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Overconfidence and Investor Size


  • Anders Ekholm
  • Daniel Pasternack


"Recent research documents that institutional or large investors act as antagonists to other investors by showing opposite trading behaviour following the disclosure of new information. Using an extremely comprehensive official transactions data set from Finland, we set out to explore the interrelation between investor size and behaviour. More specifically, we test whether investor size is positively (negatively) correlated with investor reaction following positive (negative) news. We document robust evidence of that investor size affects investor behaviour under new information, as larger investors on average react more positively (negatively) to good (bad) news than smaller investors. We furthermore find that the performance of smaller, or more overconfident, investors is in general hurt by their behaviour." Copyright 2007 The Authors Journal compilation (c) Blackwell Publishing Ltd.

Suggested Citation

  • Anders Ekholm & Daniel Pasternack, 2008. "Overconfidence and Investor Size," European Financial Management, European Financial Management Association, vol. 14(1), pages 82-98.
  • Handle: RePEc:bla:eufman:v:14:y:2008:i:1:p:82-98

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    Cited by:

    1. David Blake & Tom Boardman, 2014. "Spend More Today Safely: Using Behavioral Economics to Improve Retirement Expenditure Decisions With SPEEDOMETER Plans," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 17(1), pages 83-112, March.
    2. Xue, Wen-Jun & Zhang, Li-Wen, 2017. "Stock return autocorrelations and predictability in the Chinese stock market—Evidence from threshold quantile autoregressive models," Economic Modelling, Elsevier, vol. 60(C), pages 391-401.
    3. Palomino, Frederic & Sadrieh, Abdolkarim, 2011. "Overconfidence and delegated portfolio management," Journal of Financial Intermediation, Elsevier, vol. 20(2), pages 159-177, April.
    4. Goodfellow, Christiane & Bohl, Martin T. & Gebka, Bartosz, 2009. "Together we invest? Individual and institutional investors' trading behaviour in Poland," International Review of Financial Analysis, Elsevier, vol. 18(4), pages 212-221, September.
    5. Wen-Jun Xue & Li-Wen Zhang, 2016. "Stock Return Autocorrelations and Predictability in the Chinese Stock Market: Evidence from Threshold Quantile Autoregressive Models," Working Papers 1605, Florida International University, Department of Economics.

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