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Heterogeneity and anchoring in financial markets

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  • Yoshiyuki Nakazono

Abstract

The motivation behind this article is to verify the efficient market hypothesis as found in traditional financial theories. Participants in Japanese stock markets tend to be heterogeneous; the types of firms to which survey respondents belong can affect the formation of expectations. Furthermore, the majority of market participants -- even institutional investors who are financial market professionals -- place significant weight on past forecast values, and the strength of the anchoring effects depends on the types of firms to which the respondents belong, as well as the stock market conditions.

Suggested Citation

  • Yoshiyuki Nakazono, 2012. "Heterogeneity and anchoring in financial markets," Applied Financial Economics, Taylor & Francis Journals, vol. 22(21), pages 1821-1826, November.
  • Handle: RePEc:taf:apfiec:v:22:y:2012:i:21:p:1821-1826
    DOI: 10.1080/09603107.2012.681025
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    File URL: http://hdl.handle.net/10.1080/09603107.2012.681025
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    References listed on IDEAS

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    1. John R. Graham, 1999. "Herding among Investment Newsletters: Theory and Evidence," Journal of Finance, American Finance Association, vol. 54(1), pages 237-268, February.
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    Cited by:

    1. Fujiwara, Ippei & Ichiue, Hibiki & Nakazono, Yoshiyuki & Shigemi, Yosuke, 2013. "Financial markets forecasts revisited: Are they rational, stubborn or jumpy?," Economics Letters, Elsevier, vol. 118(3), pages 526-530.
    2. Annarita Colasante & Simone Alfarano & Eva Camacho-Cuena & Mauro Gallegati, 2017. "Long-run expectations in a Learning-to-Forecast Experiment: A Simulation Approach," Working Papers 2017/03, Economics Department, Universitat Jaume I, Castellón (Spain).
    3. Nakazono, Yoshiyuki, 2013. "Strategic behavior of Federal Open Market Committee board members: Evidence from members’ forecasts," Journal of Economic Behavior & Organization, Elsevier, vol. 93(C), pages 62-70.

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