RETAIL INVESTORS’ BIASED BELIEFS ABOUT STOCKS THAT THEY HOLD: EVIDENCE FROM CHINA’S SPLIT SHARE STRUCTURE REFORM

Autor:	Yan Luo, Xiaolin Qian, Jinjuan Ren, Yanjian Zhu
Rok vydání:	2018
Předmět:	040101 forestry Economics and Econometrics 050208 finance Financial economics 0502 economics and business 05 social sciences 0401 agriculture forestry and fisheries 04 agricultural and veterinary sciences Business Emerging markets Behavioral economics China Stock (geology)
Zdroj:	The Singapore Economic Review. 65:1579-1599
ISSN:	1793-6837 0217-5908
DOI:	10.1142/s0217590818500078
Popis:	We investigate the compensation plans during China’s split share structure reform, a unique event that affected the entire market and in which investors’ opinions over stock values can be measured. We find that anchoring effects and accruals biased investors’ valuations. Although previous studies have observed investor’s biased belief from their irrational trading behavior, our study provides direct evidence of their biases regarding stock values. In particular, the compensation ratio was lower for stocks with prices closer to the historical high and further from the 52-week high, for stocks with higher accruals and for stocks with higher misvaluations relative to industry peers. In addition, we find a strong herding effect for the compensation ratios of firms that had already completed the reform. These results are robust to control for the effects of risk sharing, differences in bargaining power, the price impact from the increased number of tradable shares and liquidity.
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=doi_________::637c6aea8de61ccf813167977fde0e39 https://doi.org/10.1142/s0217590818500078 Zobrazit plný text záznamu