The Psychology of Investing: Stock Market Recommendations and Their Impact on Investors’ Decisions (The Example of the Polish Stock Market)

Jakub Keller () and Radoslaw Pastusiak ()
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Jakub Keller: Department of Corporate Finance, University of Lodz, Poland
Radoslaw Pastusiak: Department of Corporate Finance, University of Lodz, Poland

Acta Oeconomica, 2016, vol. 66, issue 3, 419-437

Abstract: This study seeks to show the impact of stock recommendation reports on the efficiency of investments in the Polish stock market. The study is carried out in two stages: the first takes place at the micro-level and is based on a behavioural experiment, while the second focuses on the verification of our results obtained on a real market. The main assertion is that stock recommendations create heuristic effects among investors near the publication date of the recommendation. The ambiguity of the recommendations hinders investors’ reliable and unequivocal evaluation in investment decisions. There are studies in this field for different stock markets and periods of time, but our research added significant new knowledge about the functioning of the Polish stock exchange. Our study fits into the mainstream analysis of outlining the behaviour of investors in the capital market. The research findings underpin our pessimism about the impact of stock recommendations on investors’ behaviour.

Keywords: capital market; behavioural fi nance; behavioural biases; heuristics; trading; investments; Warsaw Stock Exchange (search for similar items in EconPapers)
JEL-codes: G01 G11 G23 (search for similar items in EconPapers)
Date: 2016
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