 Reversal of divergent decisions: Wise or hasty decisions?Laura Andreu, Ruth Gimeno, José Luis Sarto and Miguel Serrano Research in International Business and Finance, 2025, vol. 76, issue C Abstract: We examine whether the reversals of buying decisions by fund managers depend on the performance of the stocks; or do they depend on the divergence in the trading decisions of peer managers. Through separate analyses, we find that stock performance positively influences the reversal of trading decisions while the level of divergence has a negative effect. However, when we analyse the joint effect of performance and divergence, we find a more rapid reversal in more divergent decisions that lead to good results. This asymmetric evidence might be linked to the disposition effect and could entail the loss of potential good outcomes. The results indicate that managers who reverse their buying decisions take greater advantage of the potential performance, providing evidence of skill in their selling decisions. Finally, we observe that team structures mitigate the preference of managers to hold on to their special bets. Keywords: Disposition effect; Mutual funds; Performance consequences; Reversal decisions; Trading divergence (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:76:y:2025:i:c:s0275531925000583 DOI: 10.1016/j.ribaf.2025.102802 Access Statistics for this article Research in International Business and Finance is currently edited by T. Lagoarde Segot More articles in Research in International Business and Finance from Elsevier |
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