Overconfidence and stock returns: a behavioural perspective

Dimitrios Kourtidis, Željko Šević and Prodromos Chatzoglou

International Journal of Behavioural Accounting and Finance, 2015, vol. 5, issue 1, 57-81

Abstract: This study attempts to group investors (individuals and professionals) into different segments based on their level of overconfidence (as a psychological bias) and, then, to examine whether, and to what extent, specific personality trait drive investors' trading behaviour. This study performing a cluster analysis, and using a representative survey of 345 investors in Greece, identified two main segments of investors: Overconfident investors and Underconfident investors. A comparative analysis between these two segments identified some differences in the trading behaviour of investors, depending on the segment they belong to. Moreover, a statistical association between investors' clusters and various demographic, socioeconomic characteristics and trading behaviour is also found.

Keywords: overconfidence; trading behaviour; psychological bias; behavioural finance; stock returns; investor segmentation; personality traits; cluster analysis; Greece; underconfidence; demographics; socioeconomics. (search for similar items in EconPapers)
Date: 2015
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