DO INVESTORS EXPERIENCE HEURISTICS IN EARNINGS FORECASTING?
DO INVESTORS EXPERIENCE HEURISTICS IN EARNINGS FORECASTING?
Author(s): Riza Praditha, Haliah Haliah, Abdul Hamid Habbe, Yohanis RuraSubject(s): Business Economy / Management, Policy, planning, forecast and speculation, Financial Markets
Published by: Vilnius Gediminas Technical University
Keywords: representativeness; anchoring-adjustment; multiple benchmark information;
Summary/Abstract: This research aims to examine empirically the overreliance on representativeness heuristic and anchoring-adjustment influences experienced by investors in forecasting future earnings. This research was a laboratory experiment with a design of 2x2 full factorial between subject. The results showed that representativeness heuristics were only experienced by investors who obtained positive information. Besides, this study also shows that investors do not overreliance on anchoring-adjustment heuristics. Generally, this research shows that cognitive biases occur when the information presented is of good value so that it can be taken into consideration for investors to be more careful in making predictions. Multiple benchmark information can be used as a consideration in evaluating the company’s earnings and stock performance.
Journal: Verslas: teorija ir praktika
- Issue Year: 21/2020
- Issue No: 2
- Page Range: 686-694
- Page Count: 9
- Language: English