Keywords
Citation
(2013), "2012 Awards for Excellence", Qualitative Research in Financial Markets, Vol. 5 No. 1. https://doi.org/10.1108/qrfm.2013.40705aaa.002
Publisher
:Emerald Group Publishing Limited
Copyright © 2013, Emerald Group Publishing Limited
2012 Awards for Excellence
Article Type: 2012 Awards for Excellence From: Qualitative Research in Financial Markets, Volume 5, Issue 1
The following article was selected for this year's Outstanding Paper Award for Qualitative Research in Financial Markets
“Herding, information uncertainty and investors' cognitive profile”
Beatriz Fernández, Teresa Garcia-Merino, Rosa Mayoral, Valle Santos and Eleuterio ValleladoUniversity of Valladolid, Valladolid, Spain
Purpose – The purpose of this paper is to analyze the interaction between the availability of financial information and individuals' cognitive profiles to explain investors' herding behavior.
Design/methodology/approach – The authors designed and conducted an experiment to observe the behavior of subjects in three settings, each with a different level of information.
Findings – Results confirm that a dependence relation exists between information, investors' behavioral biases and the herding phenomenon. Moreover, the experiment shows that information concerning the number of previous transactions in the market is particularly relevant to explain herding propensity among investors. The findings indicate that the cognitive profile of investors is more relevant as the availability of information increases and the number of previous transactions in the market is low.
Research limitations/implications – Future research should examine further the best way to measure the individual's cognitive profile and its interaction with information limitation in financial markets. The presence of high levels of uncertainty favors herding behavior regardless of inter-individual differences, and only when the availability of information is high and the number of transactions is low does the subjects' cognitive profile explain the investors' herding behavior. Finally, it is observed that not all public information receives the same attention by investors. The attractiveness of public information requires further attention.
Social implications – The herding phenomenon is difficult to anticipate because there are factors of a very diverse nature that intervene.
Originality/value – The research described in this paper measures investors' cognitive profile to identify the interaction between availability of information, cognitive profile and herding.
Keywords Financial information, Individual behaviour, Investors, Uncertainty management
www.emeraldinsight.com/10.1108/17554171111124595
This article originally appeared in Volume 3 Number 1, 2011, pp. 7-33 Qualitative Research in Financial Markets
The following articles were selected for this year's Highly Commended Award
“Recovery from the current banking crisis: Insights into costs and effectiveness of response regulations”
Lukasz Prorokowski
This article originally appeared in Volume 3 Number 3, 2011, Qualitative Research in Financial Markets
“Investment decision making from a constructivist perspective”
Carlo Massironi and Marco Guicciardi
This article originally appeared in Volume 3 Number 3, 2011, Qualitative Research in Financial Markets