Investor mood and the determinants of stock prices: an experimental analysis. (9th March 2015)

• Record Type: Journal Article
• Authors: Harding, Noel; He, Wen
• Editors: Cahan, Steven
• Is Part Of: Accounting and finance. Volume 56:Number 2(2016:Jun.)
• Page Start: 445
• Page End: 478
• Publication Date: 2015-03-09
• Subjects: Earnings forecasts -- Experiment -- Investor mood -- Risk aversion -- Stock prices; Accounting -- Periodicals; Finance -- Periodicals; 657.05
• DOI: 10.1111/acfi.12098
• Languages: English
• ISSNs: 0810-5391

Abstract

Abstract: We examine, in a controlled experimental setting, whether changes in investor mood cause changes in the determinants of stock prices. Our results show that a deterioration in mood, reflected in the negative dimensions of mood state, increases the level of risk aversion in male, but not female, investors. We find no evidence to suggest that a change in mood impacts on investors' forecasts of future earnings or future cash flows. By establishing the causal impact of a change in mood on risk aversion, our study provides support for archival research that relates various market anomalies to investor mood.