Non-professional versus professional investors’ trust in financial analysts’ recommendations and influences on investments

IF 1.9 Q2 BUSINESS, FINANCE Review of Behavioral Finance Pub Date : 2024-05-09 DOI:10.1108/rbf-07-2023-0191
Magnus Jansson, Patrik Michaelsen, Doron Sonsino, Tommy Gärling
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Abstract

Purpose

The paper aims to investigate differences in non-professional and professional stock investors’ trust in and tendency to follow financial analysts’ buy and sell recommendations.

Design/methodology/approach

Online experiment conducted in Sweden in March 2022 comparing non-professional private investors (n = 80), professional investors (n = 33), and master students in finance (n = 28). Information was presented about four company stocks listed on the New York stock exchange. Two stocks were buy-recommended and two stocks sell-recommended by financial analysts. For one stock of each type, the recommendation was presented to participants. Dependent variables were predictions of the stock price after three months, ratings of confidence in the predictions and choices of holding, buying or selling the stock. Ratings were also made of the importance of presented stock-related information as well as trust in analysts’ skill and integrity.

Findings

More positive return predictions were made of buy-recommended than sell-recommended stocks. Non-professionals and to some degree finance students tended to trust financial analysts more than professional investors did and they were more influenced by the presentation of the buy recommendations. All groups made too optimistic return predictions, but the professionals were less confident in their predictions, more likely to sell the stocks and lost less on their investments.

Originality/value

A new finding is that non-professional stock investors are more likely than professional stock investors to trust financial analysts and follow their recommendations. It suggests that financial analysts’ recommendations influence non-professional investors to take unmotivated investment risks. Non-professionals in the stock market should hence be advised to exercise more caution in following analysts’ recommendations.

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非专业与专业投资者对金融分析师建议的信任度及对投资的影响
目的 本文旨在研究非专业和专业股票投资者对金融分析师买卖建议的信任度和遵循倾向的差异。设计/方法/途径 2022 年 3 月在瑞典进行了一项在线实验,比较了非专业私人投资者(n = 80)、专业投资者(n = 33)和金融专业硕士生(n = 28)。实验介绍了在纽约证券交易所上市的四家公司股票的相关信息。两只股票由金融分析师推荐买入,两只股票由金融分析师推荐卖出。每种类型的一只股票都向参与者展示了推荐信息。因变量包括对三个月后股票价格的预测、对预测的信心评级以及对持有、买入或卖出股票的选择。此外,还对所提供的股票相关信息的重要性以及对分析师技能和诚信的信任度进行了评分。研究结果 对买入推荐股票的预测回报率高于卖出推荐股票。非专业人员以及在某种程度上金融专业的学生往往比专业投资者更信任金融分析师,他们受买入建议的影响更大。所有组别都对收益预测过于乐观,但专业人士对自己的预测信心不足,更有可能卖出股票,投资损失也更少。 原创性/价值一项新发现是,非专业股票投资者比专业股票投资者更有可能信任金融分析师并听从他们的建议。这表明,金融分析师的建议会影响非专业投资者,使其冒无动机的投资风险。因此,应建议股市中的非专业人士在遵循分析师的建议时更加谨慎。
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来源期刊
Review of Behavioral Finance
Review of Behavioral Finance BUSINESS, FINANCE-
CiteScore
4.70
自引率
5.00%
发文量
44
期刊介绍: Review of Behavioral Finance publishes high quality original peer-reviewed articles in the area of behavioural finance. The RBF focus is on Behavioural Finance but with a very broad lens looking at how the behavioural attributes of the decision makers influence the financial structure of a company, investors’ portfolios, and the functioning of financial markets. High quality empirical, experimental and/or theoretical research articles as well as well executed literature review articles are considered for publication in the journal.
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