Investor Mood and the Determinants of Stock Prices: An Experimental Analysis

Accounting and Finance, Forthcoming

44 Pages Posted: 17 Mar 2011 Last revised: 7 Nov 2015

See all articles by Noel Harding

Noel Harding

University of New South Wales (UNSW)

Wen He

Monash University - Department of Accounting

Multiple version iconThere are 2 versions of this paper

Date Written: September 25, 2014

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.

Keywords: Investor mood; Stock prices; Risk aversion; Earnings forecasts; Experiment

JEL Classification: D03, G12, G14

Suggested Citation

Harding, Noel and He, Wen, Investor Mood and the Determinants of Stock Prices: An Experimental Analysis (September 25, 2014). Accounting and Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1786344 or http://dx.doi.org/10.2139/ssrn.1786344

Noel Harding

University of New South Wales (UNSW) ( email )

Kensington
High St
Sydney, NSW 2052
Australia

Wen He (Contact Author)

Monash University - Department of Accounting ( email )

Building H, Level 3
Caulfield campus
Melbourne, Victoria 3800
Australia

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