Stocks of Admired Companies and Despised Ones

29 Pages Posted: 12 Feb 2007

See all articles by Deniz Anginer

Deniz Anginer

World Bank Research

Kenneth L. Fisher

Fisher Investments, Inc.

Meir Statman

Santa Clara University - Department of Finance

Date Written: February 2007

Abstract

Do stocks of admired companies yield admirable returns? We study Fortune magazine's annual list of "America's Most Admired Companies" and find that stocks of admired companies had lower returns, on average, than stocks of despised companies during the 23 years from April 1983 through March 2006. We link differences between the returns of stocks of admired and despised companies to differences in affect, the quick feeling that distinguishes good from bad, admired from despised. The affect of admired companies is positive, and investors who were attracted by affect to stocks of admired companies paid for it with lower returns. However, the relative returns of stocks of admired and despised companies varied considerably from year to year and from decade to decade and the relationship between admiration and returns is not always monotonic.

Keywords: behavioral finance, emotions, cognitive biases, affect, asset pricing models, fortune magazine

JEL Classification: G11, G12, G14

Suggested Citation

Anginer, Deniz and Fisher, Kenneth L. and Statman, Meir, Stocks of Admired Companies and Despised Ones (February 2007). Available at SSRN: https://ssrn.com/abstract=962168 or http://dx.doi.org/10.2139/ssrn.962168

Deniz Anginer

World Bank Research ( email )

1818 H Street, NW
Washington, DC 20433
United States

Kenneth L. Fisher

Fisher Investments, Inc. ( email )

13100 Skyline Blvd.
Woodside, CA 94062
United States
800-851-8845 (Phone)
650-851-3514 (Fax)

Meir Statman (Contact Author)

Santa Clara University - Department of Finance ( email )

500 El Camino Real
Santa Clara, CA 95053
United States
408-554-4147 (Phone)
408-554-4029 (Fax)

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