TY - UNPB
T1 - Wall Street Crosses Memory Lane
T2 - How Witnessed Returns Affect Professionals' Expected Returns
AU - Hoffmann, Arvid O. I.
AU - Iliewa, Zwetelina
AU - Jaroszek, Lena
PY - 2016
Y1 - 2016
N2 - Witnessing stock-market history in the making creates a vivid story, but does not provide valuable information. However, finance professionals extrapolate from personally witnessed returns, which we show by using a unique dataset about the timing of their career start in the finance industry. This result is robust when controlling for all publicly available information and other time-fixed effects as well as interpersonal differences. Additionally, we find that returns witnessed early in the career are more formative than those witnessed recently. Finally, among the potential channels through which witnessed returns might affect expected returns, a judgmental bias appears most plausible.
AB - Witnessing stock-market history in the making creates a vivid story, but does not provide valuable information. However, finance professionals extrapolate from personally witnessed returns, which we show by using a unique dataset about the timing of their career start in the finance industry. This result is robust when controlling for all publicly available information and other time-fixed effects as well as interpersonal differences. Additionally, we find that returns witnessed early in the career are more formative than those witnessed recently. Finally, among the potential channels through which witnessed returns might affect expected returns, a judgmental bias appears most plausible.
KW - Finance professionals
KW - Expected returns
KW - Non-informative observations
KW - Early career experiences
KW - Finance professionals
KW - Expected returns
KW - Non-informative observations
KW - Early career experiences
M3 - Working paper
BT - Wall Street Crosses Memory Lane
PB - SSRN: Social Science Research Network
CY - www
ER -