Wall Street Crosses Memory Lane: How Witnessed Returns Affect Professionals' Expected Returns

Arvid O. I. Hoffmann, Zwetelina Iliewa, Lena Jaroszek

Research output: Contribution to conferencePaperResearchpeer-review


Witnessing stock market history in the making leaves behind a vivid story, but does not provide valuable information. Nevertheless, well-versed finance professionals extrapolate from witnessed returns when forming beliefs about expected returns which we show by using a unique dataset regarding professionals’ career start in the finance industry. This result is robust to controlling for all publicly available information and interpersonal differences. Additionally, we find that returns witnessed early on in a career are more formative than those witnessed recently. Among the potential channels through which witnessed returns might affect professionals’ expectations, a judgmental bias appears the most plausible.
Original languageEnglish
Publication date2017
Number of pages51
Publication statusPublished - 2017
Event2017 Financial Management Association Annual Meeting - Boston, United States
Duration: 11 Oct 201714 Oct 2017


Conference2017 Financial Management Association Annual Meeting
CountryUnited States
Internet address


  • Finance professionals
  • Expected returns
  • Witnessed returns
  • Non-informative observations
  • Early career experiences

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