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

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

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

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

Department of Finance

Research output: Contribution to conference › Paper › Research › peer-review

Abstract

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 language	English
Publication date	2017
Number of pages	49
Publication status	Published - 2017
Event	The 15th International Paris December Finance Meeting - Novotel Paris les Halles hotel, Paris, France Duration: 21 Dec 2017 → 21 Dec 2017 Conference number: 15 https://www.eurofidai.org/fr/paris-december-2017

Conference

Conference	The 15th International Paris December Finance Meeting
Number	15
Location	Novotel Paris les Halles hotel
Country/Territory	France
City	Paris
Period	21/12/2017 → 21/12/2017
Internet address	https://www.eurofidai.org/fr/paris-december-2017

Keywords

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

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https://www.eurofidai.org/sites/default/files/pdf/parismeeting/2017/iliewa_2017.pdfLicence: Unspecified

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Cite this

@conference{5dcb96826a1247adb902f9fef1c57a5c,

title = "Wall Street Crosses Memory Lane: How Witnessed Returns Affect Professionals' Expected Returns",

abstract = "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.",

keywords = "Finance professionals, Expected returns, Witnessed returns, Non-informative observations, Early career experiences, Finance professionals, Expected returns, Witnessed returns, Non-informative observations, Early career experiences",

author = "Hoffmann, {Arvid O. I.} and Zwetelina Iliewa and Lena Jaroszek",

year = "2017",

language = "English",

note = "The 15th International Paris December Finance Meeting ; Conference date: 21-12-2017 Through 21-12-2017",

url = "https://www.eurofidai.org/fr/paris-december-2017",

}

TY - CONF

T1 - Wall Street Crosses Memory Lane

T2 - The 15th International Paris December Finance Meeting

AU - Hoffmann, Arvid O. I.

AU - Iliewa, Zwetelina

AU - Jaroszek, Lena

N1 - Conference code: 15

PY - 2017

Y1 - 2017

N2 - 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.

AB - 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.

KW - Finance professionals

KW - Expected returns

KW - Witnessed returns

KW - Non-informative observations

KW - Early career experiences

KW - Finance professionals

KW - Expected returns

KW - Witnessed returns

KW - Non-informative observations

KW - Early career experiences

M3 - Paper

Y2 - 21 December 2017 through 21 December 2017

ER -