Earnings surprises, investors sentiments and contrarian strategies

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dc.citation.issue1
dc.citation.issue1
dc.citation.issue1
dc.citation.volume7
dc.contributor.authorZou L
dc.contributor.authorChen R
dc.contributor.editorOzturk, I
dc.date.accessioned2017-01-29T23:08:16Z
dc.date.available2017
dc.date.available2016-12-08
dc.date.issued2017
dc.description.abstractThis study documents that contrarian investment strategies offer superior returns because these strategies exploit investors’ expectation errors. There are two sources of expectation errors, naïve extrapolation of past performance and biased analysts’ earnings forecasts. Our results suggest that investors naively extrapolate past performance and overestimate the future growth rates of glamour stocks relative to value stocks. In addition, analysts tend to be excessively pessimistic about value stocks and over optimistic about glamour stocks. We find that both positive earnings surprises and negative earnings surprises significantly affect subsequent returns. However, negative earnings surprises have less impact on value stocks relative to glamour stocks. We also find new evidence that investor sentiments could be an alternative source of superior performances from value stocks. Our results indicate that when the investor sentiment is higher, value stocks earn significant higher returns than glamour stocks.
dc.description.confidentialfalse
dc.description.confidentialfalse
dc.description.confidentialfalse
dc.description.publication-statusPublished
dc.description.publication-statusPublished
dc.description.publication-statusPublished
dc.format.extent133 - 143 (10)
dc.identifierhttp://www.econjournals.com/index.php/ijefi/index
dc.identifier.citationInternational Journal of Economics and Financial Issues, 2017, 7 (1), pp. 133 - 143 (10)
dc.identifier.elements-id285154
dc.identifier.harvestedMassey_Dark
dc.identifier.issn2146-4138
dc.languageEnglish
dc.publisherEconJournals
dc.relation.isPartOfInternational Journal of Economics and Financial Issues
dc.rightsThis work is licensed under a Creative Commons Attribution 4.0 International License.
dc.rights.urihttps://creativecommons.org/licenses/by/4.0/
dc.titleEarnings surprises, investors sentiments and contrarian strategies
dc.typeJournal article
pubs.declined2017-01-16T13:21:17.121+1300
pubs.notesNot known
pubs.organisational-group/Massey University
pubs.organisational-group/Massey University/College of Business
pubs.organisational-group/Massey University/College of Business/School of Economics and Finance
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