Header

UZH-Logo

Maintenance Infos

All's Well That Ends Well? On the Importance of How Returns Are Achieved


Grosshans, Daniel; Zeisberger, Stefan (2018). All's Well That Ends Well? On the Importance of How Returns Are Achieved. Journal of Banking and Finance, 87:397-410.

Abstract

We demonstrate that investor satisfaction and investment behavior are influenced substantially by the price path by which the final investor return is achieved. In a series of experiments, we analyze various different price paths. Investors are most satisfied if their assets first fall in value and then recover, and they are least satisfied with the opposite pattern, independent of whether the final return is positive or negative. Price paths systematically influence risk preferences, return beliefs, and ultimately trading decisions. Our results enable a much more holistic perspective on a wide range of topics in finance, such as the disposition effect, risk-taking behavior after previous gains and losses, and behavioral asset pricing.

Abstract

We demonstrate that investor satisfaction and investment behavior are influenced substantially by the price path by which the final investor return is achieved. In a series of experiments, we analyze various different price paths. Investors are most satisfied if their assets first fall in value and then recover, and they are least satisfied with the opposite pattern, independent of whether the final return is positive or negative. Price paths systematically influence risk preferences, return beliefs, and ultimately trading decisions. Our results enable a much more holistic perspective on a wide range of topics in finance, such as the disposition effect, risk-taking behavior after previous gains and losses, and behavioral asset pricing.

Statistics

Citations

Dimensions.ai Metrics
2 citations in Web of Science®
3 citations in Scopus®
Google Scholar™

Altmetrics

Downloads

13 downloads since deposited on 28 Feb 2019
13 downloads since 12 months
Detailed statistics

Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Banking and Finance
Dewey Decimal Classification:330 Economics
Language:English
Date:February 2018
Deposited On:28 Feb 2019 13:40
Last Modified:28 Feb 2019 13:42
Publisher:Elsevier
ISSN:0378-4266
OA Status:Green
Publisher DOI:https://doi.org/10.1016/j.jbankfin.2017.09.021
Other Identification Number:merlin-id:15293

Download

Download PDF  'All's Well That Ends Well? On the Importance of How Returns Are Achieved'.
Preview
Content: Accepted Version
Filetype: PDF
Size: 818kB
View at publisher