The Impact of Financial Information on Noise Traders: Based on the Perspective of Behavioral Finance

Miao Jiang

doi:10.18282/ff.v9i1.811

Miao Jiang University of Shanghai for Science and Technology

Ariticle ID: 811

257 Views, 39 PDF Downloads, 0 revised version Downloads

DOI: https://doi.org/10.18282/ff.v9i1.811

Keywords: Noise Trading, Behavioral Finance, Financial Media, Investor Behavior

Abstract

In China's incomplete stock market which mainly consists of retail games and short-term operations, both of the high stock turnover rate and P/E ratios reflect excessive noise trading. This article focuses on the characteristic that individual investors are susceptible to financial media information, combined with the development and characteristics of financial media. From the perspective of behavioral finance, this paper analyzes the impact of financial media on noise trading. Using behavioral finance and psychology-related knowledge, investor behaviorÂ can be better understood, so asÂ the motivation behind noise trading. Finally, in order to promote the healthy development of the stock market, this paper makes recommendations to improve the efficiency of the capital market.

References

Shefrin H, Statman M. The disposition to sell winners too early and ride losers too long: theory and evidence. The Journal of Finance 1985. doi: 10.1111/j.1540-6261.1985.tb05002.x.

Shiller RJ. Do stock prices move too much to be justified by subsequent changes in dividends? Reply. The American Economic Review 1983; 73(1).

Kahneman D, Tversky A. Prospective Theory: An analysis of decision under risk. Routledge 2014; 8: 29-30. doi: 10.1111/1468-0262.00439.

Thaler R, DeBondt WF. Does the stock market over-react. The Journal of Finance 1985; 40(3): 793-805. doi: 10.1111/j.1540-6261.1985.tb05004.x.

]Solomon DH. Selective publicity and stock prices. Journal of Finance 2012. doi: 10.1111/j.1540-6261.2012.01726.x.

Barber BM, Odean T. Trading is hazardous to your wealth: the common stock investment performance of individual investors. The Journal of Finance 2000; 55(2). doi: 10.1111/0022-1082.00226.

Wang X, Shang W, Wang S. Analysis of the impact of Internet news media reports on China â€™s stock market (in Chinese). Systems Engineering Theory and Practice 2019; 39(12): 3038-3047.

Wu J, Liu H. Exploring the business model of new media in finance and economics based on the power of communication: Taking "Wall Street News" as an example (in Chinese). Contemporary Communication 2018; (4): 67-70. doi: CNKI:SUN:DACB.0.2018-04-027.