Do Investors Overreact to COVID-19 Outbreak? An Experimental Study Using Sequential Disclosures

Sulistiawan, Dedhy and Rudiawarni, Felizia Arni and Feliana, Yie Ke and Grigorescu, Adriana (2023) Do Investors Overreact to COVID-19 Outbreak? An Experimental Study Using Sequential Disclosures. Contemporary Economics, 17 (1). pp. 43-57. ISSN 2300-8814

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Abstract

This paper aims to investigate market participants' reactions to sequential information, presenting firm-specific news and market-wide information. Experimental study takes place in the COVID-19 pandemic era, as market-wide information representation. We also provide firm-specific information in the form of company fundamental information. The results show that participants, as representatives of retail investors, do not overreact to COVID-19. The recency effect dominates their decision-making. Neither firm-specific information nor market-wide information can eliminate the recency effect in decision making. Investors still provide valuations based on the latest information they receive. Another interesting finding in this study is that positive framing of information cannot mitigate the effects of bad news contained therein. Our findings contribute to the study of behavioral finance and corporate disclosure strategies. From the market participants' point of view, our results describe that investors' decisions are often not based on the information content but the latest information they received. From the company perspective, this research also contributes to the corporate disclosure strategy valued by investors based on how they disclose information to the public.

Item Type:	Article
Uncontrolled Keywords:	COVID-19, sequential information, experiment, recency effect, market-wide information, firm-specific information
Subjects:	H Social Sciences > HG Finance
Depositing User:	Dedhy Sulistyawan 31116
Date Deposited:	22 Mar 2023 03:34
Last Modified:	05 Aug 2024 03:12
URI:	http://repository.ubaya.ac.id/id/eprint/43620

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