Munich Personal RePEc Archive

Investment Decisions by Analysts: A Case Study of KSE

Shaikh, Salman (2013): Investment Decisions by Analysts: A Case Study of KSE. Forthcoming in: 3rd IRC Proceedings, Szabist Karachi , Vol. 1, No. 1 (1 December 2013)

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Abstract

Security prices in efficient markets reflect all relevant information. Past price formations and even fundamental analysis cannot guarantee abnormal returns consistently to any pre-identified strategy or market participant, be they novice or expert traders. There have been various studies done in past to test market efficiency in emerging markets. However, in this study, we take the approach of surveying the professional investment community and study their stated actions in making investments. Our results indicate prevalence of herding and overconfidence in professional analysts. We also find that analysts extrapolate past into the future forecasts. We also find association between demographic characteristics and choice of security valuation methods that analysts use. In line with Chevalier & Ellison (1998), we find that young people herd less in our sample than the old people.

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