Title: Overconfidence and stock returns: a behavioural perspective

Authors: Dimitrios Kourtidis; Željko Šević; Prodromos Chatzoglou

Addresses: Kavala Institute of Technology, Department of Accounting and Finance, Kavala, Agios Loukas 65404, Greece ' Faculty of Business and Management, University of Wales TSD, Swansea, SA1 6HD, UK ' Democritus University of Thrace, Department of Production and Management Engineering, Xanthi 67100, Greece

Abstract: This study attempts to group investors (individuals and professionals) into different segments based on their level of overconfidence (as a psychological bias) and, then, to examine whether, and to what extent, specific personality trait drive investors' trading behaviour. This study performing a cluster analysis, and using a representative survey of 345 investors in Greece, identified two main segments of investors: Overconfident investors and Underconfident investors. A comparative analysis between these two segments identified some differences in the trading behaviour of investors, depending on the segment they belong to. Moreover, a statistical association between investors' clusters and various demographic, socioeconomic characteristics and trading behaviour is also found.

Keywords: overconfidence; trading behaviour; psychological bias; behavioural finance; stock returns; investor segmentation; personality traits; cluster analysis; Greece; underconfidence; demographics; socioeconomics.

DOI: 10.1504/IJBAF.2015.071046

International Journal of Behavioural Accounting and Finance, 2015 Vol.5 No.1, pp.57 - 81

Received: 01 Apr 2014
Accepted: 10 Feb 2015
Published online: 09 Aug 2015 *

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