Abstract: Comparing with prior studies mainly focused on the
effect of a certain event (it may be the initial announcement of bad
news or the repeated announcements of identical bad news) on stock
price, the aim of this study is to explore how investors react to
subsequent bad news with identical content. Empirical results show
that as a result of behavioral pitfalls, investors underreact to the initial
announcement of the bad news (i.e., unknown bad news) and overreact
to the repeated announcements of the identical bad news (i.e., known
bad news).
Abstract: This study investigates the investors- behavioral
reaction to the investment rating change announcements from the
views of behavioral finance. The empirical results indicate that
self-interest does affect the intention of securities firms to release
investment ratings for individual stocks. In addition, behavioral
pitfalls are also found in the response of retail investors to investment
rating change announcements.