Reversal of divergent decisions: Wise or hasty decisions?

Andreu Sánchez, Laura (Universidad de Zaragoza) ; Gimeno Losilla, Ruth (Universidad de Zaragoza) ; Sarto Marzal, José Luis (Universidad de Zaragoza) ; Serrano Cored, Miguel (Universidad de Zaragoza)

Resumen: We examine whether the reversals of buying decisions by fund managers depend on the performance of the stocks; or do they depend on the divergence in the trading decisions of peer managers. Through separate analyses, we find that stock performance positively influences the reversal of trading decisions while the level of divergence has a negative effect. However, when we analyse the joint effect of performance and divergence, we find a more rapid reversal in more divergent decisions that lead to good results. This asymmetric evidence might be linked to the disposition effect and could entail the loss of potential good outcomes. The results indicate that managers who reverse their buying decisions take greater advantage of the potential performance, providing evidence of skill in their selling decisions. Finally, we observe that team structures mitigate the preference of managers to hold on to their special bets.

Idioma: Inglés

DOI: 10.1016/j.ribaf.2025.102802

Año: 2025

Publicado en: RESEARCH IN INTERNATIONAL BUSINESS AND FINANCE 76 (2025), 102802 [25 pp.]
ISSN: 0275-5319

Financiación: info:eu-repo/grantAgreement/ES/AEI/PID2022-136818NB-I00
Financiación: info:eu-repo/grantAgreement/ES/DGA/S38-23R

Tipo y forma: Artículo (PostPrint)

Área (Departamento): Área Economía Finan. y Contab. (Dpto. Contabilidad y Finanzas)