The Influence Mechanism of Investor Behavior Deviation on Beta Anomalies in the Perspective of Behavioral Finance

Research Article
Open access

The Influence Mechanism of Investor Behavior Deviation on Beta Anomalies in the Perspective of Behavioral Finance

Yuhan Feng 1*
  • 1 Beijing University of Posts and Telecommunications, Beitaipingzhuang street, Haidian District, Beijing ,100876, China.    
  • *corresponding author feng-yh@bupt.edu.cn
Published on 21 March 2023 | https://doi.org/10.54254/2754-1169/3/2022765
AEMPS Vol.3
ISSN (Print): 2754-1177
ISSN (Online): 2754-1169
ISBN (Print): 978-1-915371-15-7
ISBN (Online): 978-1-915371-16-4

Abstract

There are many interference factors in the real capital market, such as the ineffectiveness of the capital asset pricing model, and even the negative correlation between the systematic risk and return. Based on the basic theory of behavioral finance, this paper empirically tests the influence mechanism of investors' behavior deviation on a beta anomaly by taking China's A-share listed companies as samples from 2017 to 2020. It is found that both the strategy of buying the winner and the strategy of contrarian investment are positively related to the beta anomaly, that is, the higher the probability of irrational investors adopting these two strategies, the higher the probability of beta anomaly in the A-share market. The research conclusion provides new empirical evidence for understanding the relationship between investor behavior deviation and beta anomaly and also provides a certain reference for relevant departments to monitor market risk.

Keywords:

empirical test, beta anomaly, the strategy of buying the winner, contrarian investment, behavioral finance

Feng,Y. (2023). The Influence Mechanism of Investor Behavior Deviation on Beta Anomalies in the Perspective of Behavioral Finance. Advances in Economics, Management and Political Sciences,3,70-79.
Export citation

References

[1]. Fama, E.F., French, K.R. A Five-Factor Asset Pricing Model[J]. Journal of Financial Economics,2015,116(1):1-22.

[2]. Gregory, A., Tharyan, R., Chistidis, A. Constructing and Testing Alternative Versions of the Fama-French and Carhart Models in the UK[J]. Journal of Business Finance and Accounting,2013,40(1-2):172-214.

[3]. Liu Shengyao, Li YizongCharacteristics of stock gambling and market risk anomalies [J]Investment, (2016.2-2016): 11.4

[4]. Zhou Aimin far away does high risk have high return [J]Financial science, 2019, (11): 88-99

[5]. Xia ZhongzeResearch on the behavior of securities investors from the perspective of behavioral finance [J]China business theory, 2020 (18): 64-65.

[6]. Wang Qing, Li HuitongGambling psychology, low price preference and beta anomaly in stock market [J]Research on financial issues, 2021 (11): 78-87

[7]. Zhang ChenResearch on the behavior of individual investors in China's securities market from the perspective of behavioral finance [D]Tianjin University of Commerce, 2012

[8]. Bai AoyueResearch on the influence of "t + 1" trading system on beta anomaly [D]Harbin Institute of Technology, 2021

[9]. Zhou Liang, Wang YinzhiResearch on low-risk anomalies in China’s stock market [J]Financial theory and practice, 2020 (03): 90-96

[10]. Harrison Hong, David A. Sauer. Speculative Betas [J]. The Journal of Finance,2016, 71(5): 2095-2144.

[11]. Antoniou, John A. Doukas, Avanidhar Subrahmanyam. Investor Sentiment, Beta, and the Cost of Equity Capital [J]. Management Science, 2016, 62(2), 347-367.

[12]. Zhang TengResearch on risk anomalies of A-share market based on industry and institutional ownership [D]two thousand and seventeen

[13]. Zhu Feifei, Li Huixuan, Xu Jianguo, et alInfluencing factors and price effect of short-term herding behavior -- An Empirical Test Based on high-frequency data [J]Financial research, 2019 (7): 191-206

[14]. Zhang Yuanye, Bai CAIQUANInstitutional transaction scale, and market information environment -- theoretical and empirical research from the perspective of information asymmetry [J]Forecast, 2019 (5): 66-74

[15]. Huang Shizhong, Li Shi, Yu XiaoranAnalysis and Enlightenment of game station stock phenomenon -- from the perspective of behavioral finance [J]Monthly journal of Finance and accounting, 2021 (5)

[16]. Bai AoyueResearch on the influence of "t + 1" trading system on beta anomaly [D]two thousand and twenty-one

[17]. Baker, M., Bradley, B., Wurgler, J. Benchmarks as Limits to Arbitrage: Understanding the Low-Volatility Anomaly [ J]. Financial Analysts Journal,2011,67(1): 40-54.

[18]. Bali, T. G., Murray, B. S., Tang, Y. Betting Against Beta or Demand for Lottery [R]. Georgetown Mc-Donough School of Business Working Paper,2014.

[19]. Zhong Chen, Wu XiongThe impact of trust companies on the "stock price anomaly" of listed real estate enterprises from the perspective of behavioral finance [J]Journal of Sichuan Normal University (SOCIAL SCIENCES EDITION), 2021 (1).


Cite this article

Feng,Y. (2023). The Influence Mechanism of Investor Behavior Deviation on Beta Anomalies in the Perspective of Behavioral Finance. Advances in Economics, Management and Political Sciences,3,70-79.

Data availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

Disclaimer/Publisher's Note

The statements, opinions and data contained in all publications are solely those of the individual author(s) and contributor(s) and not of EWA Publishing and/or the editor(s). EWA Publishing and/or the editor(s) disclaim responsibility for any injury to people or property resulting from any ideas, methods, instructions or products referred to in the content.

About volume

Volume title: Proceedings of the 6th International Conference on Economic Management and Green Development (ICEMGD 2022), Part Ⅰ

ISBN:978-1-915371-15-7(Print) / 978-1-915371-16-4(Online)
Editor:Javier Cifuentes-Faura, Canh Thien Dang
Conference website: https://www.icemgd.org/
Conference date: 6 August 2022
Series: Advances in Economics, Management and Political Sciences
Volume number: Vol.3
ISSN:2754-1169(Print) / 2754-1177(Online)

© 2024 by the author(s). Licensee EWA Publishing, Oxford, UK. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license. Authors who publish this series agree to the following terms:
1. Authors retain copyright and grant the series right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this series.
2. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the series's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this series.
3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See Open access policy for details).

References

[1]. Fama, E.F., French, K.R. A Five-Factor Asset Pricing Model[J]. Journal of Financial Economics,2015,116(1):1-22.

[2]. Gregory, A., Tharyan, R., Chistidis, A. Constructing and Testing Alternative Versions of the Fama-French and Carhart Models in the UK[J]. Journal of Business Finance and Accounting,2013,40(1-2):172-214.

[3]. Liu Shengyao, Li YizongCharacteristics of stock gambling and market risk anomalies [J]Investment, (2016.2-2016): 11.4

[4]. Zhou Aimin far away does high risk have high return [J]Financial science, 2019, (11): 88-99

[5]. Xia ZhongzeResearch on the behavior of securities investors from the perspective of behavioral finance [J]China business theory, 2020 (18): 64-65.

[6]. Wang Qing, Li HuitongGambling psychology, low price preference and beta anomaly in stock market [J]Research on financial issues, 2021 (11): 78-87

[7]. Zhang ChenResearch on the behavior of individual investors in China's securities market from the perspective of behavioral finance [D]Tianjin University of Commerce, 2012

[8]. Bai AoyueResearch on the influence of "t + 1" trading system on beta anomaly [D]Harbin Institute of Technology, 2021

[9]. Zhou Liang, Wang YinzhiResearch on low-risk anomalies in China’s stock market [J]Financial theory and practice, 2020 (03): 90-96

[10]. Harrison Hong, David A. Sauer. Speculative Betas [J]. The Journal of Finance,2016, 71(5): 2095-2144.

[11]. Antoniou, John A. Doukas, Avanidhar Subrahmanyam. Investor Sentiment, Beta, and the Cost of Equity Capital [J]. Management Science, 2016, 62(2), 347-367.

[12]. Zhang TengResearch on risk anomalies of A-share market based on industry and institutional ownership [D]two thousand and seventeen

[13]. Zhu Feifei, Li Huixuan, Xu Jianguo, et alInfluencing factors and price effect of short-term herding behavior -- An Empirical Test Based on high-frequency data [J]Financial research, 2019 (7): 191-206

[14]. Zhang Yuanye, Bai CAIQUANInstitutional transaction scale, and market information environment -- theoretical and empirical research from the perspective of information asymmetry [J]Forecast, 2019 (5): 66-74

[15]. Huang Shizhong, Li Shi, Yu XiaoranAnalysis and Enlightenment of game station stock phenomenon -- from the perspective of behavioral finance [J]Monthly journal of Finance and accounting, 2021 (5)

[16]. Bai AoyueResearch on the influence of "t + 1" trading system on beta anomaly [D]two thousand and twenty-one

[17]. Baker, M., Bradley, B., Wurgler, J. Benchmarks as Limits to Arbitrage: Understanding the Low-Volatility Anomaly [ J]. Financial Analysts Journal,2011,67(1): 40-54.

[18]. Bali, T. G., Murray, B. S., Tang, Y. Betting Against Beta or Demand for Lottery [R]. Georgetown Mc-Donough School of Business Working Paper,2014.

[19]. Zhong Chen, Wu XiongThe impact of trust companies on the "stock price anomaly" of listed real estate enterprises from the perspective of behavioral finance [J]Journal of Sichuan Normal University (SOCIAL SCIENCES EDITION), 2021 (1).