The interest in the role of sentiment, mood, feelings and emotions in finance and business stems from the work of (Kahneman and Tversky, 1979). Results in this area was built on evidence from experimental psychology and economics and studies to explore how investors are affected in light of information’s evaluation, risk, gains.
The applying the direct and the indirect measurement on the sentiment and feelings of the investors as an attempt to discover its role on the performance of stock markets; assume that sentiment is influenced through the psychological mechanism of mood misattribution ( Ross, 1977), Simpler; a sunny weather or sports success influence the mood of some investors which make them more optimistic and therefore, this will make them more willing to enter into long positions, which leads to higher returns in the short-run (Kavetsos and Szymanski, 2010; Dawson, Downward, and Mills, 2014) ; as an example (Arkes, Herren, and Isen,1988)found that sales of “Ohio State” lottery tickets increase in the days after a victory acheived by the Ohio State University football team.
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Given the evidence that sports results affect subjects’ optimism or pessimism about not just their own abilities, but life in general, which leads that they impact investors’ views on future stock prices.
The direct measures was based on posing questions to investors through surveys while the two principal approaches for indirectly measuring of investor sentiment are based on continuous variables and a single event respectively, the used continuous variables include: lunar cycles (Yuan, Zheng, and Zhu, 2006), weather conditions (Saunders Jr, 1993; Hirshleifer and Shumway, 2003; Symeonidis, Daskalakis, and Markellos, 2010), and market variables (Brown and Cli_ 2004).
Some empirical evidences have shown that sentiment is connected to stock returns in an asymmetric manner by which poor mood has a stronger effect (Edmans et al., 2007; Kaplanski and Levy, 2010), while the study made by (Symeonidis, Daskalakis, and Markellos, 2010) demonstrates that good mood, as sunny weather and environmental variables is associated with increase in volatility.
Each of (Bernie and Lyandres, 2011) and (Palomino, Renneboog, and Zhang, 2009) in their studies have shown that the sentiment of investor is has an important impact on stock prices of publicly traded soccer clubs.
Part of studies interested in the role of sentiment and financial markets focused on how limited attention influences memory and judgments which leads to behavioral biases such as the “halo effect”, the illusion of truth and magical thinking (Yantis,1998), and here we must mention here that arguments in this field draw from the vast “dual task interference” which means that humans can’t efficiently concentrate on two or more tasks simultaneously (Pashler,1994),
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