Experimental finance stresses the role of emotions and psychological feelings in understanding the behavior and decision-making of investors on the stock markets. This article focuses on individual investors, who are thought to develop a kind of predisposition to behavioral and cognitive biases. Based on data collected from an experiment in the field of trading and supported by the use of qualitative analysis tools, we demonstrate that the participants in the experiment are more likely to trade in companies with the highest market capitalizations. Indeed, by examining and analyzing the different investment strategies chosen during the experiment, we observe a strong link between the company size and the investment choices. We also highlight, during the experiment, intensive media coverage (or media overexposure) specifically directed to the largest companies. To some extent, this can be explained by the large number of opinions and recommendations issued by financial analysts that are either directly related to companies in the news or focused on companies in the same sector (spillover effects). Financial analysts can therefore be considered as helping to reduce uncertainty and providing guidance for individual investors who are chronically in need of references on the stock markets. In addition, our results suggest that a lack of experience and a low level of familiarity regarding how stock markets work will naturally direct the attention of investors towards companies extensively covered by financial analysts (in other words, large ones) and the most media covered ones. To a certain extent, corporate communications and the marketing of stock market websites would therefore become central markers for the definition of investment strategies. The data collected show the development of “all that glitters attracts” bias, which can be explained by a strong focus on easily available and highly visible information (the availability bias). The more visible they would be, the larger the companies and the more they would be followed by financial analysts. We believe that how information is covered by the media leads to the development of herd behavior. Ultimately, stock market websites would therefore appear to facilitate behavioral and cognitive biases.
| Published in | Journal of Finance and Accounting (Volume 13, Issue 2) |
| DOI | 10.11648/j.jfa.20251302.12 |
| Page(s) | 71-85 |
| Creative Commons |
This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited. |
| Copyright |
Copyright © The Author(s), 2025. Published by Science Publishing Group |
Qualitative Research, Uncertainty, Stock Markets, Experimental Finance, Behavioral Biases
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APA Style
Finet, A., Kristoforidis, K., Laznicka, J. (2025). Big Is Beautiful: It Matters for Small Investors. Journal of Finance and Accounting, 13(2), 71-85. https://doi.org/10.11648/j.jfa.20251302.12
ACS Style
Finet, A.; Kristoforidis, K.; Laznicka, J. Big Is Beautiful: It Matters for Small Investors. J. Finance Account. 2025, 13(2), 71-85. doi: 10.11648/j.jfa.20251302.12
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Download@article{10.11648/j.jfa.20251302.12,
author = {Alain Finet and Kevin Kristoforidis and Julie Laznicka},
title = {Big Is Beautiful: It Matters for Small Investors
},
journal = {Journal of Finance and Accounting},
volume = {13},
number = {2},
pages = {71-85},
doi = {10.11648/j.jfa.20251302.12},
url = {https://doi.org/10.11648/j.jfa.20251302.12},
eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20251302.12},
abstract = {Experimental finance stresses the role of emotions and psychological feelings in understanding the behavior and decision-making of investors on the stock markets. This article focuses on individual investors, who are thought to develop a kind of predisposition to behavioral and cognitive biases. Based on data collected from an experiment in the field of trading and supported by the use of qualitative analysis tools, we demonstrate that the participants in the experiment are more likely to trade in companies with the highest market capitalizations. Indeed, by examining and analyzing the different investment strategies chosen during the experiment, we observe a strong link between the company size and the investment choices. We also highlight, during the experiment, intensive media coverage (or media overexposure) specifically directed to the largest companies. To some extent, this can be explained by the large number of opinions and recommendations issued by financial analysts that are either directly related to companies in the news or focused on companies in the same sector (spillover effects). Financial analysts can therefore be considered as helping to reduce uncertainty and providing guidance for individual investors who are chronically in need of references on the stock markets. In addition, our results suggest that a lack of experience and a low level of familiarity regarding how stock markets work will naturally direct the attention of investors towards companies extensively covered by financial analysts (in other words, large ones) and the most media covered ones. To a certain extent, corporate communications and the marketing of stock market websites would therefore become central markers for the definition of investment strategies. The data collected show the development of “all that glitters attracts” bias, which can be explained by a strong focus on easily available and highly visible information (the availability bias). The more visible they would be, the larger the companies and the more they would be followed by financial analysts. We believe that how information is covered by the media leads to the development of herd behavior. Ultimately, stock market websites would therefore appear to facilitate behavioral and cognitive biases.
},
year = {2025}
}
TY - JOUR T1 - Big Is Beautiful: It Matters for Small Investors AU - Alain Finet AU - Kevin Kristoforidis AU - Julie Laznicka Y1 - 2025/03/21 PY - 2025 N1 - https://doi.org/10.11648/j.jfa.20251302.12 DO - 10.11648/j.jfa.20251302.12 T2 - Journal of Finance and Accounting JF - Journal of Finance and Accounting JO - Journal of Finance and Accounting SP - 71 EP - 85 PB - Science Publishing Group SN - 2330-7323 UR - https://doi.org/10.11648/j.jfa.20251302.12 AB - Experimental finance stresses the role of emotions and psychological feelings in understanding the behavior and decision-making of investors on the stock markets. This article focuses on individual investors, who are thought to develop a kind of predisposition to behavioral and cognitive biases. Based on data collected from an experiment in the field of trading and supported by the use of qualitative analysis tools, we demonstrate that the participants in the experiment are more likely to trade in companies with the highest market capitalizations. Indeed, by examining and analyzing the different investment strategies chosen during the experiment, we observe a strong link between the company size and the investment choices. We also highlight, during the experiment, intensive media coverage (or media overexposure) specifically directed to the largest companies. To some extent, this can be explained by the large number of opinions and recommendations issued by financial analysts that are either directly related to companies in the news or focused on companies in the same sector (spillover effects). Financial analysts can therefore be considered as helping to reduce uncertainty and providing guidance for individual investors who are chronically in need of references on the stock markets. In addition, our results suggest that a lack of experience and a low level of familiarity regarding how stock markets work will naturally direct the attention of investors towards companies extensively covered by financial analysts (in other words, large ones) and the most media covered ones. To a certain extent, corporate communications and the marketing of stock market websites would therefore become central markers for the definition of investment strategies. The data collected show the development of “all that glitters attracts” bias, which can be explained by a strong focus on easily available and highly visible information (the availability bias). The more visible they would be, the larger the companies and the more they would be followed by financial analysts. We believe that how information is covered by the media leads to the development of herd behavior. Ultimately, stock market websites would therefore appear to facilitate behavioral and cognitive biases. VL - 13 IS - 2 ER -
Health Institute, Financial Management Department, University of Mons, Mons, Belgium
Health Institute, Financial Management Department, University of Mons, Mons, Belgium
Health Institute, Financial Management Department, University of Mons, Mons, Belgium
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