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Investor sentiment and local bias in extreme circumstances: the case of the Blitz

Urquhart, Andrew; Hudson, Robert

Authors

Andrew Urquhart



Abstract

© 2015 Elsevier B.V. This paper treats the Blitz, the bombing of Britain during World War Two, as a natural experiment which can provide insights into the effects of investor sentiment on stock returns. The period of the Blitz is very interesting in that one of the world's major financial centres was under regular and severe air attack, as were many other industrial and commercial centres. These conditions provide a unique opportunity to study both investor sentiment and local bias effects in extreme circumstances. We show that negative investor sentiment during the Blitz as a whole was not evident. However major bombings in London generate negative investor sentiment on stock returns while major bombings outside of London generate no negative investor sentiment on stock returns, which is consistent with local bias effects.

Citation

Urquhart, A., & Hudson, R. (2016). Investor sentiment and local bias in extreme circumstances: the case of the Blitz. Research in international business and finance, 36(January), 340-350. https://doi.org/10.1016/j.ribaf.2015.09.010

Journal Article Type Article
Acceptance Date Sep 8, 2015
Online Publication Date Sep 14, 2015
Publication Date 2016-01
Deposit Date Oct 12, 2015
Publicly Available Date Nov 23, 2017
Journal Research in international business and finance
Print ISSN 0275-5319
Electronic ISSN 0275-5319
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 36
Issue January
Pages 340-350
DOI https://doi.org/10.1016/j.ribaf.2015.09.010
Keywords Stock returns; Sentiment; World War Two; Local bias
Public URL https://hull-repository.worktribe.com/output/379561
Publisher URL http://www.sciencedirect.com/science/article/pii/S0275531915300167
Additional Information Authors' accepted manuscript of article published in: Research in international business and finance, 2016, V.36.

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Publisher Licence URL
http://creativecommons.org/licenses/by-nc-nd/4.0/





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