Study of Behavior on Empirical Investors

Extensive studies were conducted of three categories of investors: individual investors, institutional investors and financial analysts. Both individual and institutional investors regarded long-term capital gains as more important than dividend income which was more important than short-term capital gains. Both individual and institutional investors with portfolios under $10,000 rated short-term capital gains higher than investors with large portfolios [Most and Chang,1979].

All groups in the USA regarded financial statements as the most important source of information for investment decisions. In the United Kingdom, only institutional investors made that judgement. Financial analysts regarded communications with management as the most important source, whereas individual investors preferred newspapers and magazines. Financial statements were found to be equally important for "buy decisions" as for "hold/sell decisions" [Chang and Most,1981].