Elena Ferrer Zubiate

Elena Ferrer Zubiate, a graduate in Administration and Business Management from the Public University of Navarre, focused her PhD thesis on what is known as “behavioural finance” and investigated potential sentiment effect when evaluating assets in four key European stock markets: Germany, Spain, France and the United Kingdom. Amongst her findings, she pointed out “the mechanism for the transmission of sentiment in stock markets is not directly linked to the flows of capital, but it may be due to variables more related to the behavior of the investor himself or herself, such as, for example, media attention”.

The thesis “Investor Sentiment Effect in European Stock Markets”, was led by lecturers Pilar Corredor Casado and Rafael Santamaría Aquilué, from the UPNA’s Department of Business Management.

The first part of the thesis consisted of an individualised analysis of the four mentioned European markets and studied the Spanish markets in depth. In the second, the research was focused on the investor sentiment effect on the actions of analysts. “A possible investor sentiment effect is suggested as an explanation for the optimistic bias shown in the analysts’ predictions”, pointed out the author. “It is seen that analysts, although acting strategically, are also affected by cognitive biases”.

In this context, the thesis also deals with the value that investment recommendations made by analysts and investor sentiment effect have. “The conclusions obtained have important consequences, as it is possible to design investment strategies based on the effect that investor sentiment has on those assets most difficult to evaluate and to judge, those obtaining risk-adjusted returns greater than those obtained with strategies based on investment recommendations that do not take this information into account”.

The last part of the thesis analyzes the contemporary dynamic between the spot and forward markets and the transmissions of volatility between both markets in a state of optimistic sentiment.

* Elhuyar translation, published in www.basqueresearch.com