From a behavioral perspective, the anomaly known as post-earnings announcement drift or momentum is best explained by
A) self attribution bias.
B) loss aversion.
C) representativeness.
D) familiarity bias.

Question

Quizplus · Accepted Answer

Representativeness leads investors to underreact to new information, such as earnings announcements, because they are overly influenced by past trends or stereotypes. This underreaction can cause the post-earnings announcement drift, where stock prices continue to move in the direction of the earnings surprise for some time after the announcement.

From a Behavioral Perspective, the Anomaly Known as Post-Earnings Announcement