TY  - UNPD
A1  - Kaustia, Markku
A1  - Lehtoranta, Antti
A1  - Puttonen, Vesa
T1  - Does sophistication affect long-term return expectations? : Evidence from financial advisers' exam scores
T2  - SAFE working paper series ; No. 3
N2  - We use unique data from financial advisers’ professional exam scores and combine it with other variables to create an index of financial sophistication. Using this index to explain long-term stock return expectations, we find that more sophisticated financial advisers tend to have lower return expectations. A one standard deviation increase in the sophistication index reduces expected returns by 1.1 percentage points. The effect is stronger for emerging market stocks (2.3 percentage points). The sophistication effect contributes 60% to the model fit, while employer fixed effects combined contribute less than 30%. These results help understand the formation of potentially excessively optimistic expectations.
T3  - SAFE working paper - 3 
KW  - stock return expectations
KW  - sophistication
KW  - financial literacy
KW  - adviser
Y1  - 2013
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/29371
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-293716
UR  - http://ssrn.com/abstract=2209649
PB  - Goethe-Univ., House of Finance, Sustainable Architecture for Finance in Europe, SAFE
CY  - Frankfurt am Main
ER  -