Content Details | NUML Online Research Repository

Title Impact of Overconfidence and Loss Aversion Biases on Equity investors Decision Making Process and Performance

Author(s) Abdul Rauf

Abstract The purpose of this study was to investigating the behavioral factors that having an impact of individual equity investors' investment decision making process together with investment performance at Pakistan's Stock Markets. Moreover, the relationship of these behavioral variables with investment decision making process and performance are also monitored. As in Pakistan, there are limited work is done in the area of behavioral finance, this study is considered to add significantly to the advancement of this field in Pakistan. The study starts with the previous theories in behavioral finance. So, on the basis of those theories researcher develop hypotheses. After that, these hypotheses are tested in the course of the questionnaires which are distributed to individual equity investor's at Pakistan's Stock Exchanges. Then the collected data are analyzed by using Statistical software. The Tests used were, Exploratory Factor Analysis (EFA), Descriptive Statistics (DS), Cronbach's Alpha, Pearson Correlation Coefficient and also Multiple Linear Regression (MLR) alongwith Soble Test. The result shows that these are two mainly behavioral factors: Heuristic Theory (Overconfidence Bias) and Prospect Theory (Loss Aversion Bias), affecting the investment decisions making process and performance of individual equity investors. Most of the sub-variables of both behavioral biases contain high impact on the performance of equity investor. And these behavioral biases along with or without mediating variable (partial mediation exist through Sobel test) also contain positive impact on investment performance of individual equity investor at Pakistan's Stock Markets. The findings of this study is not only helpful to the individual equity investors, authors, security companies, but also for the field of behavioral finance. Because, here the only two behavioral biases (Overconfidence and Loss aversion) impact is deeply observed and draw the conclusions.

Type Thesis/Dissertation MS

Faculty Management Sciences

Department Management Sciences

Language English

Publication Date 2015-01-01

Subject

Publisher

Contributor(s)

Format

Identifier

Source

Relation

Coverage

Rights