A Study of the Disposition Effect for Individual Investors in the Taiwan Stock Market

Goo, Yeong-Jia; Chen, Dar-Hsin; Chang, Sze-Hsun Sylcien; Yeh, Chi-Feng

doi:10.2753/ree1540-496x460110

Cited by 38 publications

(17 citation statements)

References 18 publications

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“…Although the average difference was 0.0245, the t-value was not at the 10% significance level. Therefore, unlike the conclusions of Chong and Goo et al, the observations presented here do not support Hypothesis 1 [14] [15].…”

Section: Verification Of the Relationship Between Regret Bias And Thecontrasting

confidence: 57%

The Effects of Social Interaction and Psychological Bias on Trading Behavior: Evidence from a Laboratory Experiment

Ho¹

2018

JMF

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This paper details an experiment designed to explore the trading behaviors of investors that result from psychological biases and social interactions. In total, 88 investors were tracked for 6 months and 40,795 transactions were recorded. The research conducted an experimental survey and estimated a system analysis model to generate several important conclusions. First, the degree of regret bias and the disposition effects are unrelated, probably because the professional training of investors and the disposition effects are not significantly related. Second, if investors are affected by contradictions arising from their decisions, then the likelihood that they will sell a stock will decrease as the investor relationships in the community improve and the regret bias increases. Third, male investors prefer to trade derivatives, and even after controlling for the degree of regret bias, this preference is still significant.

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Section: Verification Of the Relationship Between Regret Bias And Thecontrasting

confidence: 57%

The Effects of Social Interaction and Psychological Bias on Trading Behavior: Evidence from a Laboratory Experiment

Ho¹

2018

JMF

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“…• Education: Goo et al (2010) report that investors with more education have a lower disposition effect. Bhandari and Deaves (2006) and Deaves et al (2010) find that overconfidence increases when individuals have more education.…”

Section: Investor Characteristics and Behavioral Biasesmentioning

confidence: 99%

How financial literacy and demographic variables relate to behavioral biases

et al. 2019

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Purpose The purpose of this paper is to examine how financial literacy and demographic variables (gender, age, income level, education, occupation, marital status and investment experience) related to behavioral biases. Design/methodology/approach The study uses one-way analysis of variance (ANOVA), factor analysis and multiple regression analysis to examine survey data from more than 500 individual investors in India. Findings The results reveal the presence of different behavioral biases including overconfidence and self-attribution, the disposition effect, anchoring bias, representativeness, mental accounting, emotional biases and herding among Indian investors. Hence, the findings support the view that individual investors do not always act rationally. The results also show that financial literacy has a negative association with the disposition effect and herding bias, a positive relation with mental accounting bias, but no significant relation with overconfidence and emotional biases. Age, occupation and investment experience are the most important demographic variables that relate to the behavioral biases of individual investors in the sample. Regarding gender, males are more overconfident than are females about their knowledge of the stock market. Research limitations/implications The study does not test for causality, only association between the variables. Thus, the findings in this study should not be interpreted as suggesting causality. The study may have implications for financial educators in promoting the financial awareness programs for individuals. Financial advisors can potentially become more effective by understanding their clients’ decision-making processes. Originality/value Despite an extensive literature on behavioral finance, limited academic research attempts to unravel the relation of how financial literacy and demographic variates relate to behavioral biases. This study contributes to this literature by trying to fill this gap.

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“…Barber and Odean (2001) found that investors who show excessive self-confidence lead to poor performance and excessive trading. Investors having a high level of education will influence behavioral bias, and the higher the level of education, the more self-confidence will be (Goo et al, 2010). Investors who have a higher level of education will be more confident and trust the results of their investment decisions because they feel they have more knowledge (Bhandari and Deaves, 2006).…”

Section: Literature Review and Hypothesesmentioning

confidence: 99%

“…Investors who have a high level of education will have sufficient knowledge of financial literacy. The higher the level of education, the more selfconfidence results from their own investment decisions, and they do not tend to follow other people's information or investment decisions (Goo et al, 2010). H3c: Education level has a negative effect on herding bias.…”

Section: Literature Review and Hypothesesmentioning

confidence: 99%

The effect of demographic factors on behavioral biases

Beatrice

Murhadi

Herlambang

2021

JSB

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The purpose of this study was to examine the influence of demographic factors such as gender, age, education, occupation, income, and investment experience on investor behavior bias such as overconfidence bias, disposition effects, herding bias, and mental accounting. This type of research was causal research with a quantitative approach, and the analytical method used was the analysis of SEM (structural equation modeling). This research was conducted by distributing questionnaires to investors listed on the Indonesia Stock Exchange with a minimum age of 17 years. The results showed that overconfidence bias was influenced by investment experience while disposition effect was influenced by age, income level, and investment experience. Herding bias was influenced by age and occupation while mental accounting was influenced by income level.

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A Study of the Disposition Effect for Individual Investors in the Taiwan Stock Market

Cited by 38 publications

References 18 publications

The Effects of Social Interaction and Psychological Bias on Trading Behavior: Evidence from a Laboratory Experiment

The Effects of Social Interaction and Psychological Bias on Trading Behavior: Evidence from a Laboratory Experiment

How financial literacy and demographic variables relate to behavioral biases

The effect of demographic factors on behavioral biases

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