Disposition Effect and Flippers in the Bursa Malaysia

Chong, Fennee

doi:10.1080/15427560903167712

Cited by 27 publications

(36 citation statements)

References 20 publications

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“…Miller and Reilly (1987), Schultz and Zaman (1994) and Ellis et al (2000) had argued that there is a positive relationship between the IPOs initial performance and the flipping activity. The finding is consistent with Chong (2009) on the disposition effect using 132 Malaysian IPOs from 1991 to 2003, which also reported a positive relationship between initial performance and the flipping activity.…”

Section: Introductionsupporting

confidence: 80%

“Stagging” and Flipping Activity: The Moderating Effect of IPOs Performance towards Market Momentums

Wei¹

2015

IJEF

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Flipping activities provide liquidity and enhance IPOs efficiency; however, enormous "stagging" phenomenon may hurt the investors during the secondary market. This paper aims to study whether the effort of IPOs performance moderates the flipping activity in different market momentums. A quantitative research is adopted in this paper with a set of 344 IPOs data collected to proxy the flipping activities, IPOs initial performance and market momentums. Hierarchy regression is applied to analyze the interaction effect of moderating variable to the independent variable and dependent variable. The results revealed the following: market momentum of very cold IPOs helped in encouraging flipping activities on trading volume; hot IPOs helped in stimulating flipping activities for both trading volume and share offered. Nevertheless, there is a moderating effect of IPOs initial performance towards hot IPOs to affect flipping activities. The IPO market experiences active flipping activities in hot IPOs and very cold IPOs; to assist in predicting subsequent trading activity. It helps the underwriter to retain the stabilization of share prices, to prevent abnormal "stagging" activities and create market efficiency. From the investor"s perspective, liquidity risk is reduced in regard to the IPOs performance through flipping activities.

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Section: Introductionsupporting

confidence: 80%

“Stagging” and Flipping Activity: The Moderating Effect of IPOs Performance towards Market Momentums

Wei¹

2015

IJEF

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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%

“…Kahneman and Tversky used prospect theory to explain the impact of regret bias on investment behavior [12]. This relationship between regret bias and investment behavior has also been supported by other studies [13] [14] [15] [16]. However, certain studies only utilized qualitative reasoning and did not employ transaction data, which are needed to verify the robustness of the conclusions.…”

Section: Introductionmentioning

confidence: 87%

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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“…Similar to this IPO study, another research exists that investigated the aftermarket effect of disposition on IPO in Bursa Malaysia market. This study indicated that 2.64 times more investors intended to flip a winning IPO in comparison to losing IPO that result in consistent disposition effect (Chong, 2009). The role of disposition has studied in equity premium.…”

Section: Review Of Literaturementioning

confidence: 78%

An Analysis of Behavioral Biases in Investment Decision-Making

Madaan¹,

Singh²

2019

IJFR

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Individual investor’s behavior is extensively influenced by various biases that highlighted in the growing discipline of behavior finance. Therefore, this study is also one of another effort to assess the impact of behavioral biases in investment decision-making in National Stock Exchange. A questionnaire is designed and through survey responses collected from 243 investors. The present research has applied inferential statistics and descriptive statistics. In the existing study, four behavioral biases have been reviewed namely, overconfidence, anchoring, disposition effect and herding behavior. The results show that overconfidence and herding bias have significant positive impact on investment decision. Overall results conclude that individual investors have limited knowledge and more prone towards making psychological errors. The findings of the study also indicate the existence of these four behavioral biases on individual investment decisions. This study will be helpful to financial intermediaries to advice their clients. Further, study can be elaborated to study other behavioral biases on investment decisions.

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Disposition Effect and Flippers in the Bursa Malaysia

Cited by 27 publications

References 20 publications

“Stagging” and Flipping Activity: The Moderating Effect of IPOs Performance towards Market Momentums

“Stagging” and Flipping Activity: The Moderating Effect of IPOs Performance towards Market Momentums

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

An Analysis of Behavioral Biases in Investment Decision-Making

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