Stock market anomalies: An extreme bounds analysis

Kim, Jaehwan; Shamsuddin, Abul

doi:10.1016/j.irfa.2023.102841

Cited by 2 publications

(2 citation statements)

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“…Past literature especially probed into the behavioral biases existing among investors while the decision-making process (Parmitasari and Syariati, 2022;Sachdeva et al, 2022;S ¸enol and Onay, 2023). The retail investors' biases can be examined to understand one of the forms of market anomalies (Kim and Shamsuddin, 2023) that exist in financial markets (Parhi and Pal, 2022;Baker et al, 2019). Recent studies also corroborated the fact that behavioral biases can be influenced by self-enhancement in investors.…”

Section: Introductionmentioning

confidence: 99%

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Specifying and validating overconfidence bias among retail investors: a formative index

Nair,

Shiva

2023

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PurposeThe study explored various dimensions of overconfidence bias (OB) among retail investors in Indian financial markets. Further, these dimensions were validated through formative assessments for OB.Design/methodology/approachThe study applied exploratory factor analysis (EFA) to 764 respondents to explore dimensions of OB. These were validated with formative assessments on 489 respondents by the partial least square path modeling (PLS-PM) approach in SmartPLS 4.0 software.FindingsThe major findings of EFA explored four dimensions for OB, i.e. accuracy, perceived control, positive illusions and past investment success. The formative assessments revealed that positive illusions followed by past investment success among retail investors played an instrumental role in orchestrating the OBs that affect investment decisions in financial markets.Practical implicationsThe formative index of OB has several practical implications for registered financial and investment advisors, bank advisors, business media companies and portfolio managers, besides individual investors in the domain of behavioral finance.Originality/valueThis research provides a novel approach to provide a formative index of OB with four dimensions. This formative index can acts as an overview for upcoming researchers to investigate the OB of retail individual investors.Highlights Overconfidence bias is an important predictor of retail investors' behaviorFormative dimensions of the overconfidence bias index.Accuracy, perceived control, positive illusions and past investment success are important dimensions of overconfidence bias.Modern portfolio theory and illusion of control theory support this study.

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Section: Introductionmentioning

confidence: 99%

“…, 2022; Şenol and Onay, 2023). The retail investors' biases can be examined to understand one of the forms of market anomalies (Kim and Shamsuddin, 2023) that exist in financial markets (Parhi and Pal, 2022; Baker et al. , 2019).…”

Section: Introductionmentioning

confidence: 99%