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The role of overconfidence and past investment experience in herding behaviour with a moderating effect of financial literacy: evidence from Pakistan stock exchange

The most stimulating task for investors is to make rational investment decisions.Normally, investors indulge in behavioural biases in uncertain situations. Numerous cognitive factors influence investors during decision making for investment and lead towards herding the acts of others. The core objec...

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Main Authors: Ahmad Sabir, Saeed, Mohammad, Hisham, Kadir Shahar, Hanita
Format: Article
Language:English
Published: 2019
Subjects:
HG Finance
Online Access:http://repo.uum.edu.my/26365/1/AEFR%209%204%202019%20480%20490.pdf
http://repo.uum.edu.my/26365/
http://doi.org/10.18488/journal.aefr.2019.94.480.490
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spelling my.uum.repo.263652019-09-03T02:34:08Z http://repo.uum.edu.my/26365/ The role of overconfidence and past investment experience in herding behaviour with a moderating effect of financial literacy: evidence from Pakistan stock exchange Ahmad Sabir, Saeed Mohammad, Hisham Kadir Shahar, Hanita HG Finance The most stimulating task for investors is to make rational investment decisions.Normally, investors indulge in behavioural biases in uncertain situations. Numerous cognitive factors influence investors during decision making for investment and lead towards herding the acts of others. The core objective of this study is to investigate the influence of overconfidence and past investment experience on the herding behaviour of individual investors participating in the Pakistan stock exchange. To accomplish this aim, researcher used a quantitative research method and a cross-sectional research design. Data was collected from 352 individual investors participating in Pakistan stock exchange via survey questionnaires. A partial least square (PLS) was used to assess the measurement model and structural equation model. Additionally, the study examines the moderating effect of financial literacy on the relationship of overconfidence and past investment experience with the herding behaviour of individual investors. The results provided strong evidence that both overconfidence and past investment experience motivate investors towards herding behaviour. It was found that financial literacy has a moderate impact on the relationship between the cognitive profile and herding behaviour. This study contributes to behavioural finance literature and provides empirical evidence that the cognitive factors of investors are significant predictors of herding behaviour of investors. The study offers new empirical insights of investors’ behaviour due to the cognitive characteristics in Pakistan stock market. 2019 Article PeerReviewed application/pdf en http://repo.uum.edu.my/26365/1/AEFR%209%204%202019%20480%20490.pdf Ahmad Sabir, Saeed and Mohammad, Hisham and Kadir Shahar, Hanita (2019) The role of overconfidence and past investment experience in herding behaviour with a moderating effect of financial literacy: evidence from Pakistan stock exchange. Asian Economic and Financial Review, 9 (4). pp. 480-490. ISSN 23052147 http://doi.org/10.18488/journal.aefr.2019.94.480.490 doi:10.18488/journal.aefr.2019.94.480.490
institution Universiti Utara Malaysia
building UUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Utara Malaysia
content_source UUM Institutionali Repository
url_provider http://repo.uum.edu.my/
language English
topic HG Finance
spellingShingle HG Finance
Ahmad Sabir, Saeed
Mohammad, Hisham
Kadir Shahar, Hanita
The role of overconfidence and past investment experience in herding behaviour with a moderating effect of financial literacy: evidence from Pakistan stock exchange
description The most stimulating task for investors is to make rational investment decisions.Normally, investors indulge in behavioural biases in uncertain situations. Numerous cognitive factors influence investors during decision making for investment and lead towards herding the acts of others. The core objective of this study is to investigate the influence of overconfidence and past investment experience on the herding behaviour of individual investors participating in the Pakistan stock exchange. To accomplish this aim, researcher used a quantitative research method and a cross-sectional research design. Data was collected from 352 individual investors participating in Pakistan stock exchange via survey questionnaires. A partial least square (PLS) was used to assess the measurement model and structural equation model. Additionally, the study examines the moderating effect of financial literacy on the relationship of overconfidence and past investment experience with the herding behaviour of individual investors. The results provided strong evidence that both overconfidence and past investment experience motivate investors towards herding behaviour. It was found that financial literacy has a moderate impact on the relationship between the cognitive profile and herding behaviour. This study contributes to behavioural finance literature and provides empirical evidence that the cognitive factors of investors are significant predictors of herding behaviour of investors. The study offers new empirical insights of investors’ behaviour due to the cognitive characteristics in Pakistan stock market.
format Article
author Ahmad Sabir, Saeed
Mohammad, Hisham
Kadir Shahar, Hanita
author_facet Ahmad Sabir, Saeed
Mohammad, Hisham
Kadir Shahar, Hanita
author_sort Ahmad Sabir, Saeed
title The role of overconfidence and past investment experience in herding behaviour with a moderating effect of financial literacy: evidence from Pakistan stock exchange
title_short The role of overconfidence and past investment experience in herding behaviour with a moderating effect of financial literacy: evidence from Pakistan stock exchange
title_full The role of overconfidence and past investment experience in herding behaviour with a moderating effect of financial literacy: evidence from Pakistan stock exchange
title_fullStr The role of overconfidence and past investment experience in herding behaviour with a moderating effect of financial literacy: evidence from Pakistan stock exchange
title_full_unstemmed The role of overconfidence and past investment experience in herding behaviour with a moderating effect of financial literacy: evidence from Pakistan stock exchange
title_sort role of overconfidence and past investment experience in herding behaviour with a moderating effect of financial literacy: evidence from pakistan stock exchange
publishDate 2019
url http://repo.uum.edu.my/26365/1/AEFR%209%204%202019%20480%20490.pdf
http://repo.uum.edu.my/26365/
http://doi.org/10.18488/journal.aefr.2019.94.480.490
_version_ 1644284582412943360
score 13.211869

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