INVESTOR BEHAVIOUR AND INVESTMENT DECISIONS : EVIDENCE FROM PAKISTAN STOCK EXCHANGE

• Main Authors: Muhammad, Ali, Nayeem ul Hassan, Ansari, Bilal Ahmed, Chishty, Puah, Chin Hong, Muhammad, Ashfaq
• Format: Article
• Language: English
• Published: Asian Academy of Management and Penerbit Universiti Sains Malaysia 2023
• Subjects: HG Finance
• Online Access: http://ir.unimas.my/id/eprint/44592/1/INVESTOR%20BEHAVIOUR.pdf; http://ir.unimas.my/id/eprint/44592/; https://ejournal.usm.my/aamj/article/view/aamj_vol28-no2-2023_1; https://doi.org/10.21315/aamj2023.28.2.1

This research aims to understand the influence of behavioural factors on investment decisions in the Pakistan Stock Exchange (PSX). This study gathered primary data using a survey-based questionnaire from 318 individual investors. The issue being investigated in this study is how behavioural elements, such as sentiment, overconfidence, over- and underreaction, and perceived market efficiency, affect investment choices made on the PSX, with a particular emphasis on the limited predictive power of herd behaviour. The sample data were analysed using partial least square-structural equation modelling (PLS-SEM) based approach. Results indicate that financial knowledge, sentiment, overconfidence, over- and under-reaction, and perceived market efficiency significantly affect the investment decision. Interestingly, herd behaviour does not play a significant role in predicting investment decisions. However, we are certain that this study will provide a better understanding of the relationship between behavioural factors and an investor’s investment decision in Pakistan.