Impact of RISK on BEHAVIOURAL Biases across the Stock Market Investors: Evidence from Pakistan

Abstract

The study aimed at exploring the major behavioural factors that affect the investment decision of individual investors of Lahore Stock exchange. The objective was also to gain the insight of both type of behavioural finance and standard finance and see where standard finance theories fail to address market anomalies. This research was conducted in Lahore stock exchange with the help of structured and closed ended questionnaires survey. Data was analysed using quantitative technique. The empirical investigation was carried out by using two statistical techniques. First exploratory factor analysis was used to find out the most influential factors that affect the investment decision. Then discriminant analysis is used to identify the relationship between the independent variables and dependent variables.Conclusion of this study helps the investors and broker sitting in stock exchange and new investors coming in the market. It is also helpful to others to investigate the other factors that affect the investment decision of investors.

Keywords: Disposition Effect, Overconfidence, Herding, Gambler Fallacy