Do Investor Overconfidence and Loss Aversion Drive Saudi Firm Market Performance? The Moderating Effect of Corporate Governance
Sustainability
; 14(16):10072, 2022.
Article
in English
| ProQuest Central | ID: covidwho-2024130
ABSTRACT
sThis study investigated the impact of investor psychological bias on a firm’s market value. In detail, we examined the effect of investor overconfidence (optimism) and loss aversion (pessimism) on firm market value. We also aimed to investigate the moderating effect of corporate governance on the relationship between investor behavior biases and firm market value. This study used a sample of 143 firms listed on the Saudi Stock Exchange over the period from 2012 to 2021. The results suggest that investor overconfidence affects a firm’s value positively. On the other hand, loss aversion is negatively associated with the firm’s market value. Furthermore, we find that corporate governance (measured by board size and board independence) enhances the positive association between overconfidence and firm market value. In contrast, we find that corporate governance seems to marginally mitigate the negative effect of loss aversion.
Environmental Studies; behavioral finance; overconfidence; loss aversion; corporate governance; firm market performance; Stock exchanges; Economic crisis; Institutional investments; Hypotheses; Securities markets; Profits; Behavioral economics; Equity financing; Market value; Coronaviruses; Influence; Aversion; New stock market listings; COVID-19; Investor behavior; Disease transmission; Bias; United States--US
Full text:
Available
Collection:
Databases of international organizations
Database:
ProQuest Central
Type of study:
Experimental Studies
Language:
English
Journal:
Sustainability
Year:
2022
Document Type:
Article
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