Disposition effect in group versus individual investors: Evidence from Kenyan stock exchange

Mercy Kano, Gülnur Muradoğlu and John Olukuru

Review of Financial Economics, 2025, vol. 43, issue 2, 192-212

Abstract: This paper studies group behavior and disposition effect. Nairobi Securities Exchange constitutes an excellent setting for analyzing group behavior of investors, who trade jointly as investment groups. Using a proprietary database from the Central Depository and Settlement Corporation (CDSC) containing all retail equity transactions from 2016, we compared the trading behavior of groups and individuals. The results show that group investors exhibit a significantly lower disposition effect than individual investors. Disposition effect increases with frequency of trade and reduces with age. Implications are important in terms of further work on groupthink and group polarization in the context of investments.

Date: 2025
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https://doi.org/10.1002/rfe.1229

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Persistent link: https://EconPapers.repec.org/RePEc:wly:revfec:v:43:y:2025:i:2:p:192-212

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