Investor Behavior Biases and Stock Market Reaction in Kenya

Irene Cherono, Tobias Olweny and Tabitha Nasieku

Journal of Applied Finance & Banking, 2019, vol. 9, issue 1, 6

Abstract: A challenge to EMH is that individuals often overreact and underreact to news causing stock markets to react according to investor behaviour in their investment decision making. Generally, the study determined the effect of investor behaviour on stock market reaction of listed companies in Kenya. Specifically, the study determined the effect of investor herd behaviour on stock market reactions of listed companies in Kenya; determined the effect of investor loss aversion on stock market reactions of listed companies in Kenya; determined the effect of investor mental accounting on stock market reactions of listed companies in Kenya; and determined the effect of investor overconfidence on stock market reactions of listed companies in Kenya. The target population was 67 listed companies at the Nairobi Securities Exchange. A sample of 48 listed companies was used for analysis. Secondary data extracted from NSE historical data of listed companies for the period 2004 to 2016 was used for analysis. The study adopted quantitative research design. Panel data regression analysis model was used. The results indicated that herd behaviour did not have a significant effect on stock market reaction. However, loss aversion, mental accounting and overconfidence had significant effect on stock market reaction in Kenya. JEL classification numbers: C91, D03, D84Keywords: Herding Behaviour; Loss Aversion; Overconfidence; Mental Accounting; Overreaction; Stock Market Reaction; Under-reaction.

Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.scienpress.com/Upload/JAFB%2fVol%209_1_6.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spt:apfiba:v:9:y:2019:i:1:f:9_1_6

Access Statistics for this article

More articles in Journal of Applied Finance & Banking from SCIENPRESS Ltd
Bibliographic data for series maintained by Eleftherios Spyromitros-Xioufis ().