Herd Mentality Amongst Equity Investors During COVID-19: Evidences from Saudi Arabia

Abstract

The behaviour of individual equity investors during pandemics needs to be probed for better decision making. This study investigates the herd mentality amongst equity investors in Saudi Arabia in the context of COVID-19 (March 2020 to June 2021). The study is based on 326 responses and uses regression analysis as the anchor analytical technique. Additionally, the interaction of herding behaviour is probed in relation to overconfidence, emotions and independent decision making through a moderation analysis. The study found a negative moderating influence of age, gender and level of education on the herding behaviour of individual equity investors.

The Interaction Between Cognitive Biases and the Cultural Dimensions of the Country in Individual Investment Decisions

“…In another study, Bikhchandani & Sharma (2000) presented a comprehensive review of herd mentality in financial markets in the report they prepared for the International Monetary Fund. One of the interesting studies on this subject was done by Alnori & Ahmad (2022). In this study, the authors examined the herd mentality among Saudi Arabian investors during COVID-19 pandemic and as a result they found out that demographics such as age, gender and education level have a negative moderator effect on the herd behavior of individual stock investors.…”