Overconfidence And Trading Volume: Evidence From An Emergent Market

Zaiane, Salma; Abaoub, Ezzeddine

doi:10.29302/oeconomica.2008.10.1.41

Cited by 8 publications

(10 citation statements)

References 49 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…The studies conducted by Gervais and Odean (2001), Statman et al (2007), Chuang and Lee (2006), Korkmaz and Çelik (2007), Zaiane and Abaoub (2009), Otluoğlu ( 2009), Horasan and Bozkurt ( 2016) and Alsabban and Alarfaj (2020), who found that overconfidence and selfattribution increase the trading volume, support the same finding reached as a result of this study. In addition, Boyacıoğlu et al (2010) and Gaygusuz (2008)'s finding that volatility is the Granger cause of trading volume contradicts the result of this study.…”

Section: Discussionsupporting

confidence: 87%

Factors Affecting Borsa İstanbul Trading Volume and Overconfidence Bias

Güzel¹,

Şekeroğlu²

2021

Journal of Yaşar University

View full text Add to dashboard Cite

The aim of this study is to examine the factors affecting the trading volume of Borsa Istanbul within the framework of the overconfidence bias, one of the behavioral finance theories. For this purpose, stock market trading volume, BIST 100 index closing values, BIST 100 index historical volatility and credit default swaps (CDS) premium variables for the period covering the years 2010 -2019 were used in the study. During the analysis process, firstly ADF, PP and KPSS unit root tests were performed and then Granger causality analysis was applied. The findings showed that the stock index and CDS premiums are the Granger cause of the trading volume, but volatility is not the Granger cause of the trading volume. The obtained findings were compared with the results in the literature and interpreted. It is interpreted that linking the earnings obtained with the increase in the stock market index to individual abilities, predictions and achievements may cause a tendency to overconfidence bias in investors. In addition, it is thought that this overconfidence may cause new transactions and thus an increase in the transaction volume. CDS premiums, on the other hand, give positive and negative signals about the future and are accepted as a risk indicator. It can be evaluated that investor who perceive risk as an opportunity and have a tendency to overconfidence bias will try to evaluate this situation with various positions and transactions and increase market trading volume. However, the fact that volatility is not the cause of trading volume can be explained by the perception that investors with high returns pay less attention to volatility and that their own forecasts are better than other investors' forecasting power. As a result, volatility is not effect the trading activity and investors focus on the value they have determined within the framework of overconfidence bias.

show abstract

Section: Discussionsupporting

confidence: 87%

Factors Affecting Borsa İstanbul Trading Volume and Overconfidence Bias

Güzel¹,

Şekeroğlu²

2021

Journal of Yaşar University

View full text Add to dashboard Cite

show abstract

“…Many studies investigate the investors’ overconfidence in Tunisian stock market (Zaiane and Abaoub, 2009, 2010; Naoui and Khaled, 2010; Dhaoui, 2011). Empirical findings point out that trading volume increases after a series of high returns announcements, which confirms that Tunisian investors are overconfident.…”

Section: Survey Of the Literaturementioning

confidence: 99%

Firm's information environment and stock liquidity: evidence from Tunisian context

Loukil

Yousfi

2012

Journal of Accounting in Emerging Economies

View full text Add to dashboard Cite

This paper analyzes the relationship between public disclosure, private information and stock liquidity in Tunisian context using a sample of 41 listed firms in the Tunis Stock Exchange in 2007. First, we find no evidence that there is a relation between public and private information. Second, Tunisian investors do not trust the information disclosed in both annual reports and web sites, consequently it has no effects on stock liquidity, in contrast with private information.

show abstract

“…Whilst Griffin et al (2007) observe 46 different stock markets and find strong evidence of investor overconfidence, studies by Zia et al (2017) and Alsabban and Alarfaj (2020) also find evidence of overconfidence on the Pakistani and Saudi equity markets, respectively. On the contrary, Zaiane and Abaoub (2009) find weak evidence of investor overconfidence in the Tunisian stock market. Overall, Chuang and Lee (2006), Abbes (2013), andJlassi et al (2014) report that trading volume induced by overconfident trading is positively related to market volatility.…”

Section: Empirical Evidence Of Investor Overconfidencementioning

confidence: 72%

“…Other evaluations of the equity market have overwhelmingly found evidence of the overconfidence bias 1 affecting investment decisions (Baker et al, 2019;Jlassi et al, 2014;Meier & de Mello, 2020;Zaiane & Abaoub, 2009). The presence of investor overconfidence has been examined for markets of different asset classes, including stocks (Gupta et al, 2018), commodities (Yung & Liu, 2009), real estate (Lin et al, 2010) and index funds (Bailey et al, 2011).…”

Section: Public Interest Statementmentioning

confidence: 99%

Investor overconfidence in the South African exchange traded fund market

Kunjal

2021

Cogent Economics & Finance

View full text Add to dashboard Cite

Exchange Traded Funds (ETFs) have proven to be extremely popular amongst both retail and institutional investors. The increasing interest in this asset class may incite overconfidence in its' investor base, which could lead to undesirable market effects such as security mispricing, excess trading volumes, and exacerbated market volatility. This study aims to examine the South African ETF market for presence of investor overconfidence. To achieve this objective, Vector Autoregression (VAR) models and their associated impulse response functions are employed to examine the relationship between the current trading activity and the historical market return. Consistent with the overconfidence hypothesis, a positive and significant relationship between current market turnover and lagged market returns is found for both ETFs with domestic benchmarks and ETFs with international benchmarks. Further analysis of panel VAR models and their associated impulse response functions suggest that the overconfidence bias also influences the trading activities of individual ETFs. These findings have important implications for various market participants.

show abstract

Overconfidence And Trading Volume: Evidence From An Emergent Market

Cited by 8 publications

References 49 publications

Factors Affecting Borsa İstanbul Trading Volume and Overconfidence Bias

Factors Affecting Borsa İstanbul Trading Volume and Overconfidence Bias

Firm's information environment and stock liquidity: evidence from Tunisian context

Investor overconfidence in the South African exchange traded fund market

Contact Info

Product

Resources

About