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Revisiting Overconfidence In Investment Decision-Making: Further Evidence From The U.S. Market

Ahmed Bouteska, Murad Harasheh, Abedin Abedin

Research in International Business and Finance, Volume: 66, Start page: 102028

Swansea University Author: Abedin Abedin

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DOI (Published version): 10.1016/j.ribaf.2023.102028

Abstract

Investor overconfidence leads to excessive trading due to positive returns, causing inefficiencies in stock markets. Using a novel methodology, we build on the previous literature by investigating the existence of overconfidence by studying the causal relationship between return and trading volume c...

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Published in: Research in International Business and Finance
ISSN: 0275-5319 1878-3384
Published: Elsevier BV 2023
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URI: https://cronfa.swan.ac.uk/Record/cronfa63950
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first_indexed 2023-07-26T08:55:47Z
last_indexed 2023-07-26T08:55:47Z
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spelling v2 63950 2023-07-26 Revisiting Overconfidence In Investment Decision-Making: Further Evidence From The U.S. Market 4ed8c020eae0c9bec4f5d9495d86d415 Abedin Abedin Abedin Abedin true false 2023-07-26 BAF Investor overconfidence leads to excessive trading due to positive returns, causing inefficiencies in stock markets. Using a novel methodology, we build on the previous literature by investigating the existence of overconfidence by studying the causal relationship between return and trading volume covering the COVID-19 period. We implement a nonlinear approach to Granger causality based on multilayer feedforward neural networks on daily returns and trading volumes from 2016 to 2021, covering 1424 daily observations of the S&P 500 index. The results provide evidence of overconfidence among investors. Such behavior may be linked to the increase in the number of investors. However, there is a decline in the rate of returns during the study period, implying uncertainty caused by the COVID-19 pandemic. Journal Article Research in International Business and Finance 66 102028 Elsevier BV 0275-5319 1878-3384 Finance, Overconfidence, Granger causality, Artificial neural networks, U.S. stock market 31 10 2023 2023-10-31 10.1016/j.ribaf.2023.102028 http://dx.doi.org/10.1016/j.ribaf.2023.102028 COLLEGE NANME Accounting and Finance COLLEGE CODE BAF Swansea University SU Library paid the OA fee (TA Institutional Deal) Swansea University 2023-08-18T16:09:22.3194212 2023-07-26T09:51:40.5107486 Faculty of Humanities and Social Sciences School of Management - Accounting and Finance Ahmed Bouteska 1 Murad Harasheh 2 Abedin Abedin 3 63950__28182__64298f4de3c544dcb46cb7f663fd57fe.pdf 63950.VOR.pdf 2023-07-26T09:57:28.1692716 Output 2070887 application/pdf Version of Record true © 2023 The Authors. Distributed under the terms of a Creative Commons Attribution 4.0 License (CC BY 4.0). true eng https://creativecommons.org/licenses/by/4.0/
title Revisiting Overconfidence In Investment Decision-Making: Further Evidence From The U.S. Market
spellingShingle Revisiting Overconfidence In Investment Decision-Making: Further Evidence From The U.S. Market
Abedin Abedin
title_short Revisiting Overconfidence In Investment Decision-Making: Further Evidence From The U.S. Market
title_full Revisiting Overconfidence In Investment Decision-Making: Further Evidence From The U.S. Market
title_fullStr Revisiting Overconfidence In Investment Decision-Making: Further Evidence From The U.S. Market
title_full_unstemmed Revisiting Overconfidence In Investment Decision-Making: Further Evidence From The U.S. Market
title_sort Revisiting Overconfidence In Investment Decision-Making: Further Evidence From The U.S. Market
author_id_str_mv 4ed8c020eae0c9bec4f5d9495d86d415
author_id_fullname_str_mv 4ed8c020eae0c9bec4f5d9495d86d415_***_Abedin Abedin
author Abedin Abedin
author2 Ahmed Bouteska
Murad Harasheh
Abedin Abedin
format Journal article
container_title Research in International Business and Finance
container_volume 66
container_start_page 102028
publishDate 2023
institution Swansea University
issn 0275-5319
1878-3384
doi_str_mv 10.1016/j.ribaf.2023.102028
publisher Elsevier BV
college_str Faculty of Humanities and Social Sciences
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hierarchy_top_id facultyofhumanitiesandsocialsciences
hierarchy_top_title Faculty of Humanities and Social Sciences
hierarchy_parent_id facultyofhumanitiesandsocialsciences
hierarchy_parent_title Faculty of Humanities and Social Sciences
department_str School of Management - Accounting and Finance{{{_:::_}}}Faculty of Humanities and Social Sciences{{{_:::_}}}School of Management - Accounting and Finance
url http://dx.doi.org/10.1016/j.ribaf.2023.102028
document_store_str 1
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description Investor overconfidence leads to excessive trading due to positive returns, causing inefficiencies in stock markets. Using a novel methodology, we build on the previous literature by investigating the existence of overconfidence by studying the causal relationship between return and trading volume covering the COVID-19 period. We implement a nonlinear approach to Granger causality based on multilayer feedforward neural networks on daily returns and trading volumes from 2016 to 2021, covering 1424 daily observations of the S&P 500 index. The results provide evidence of overconfidence among investors. Such behavior may be linked to the increase in the number of investors. However, there is a decline in the rate of returns during the study period, implying uncertainty caused by the COVID-19 pandemic.
published_date 2023-10-31T16:09:23Z
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score 11.013082

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