Investors’ Behavior in an Emerging, Tax Free Market

Emerging Markets Finance and Trade, Volume 53, 2017 - Issue 7

Posted: 26 Feb 2019

See all articles by Abdelaziz Chazi

Abdelaziz Chazi

American University of Sharjah - School of Business & Management

Ashraf Khallaf

American University of Sharjah

A. S. M. Sohel Azad

Deakin University

Khalil Al-Hilu

Abu Dhabi University

Date Written: Spring 2016

Abstract

We provide the first empirical evidence, to the best of our knowledge, on the stock market participants’ behavior in an emerging market, with a tax free environment. Our results show that UAE investors exhibit overconfidence and home bias, and tend to sell prior winners and buy prior losers. We find that investors mostly rely on familiarity and on their own information channels to make their decisions. The results also indicate that most investors are risk averse, especially after the Global Financial Crisis (GFC), which has had contagion effect on UAE markets as evidenced in our analysis. Investors attribute the contagion effect to the inability to manage systemic crisis and to problems of information asymmetry, insider trading, and lack of good governance in times of crisis. Our findings have important implications for the policy makers, and retail and institutional investors.

Keywords: Investor Behavior, Survey, Emerging Market, Contagion, UAE

JEL Classification: G02, G11

Suggested Citation

Chazi, Abdelaziz and Khallaf, Ashraf and Azad, A. S. M. Sohel and Al-Hilu, Khalil, Investors’ Behavior in an Emerging, Tax Free Market (Spring 2016). Emerging Markets Finance and Trade, Volume 53, 2017 - Issue 7 , Available at SSRN: https://ssrn.com/abstract=3307869

Abdelaziz Chazi

American University of Sharjah - School of Business & Management ( email )

P.O. Box 26666
Sharjah
United Arab Emirates

Ashraf Khallaf (Contact Author)

American University of Sharjah ( email )

P.O. Box 26666
Sharjah
United Arab Emirates

A. S. M. Sohel Azad

Deakin University ( email )

221 Burwood Highway
Burwood
Melbourne, Victoria 3125
Australia

Khalil Al-Hilu

Abu Dhabi University ( email )

Abu Dhabi
United Arab Emirates

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