Irrational Behaviour and Stock Investment Decision. Does Gender Matter? Evidence from Sri Lanka

Revista Geintec-Gestao Inovacao E Technologies (Journal of Management, Innovation and Technologies), 11 (2), 2185- 2204, https://doi.org/10.47059/revistageintec.v11i2.1868.

20 Pages Posted: 27 Aug 2021

See all articles by M Siraji

M Siraji

Sri Lanka Institute of Advanced Technological Education

M. C. Abdul Nazar

South Eastern University of Sri Lanka - Department of Accountancy and Finance

M.S Ishar Ali

affiliation not provided to SSRN

Date Written: June 29, 2021

Abstract

The research aims to examine the effect of the irrational behaviour of individual investors on stock investment decisions, specifically, anchoring, disposition effect, home bias, herding, overconfidence and risk perception. The research further investigates the moderating role of gender between irrational behaviour and stock investment decision. Finally, it reveals which irrational behaviour is most prevalent. A survey collected the primary data from 432 individual investors. The survey evidence shows that six irrational behaviours, anchoring, disposition effect, overconfidence and risk perception affect the investment decision of individual investors, and risk perception comes out to be the significant irrational behaviour on stock investment decision. The research further explores that gender has a significant moderation for anchoring, disposition effect, herding, overconfidence, risk perception, and stock investment decision. We recommend that if individuals are aware of the behavioural biases, it will help them for making the right stock investment decisions. The study is also relevant for financial advisors, stockbrokers and policymakers as it facilitates them in gaining a better understanding of their clients’ irrational behaviour. The present study gives a unique insight into the individual investors’ profile of gender corresponding to each main irrational behaviour on investment decision under consideration of stock investment.

Keywords: Irrational Behaviour, Behavioural Bias, Investment Decision, Stock Market, Gender, Behavioural Finance

JEL Classification: G02

Suggested Citation

Siraji, M and Nazar, M. C. Abdul and Ishar Ali, M.S, Irrational Behaviour and Stock Investment Decision. Does Gender Matter? Evidence from Sri Lanka (June 29, 2021). Revista Geintec-Gestao Inovacao E Technologies (Journal of Management, Innovation and Technologies), 11 (2), 2185- 2204, https://doi.org/10.47059/revistageintec.v11i2.1868., Available at SSRN: https://ssrn.com/abstract=3910478

M Siraji (Contact Author)

Sri Lanka Institute of Advanced Technological Education ( email )

Sri Lanka

M. C. Abdul Nazar

South Eastern University of Sri Lanka - Department of Accountancy and Finance

University Park
Oluvil
Easter 32260
Sri Lanka

M.S Ishar Ali

affiliation not provided to SSRN

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