期刊名称：International Journal of Economics and Empirical Research (IJEER)
印刷版ISSN：2311-3871
电子版ISSN：2310-5232
出版年度：2016
卷号：4
期号：6
页码：320-332
出版社：The Economics and Social Development Organization (TESDO)
摘要：Psychological factors influence and distort financial decision-making and asset valuation in the real world. However, conventional asset pricing model ignores such factors albeit incorporation of psychological factors can enhance the effectiveness of asset pricing. The disposition effect, which is one of the distortions present in the financial market yield significant implications. Disposition effect is a phenomenon where investors hold losing investment ‘too long’ and sell winning investment ‘too soon’. Purpose: This paper examines the disposition effect in the Karachi Stock Exchange (KSE) and investigates its role in asset pricing in the same market. Methodology: Regression approach is usedfor empirical purpose. Findings: The findings provide an evidence of a disposition effect in KSE and a quite interestingly show that the disposition effect reduces expected returns.Recommendations: Policy recommendations have been provided.
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