Document Type : Original Research

Authors

Department of Business Administration, Bangladesh Army International University of Science and Technology, Cumilla, Bangladesh

Abstract

Investment decisions are influenced by several rational and irrational factors. The most common irrational phenomena are behavioral biases, such as overconfidence or herding bias. This paper intends to examine the impact of overconfidence bias on investment decisions from the perspective of Bangladeshi retail investors. The current study is based on primary data collected from general investors through a survey of a self-developed questionnaire. For surveying the questionnaire, investors were selected following the convenience sampling technique. Collected data were analyzed using Correlation, OLS Regression, One-way ANOVA, and One sample t-test in SPPSS software. The study found that the investment decision is significantly influenced by the overconfidence bias. They think they can outperform the market and rely on their capability to analyze an investment opportunity. Such behavior could be very harmful to themselves as well as the market stability. The study also found that male investors tend to be more overconfident in their investment decisions than females. The empirical model concludes that there exists significant overconfidence bias among retail investors.  This research could be helpful for stakeholders of the capital market to understand the tendency of Bangladeshi investors towards overconfidence bias.

Keywords

Main Subjects

COPYRIGHTS

©2024 The Author(s). This is an open access article distributed under the terms of the Creative Commons Attribution (CC BY 4.0), which permits unrestricted use, distribution, and reproduction in any medium, as long as the original authors and source are cited. No permission is required from the authors or the publishers.

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