POST COVID-19 INFLUENCE OF HERDING EFFECT BIAS ON INVESTMENT DECISIONS OF PAKISTANI STOCK INVESTORS

Dr. Adeel Rahim, Dr.Mumtaz Hussain Shah, Dr. Zahirullah, Jehan Zeb

Abstract
In this study researcher analysed post Covid-19 influence of Herding effect bias on investment decisions of Pakistani stock investors. Post Covid-19 Financial markets all over the World markets have changed and it affected investor decision making in number of ways. Conventional investments like keeping money in Banks, buying Fix term deposit, buying Prize bonds or gold bars is now outdated in current scenario. Investor now invest more wisely than before Covid-19 they prefer to encash those stock markets which sinked during Covid-19 pandemic and try to capitalize the opportunity of higher returns now when these markets are gaining momentum again. Pakistani stock market is one of those gaining momentum market where now not only local but foreign investors are investing and buying shares due to Herding effect bias and it has raised the KSE-100 index from 35112 to 42781( 10th June- 10th September, 2020). Researcher made an attempt to address post Covid-19 influence of herding effect bias on investment decision of Pakistani stock investors by taking herding effect bias along with its sub variables as an independent variable and investment decision of these investors as dependent variable and evaluated the impact of both variables in post Covid-19 Pakistan stock market performance. Researcher used stratified random sampling technique by dividing Pakistan Stock Exchange (PSX) in three strata’s: Karachi Stock Exchange (KSE), Lahore Stock Exchange (LSE) and Islamabad Stock Exchange (ISE). The study is quantitative in nature so questionnaire survey technique was employed for data collection from PSX individual investors of KSE, LSE and ISE. Over/Under react theory of behaviour finance is backing this study and has served the base for researcher. Researcher used descriptive statistics, rank correlation and its analysis, association method and applied logistic regression model. Findings of this study suggest that Post Covid-19 pandemic influence of Herding effect bias have positive impact on individual investors decisions at PSX.

Key words: Pakistan stock exchange (PSX), Karachi Stock Exchange (KSE), Lahore Stock Exchange (LSE) and Islamabad Stock Exchange (ISE), individual investors, investment decisions and Herding effect bias.

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