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An Exploration of Overconfidence and the Disposition Effect in the Stock Market

Author

Listed:
  • Benomar Ikram

    (Interdisciplinary Research Laboratory in Economics, Finance and Management of Organizations, University Sidi Mohamed BEN Abdellah, Fes 30000, Morocco)

  • Ben El Haj Fouad

    (Interdisciplinary Research Laboratory in Economics, Finance and Management of Organizations, University Sidi Mohamed BEN Abdellah, Fes 30000, Morocco)

  • Chelh Sara

    (Research Laboratory in Entrepreneurship and Organizational Management, Fez Business School, Private University of Fez, Fes 30000, Morocco)

Abstract

This paper offers a comprehensive empirical overview of the impact of overconfidence in the stock market, thus contributing to the existing research literature on this topic. The study employs a bibliometric approach that utilizes the VOSviewer to extract and analyze 277 articles registered between 1992 and January 2023. By providing a detailed analysis of the literature, this research expands our understanding of the impact of overconfidence in the stock market and offers avenues for future studies in this area. The results of this analysis are noteworthy, as they reveal several important findings. These include the exponential growth of scientific production in recent decades, the concentration of research in specific journals indexed in the Journal Citation Reports, the presence of institutional co-author networks, and the thematic and temporal segregation of financial behavior concepts. The most significant finding of this study is the identification of six major clusters: investor behavior during times of crisis; behavioral finance; herding and risk-taking concepts; psychological and cognitive decisions; emotions and decision-making; and the performance of stocks. This temporal evolution of research demonstrates the emergence of various perspectives on the relationship between individual financial behavior and the global market. This study represents a pioneering effort in the field of bibliometric analysis as it is the first to specifically examine the subject of overconfidence in the stock market using this method.

Suggested Citation

  • Benomar Ikram & Ben El Haj Fouad & Chelh Sara, 2023. "An Exploration of Overconfidence and the Disposition Effect in the Stock Market," IJFS, MDPI, vol. 11(2), pages 1-19, June.
    • Handle: RePEc:gam:jijfss:v:11:y:2023:i:2:p:78-:d:1170333
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    References listed on IDEAS

    as
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    2. Harry Markowitz, 1952. "The Utility of Wealth," Journal of Political Economy, University of Chicago Press, vol. 60(2), pages 151-151.
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    4. Satish Kumar & Nisha Goyal, 2016. "Evidence on rationality and behavioural biases in investment decision making," Qualitative Research in Financial Markets, Emerald Group Publishing Limited, vol. 8(4), pages 270-287, November.
    5. French, Kenneth R. & Poterba, James M., 1990. "Japanese and U.S. cross-border common stock investments," Journal of the Japanese and International Economies, Elsevier, vol. 4(4), pages 476-493, December.
    6. Hoffmann, Arvid O.I. & Post, Thomas, 2016. "How does investor confidence lead to trading? Linking investor return experiences, confidence, and investment beliefs," Journal of Behavioral and Experimental Finance, Elsevier, vol. 12(C), pages 65-78.
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