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Nexus of investors' sentiments and firm value

Author

Listed:
  • Sayyed Sadaqat Hussain Shah
  • Mário Nuno Mata
  • Rui Miguel Dantas
  • Warda Javed
  • Jéssica Nunes Martins

Abstract

This study explores how investors' sentiments affected firm value in the non-financial sector of the Pakistan Stock Exchange from 2015 to 2019. Investors' sentiments are measured using a principal component index (PCA), while firm value is assessed through Tobin's Q formula. Control variables include firm size, leverage, and sales growth to enhance internal validity. A generalised method of moments (GMM) is employed for analysis, with Driscoll-Kraay standard error regression for robustness. The findings reveal a statistically significant impact of investors' sentiments on firm value. Consequently, firm managers are advised to actively monitor sentiment, maintain open communication, safeguard their reputation, prioritise financial performance, and engage stakeholders to counteract negative sentiment effects and uphold a positive company outlook.

Suggested Citation

  • Sayyed Sadaqat Hussain Shah & Mário Nuno Mata & Rui Miguel Dantas & Warda Javed & Jéssica Nunes Martins, 2025. "Nexus of investors' sentiments and firm value," Global Business and Economics Review, Inderscience Enterprises Ltd, vol. 32(1), pages 31-48.
    • Handle: RePEc:ids:gbusec:v:32:y:2025:i:1:p:31-48
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