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Investors’ Behavior in an Emerging, Tax-Free Market

Author

Listed:
  • Khalil Al-Hilu
  • A. S. M. Sohel Azad
  • Abdelaziz Chazi
  • Ashraf Khallaf

Abstract

We provide empirical evidence on the stock market participants’ behavior in an emerging market, with a tax-free environment. Our results show that United Arab Emirates’ (UAE) investors exhibit overconfidence and home bias, and tend to sell prior winners and buy prior losers. We find that investors rely on familiarity and on their information channels to make decisions. The results indicate that investors are risk averse, especially after the global financial crisis, which has had contagion effect on UAE markets. Investors attribute this effect to the inability to manage systemic crisis and to problems of information asymmetry, insider trading, and lack of good governance during crisis.

Suggested Citation

  • Khalil Al-Hilu & A. S. M. Sohel Azad & Abdelaziz Chazi & Ashraf Khallaf, 2017. "Investors’ Behavior in an Emerging, Tax-Free Market," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 53(7), pages 1573-1588, July.
    • Handle: RePEc:mes:emfitr:v:53:y:2017:i:7:p:1573-1588
    DOI: 10.1080/1540496X.2016.1178110
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    Cited by:

    1. Dupuis, Daniel, 2019. "Ex-dividend day price behavior and liquidity in a tax-free emerging market," Emerging Markets Review, Elsevier, vol. 38(C), pages 239-250.

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