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Investor Sentiment, Market Competition, and Financial Crisis: Evidence from the Korean Stock Market

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  • Doowon Ryu
  • Doojin Ryu
  • Heejin Yang

Abstract

This study examines the role of product market competition in explaining the relationship between investor sentiment and stock returns. We also consider how financial crises, which are exogenous shocks to market participants, affect the associations and interactions among the market competition, investor sentiment, and stock market returns. Our empirical analyses indicate that the positive relationship between sentiment and returns found under high market competition disappears under low market competition. In the crisis period, however, we observe significant relationships between sentiment and returns irrespective of the degree of market competition.

Suggested Citation

  • Doowon Ryu & Doojin Ryu & Heejin Yang, 2020. "Investor Sentiment, Market Competition, and Financial Crisis: Evidence from the Korean Stock Market," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(8), pages 1804-1816, June.
    • Handle: RePEc:mes:emfitr:v:56:y:2020:i:8:p:1804-1816
    DOI: 10.1080/1540496X.2019.1675152
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    Citations

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    Cited by:

    1. Doojin Ryu & Jinyoung Yu, 2022. "Sentiment‐dependent impact of funding liquidity shocks on futures market liquidity," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 42(1), pages 61-76, January.
    2. Ryu, Doojin & Yu, Jinyoung, 2020. "Hybrid bond issuances by insurance firms," Emerging Markets Review, Elsevier, vol. 45(C).
    3. Henry Hyun-Do Kim & Kwangwoo Park, 2021. "Impact of Environmental Disaster Movies on Corporate Environmental and Financial Performance," Sustainability, MDPI, vol. 13(2), pages 1-35, January.
    4. Song Joonhyuk & Ryu Doojin, 2021. "Houses as Collateral and Household Debt Deleveraging in Korea," Economics - The Open-Access, Open-Assessment Journal, De Gruyter, vol. 15(1), pages 3-27, January.
    5. Ham, Hyuna & Ryu, Doojin & Webb, Robert I., 2022. "The effects of overnight events on daytime trading sessions," International Review of Financial Analysis, Elsevier, vol. 83(C).
    6. Karam KIM & Doojin RYU, 2020. "Predictive ability of investor sentiment for the stock market," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 33-46, December.
    7. Anwesha Sengupta & Shashankaditya Upadhyay & Indranil Mukherjee & Prasanta K. Panigrahi, 2024. "A study of the effect of influential spreaders on the different sectors of Indian market and a few foreign markets: a complex networks perspective," Journal of Computational Social Science, Springer, vol. 7(1), pages 45-85, April.
    8. Seok, Sangik & Cho, Hoon & Ryu, Doojin, 2024. "Dual effects of investor sentiment and uncertainty in financial markets," The Quarterly Review of Economics and Finance, Elsevier, vol. 95(C), pages 300-315.
    9. Heejin Yang & Doowon Ryu, 2021. "Investor Sentiment and Price Discrepancies between Common and Preferred Stocks in Korea," Sustainability, MDPI, vol. 13(10), pages 1-11, May.
    10. Aneeta Elsa Simon & Manu K.S., 2023. "Does Sentiments Impact the Returns of Commodity Derivatives? An Evidence from Multi-commodity Exchange India," Vision, , vol. 27(1), pages 79-92, February.
    11. Blajer-Gołębiewska, Anna & Honecker, Lukas & Nowak, Sabina, 2024. "Investor sentiment response to COVID-19 outbreak-related news: A sectoral analysis of US firms," The North American Journal of Economics and Finance, Elsevier, vol. 71(C).
    12. Seok, Sang Ik & Cho, Hoon & Ryu, Doojin, 2021. "Stock Market’s responses to intraday investor sentiment," The North American Journal of Economics and Finance, Elsevier, vol. 58(C).
    13. Narayan, Paresh Kumar & Narayan, Seema, 2021. "Do opinion polls on government preference influence stock returns?," Journal of Behavioral and Experimental Finance, Elsevier, vol. 30(C).
    14. Kim, Karam & Ryu, Doojin & Yang, Heejin, 2021. "Information uncertainty, investor sentiment, and analyst reports," International Review of Financial Analysis, Elsevier, vol. 77(C).
    15. Anwesha Sengupta & Shashankaditya Upadhyay & Indranil Mukherjee & Prasanta K. Panigrahi, 2022. "Describing the effect of influential spreaders on the different sectors of Indian market: a complex networks perspective," Papers 2303.05432, arXiv.org.

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