IMPACT OF CONSERVATISM BIAS EFFECT ON INVESTMENT DECISIONS OF PAKISTANI STOCK INVESTOR

Abstract

In this study researcher has analysed the impact of Conservatism bias effect on investment decisions
of Pakistani Stock exchange (PSX) investors. Investors take many irrational investment decisions to
beat the market dynamics but sometimes bear heavy loss in trading at PSX due to intervention of
investor biases but they could not address it properly. This study made an attempt to address investor
biases by taking Conservatism bias along with its sub variables as an independent variable and
investment decision as dependent variable and determine the impact of both variables on investor
decisions of Pakistani stock investor. He applied stratified random sampling technique to collect data
from the sample profile of PSX investors i-e: Karachi stock exchange, Lahore Stock exchange and
Islamabad Stock exchange. The study is quantitative in nature and for this Primary data was collected
through Questionnaire survey technique through stock exchanges working under PSX. Prospect
theory in 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. The findings of the study suggest that Conservatism bias has positive impacts on the
investment decisions of PSX individual investors