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[author] => Ms.Nithya.J [googlescholar] => https://scholar.google.co.in/citations?view_op=view_citation&hl=en&user=KeqZGcIAAAAJ&imq=EPRA+International+Journal+of+Economic+and+Business+Review&citation_for_view=KeqZGcIAAAAJ:35r97b3x0nAC [doi] => [year] => 2017 [month] => February [volume] => 5 [issue] => 2 [file] => eprapub/EW201702-01-001612.pdf [abstract] =>
Traditional finance, derived from neo-classical economic theory, assumes investors are rational, efficient information processors, and markets are efficient. In contrast, the relatively new school of behavioural finance borrows from the psychologists to argue that we are inherently prone to serious judgemental biases, and, as a result, often make poor investment decisions. Implicitly, due to our cognitive limitations, market prices deviate from fundamental values. However, the key role of the emotions, and the associated unconscious needs, fantasies and fears we all have, in driving investor behaviour has been largely ignored by financial researchers to date.The objective of this research is to study the emotions that play in the trading and investment activity of the investors and to analyze the impact of emotions on the stock market investments. The data was collected extensively from Coimbatore district in Tamil Nadu identifying investors through share broker officers and financial institutions. The relationship between the trader’s ability to regulate emotions and the investor experience are analyzed through the statistical tool of nominal regression. Factor analysis is applied to analyze and measure the illusion of control and the measurement of trading performance of the investors. The factor loadings account for 78.958 percent of the total variance. Hence, the emotions account for unrealistic perceptions of control beliefs are inversely proportional with the trading performance.
KEY WORDS: illusion of control, emotional finance, judgemental biases, unrealistic perceptions
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