ERF 26th Annual Conference
Islamic Finance and Anchoring Heuristic Bias: An Analysis to Gulf Islamic Stock Markets
No.
ERF26_71
Publisher
ERF
Date
July, 2020
Topic
G1. General Financial Markets
The aim of this work is to study the anchoring heuristic. The Extraneous factors plays’ an important role in investment decisions and choices of stock's firm. Based on first impressions and news in the market, even in world markets, investors and analysts have to make prediction to estimate the future probability of a firm and then take decisions. These decisions encountered by high uncertainty can be right or wrong and the anchoring bias can occur. In other way, initial perceptions affect future decisions. This study explores the importance of the 52-week high price in the Islamic GCC stock market returns. We study the anchoring bias of Muslim investors and the important role of the 52-week high price strategy in predicting future returns in the Islamic GCC stock market returns based on new information. For doing this, we have collected data for the period July 2016-July 2019 of Islamic GCC companies listed on all sectors of Islamic GCC stock market. Using linear regression models empirical results show that 52-week high price indicator can be considered as a good anchor which used for the prediction of future returns based on new information.
Authors
Mustapha Chaffai
Assistant Professor at the Department of Management...
Authors
Imed Medhioub
Associate Professor, Imam Mohammad Ibn Saud Islamic...