The COVID-19 Pandemic and Overconfidence Bias: The Case of Cyclical and Defensive Sectors

Risks

Iqbal Thonse Hawaldar¹  Md Shabbir Alam²  Mirza Allim Baig³  Md Qamar Azam³  Nazia Iqbal Hashmi⁴ 

[1] Department of Accounting & Finance, College of Business Administration, Kingdom University, Riffa 40434, Bahrain;Department of Economics and Finance, College of Business Administration, University of Bahrain, Sakhir 32038, Bahrain;Department of Economics, Faculty of Social Sciences, Jamia Millia Islamia (A Central University), New Delhi 110025, India;Department of Finance, College of Business Administration, Prince Sultan University, Riyadh 66833, Saudi Arabia;

关键词: COVID-19;    overconfidence bias;    sectors;    VAR;   

DOI  :  10.3390/risks10030056

来源: DOAJ

【 摘 要 】

This research paper analyses the impact of COVID-19 to investigate the overconfidence bias in 12 cyclical and defensive sectors in pre- and during COVID-19 periods using daily data from 1 January 2015 to 31 December 2020. The results of VAR show that in the pre COVID-19 phase overconfidence bias is more prevalent in all the cyclical sectors; in particular, MEDIA, METAL and REALTY have highly significant coefficients . In the defensive sectors, the VAR outcomes are not as strong as we expected, except for SERVICES. During the COVID-19 period, the investor shifted their focus to COVID-19-related opportunities, leading to a surge in the IT and PHARMA sectors. In both phases, METAL, MEDIA and REALTY exhibit overconfidence-driven stock trading behaviour. ENERGY is the only sector in both the phases that does not witness overconfidence bias.

【 授权许可】

Unknown