| dc.description.abstract | Abstract:
COVID-19, caused by a coronavirus known as SARS-CoV-2, is a disease that emerged in Wuhan, Hubei Province, China in 2019 and quickly spread globally. As of May 6, 2023, there have been over 370 million confirmed cases and over 5.8 million deaths worldwide. Taiwan, as part of the international community, has also been affected by this pandemic.
The data for this study is sourced from Taiwan Economic Journal (TEJ), including the Taiwan stock market′s monthly return rate and margin trading data from January 2010 to March 2023 (covering the COVID-19 pandemic and the Russo-Ukrainian war). The study primarily explores the changes in decision-making behavior of retail investors in the Taiwan stock market, focusing on variables such as ＂disposition effect,＂ ＂overconfidence,＂ and ＂herding behavior,＂ to determine if these changes impact the overall market return rate. The results of this research are as follows:
(1)Variables such as the pandemic and the Russo-Ukrainian war do not significantly affect the overall monthly market return rate. However, they do have a negative and significant impact on the weekly market return rate.
(2)The coefficient of the disposition effect shows a positive relationship with the market return rate, and this relationship remains significant during the pandemic period. Regardless of whether investors are in the epicenter of the events or not, retail investors tend to sell stocks prematurely while the market return rate continues to rise.
(3)The coefficient of herding behavior shows a positive and significant relationship with the market return rate. The coefficient of overconfidence also shows a positive relationship but is not statistically significant.
(4)By excluding behavioral patterns characterized by selling too early and excessive trading, selecting an investment portfolio that closely aligns with the overall market index appears to be a favorable investment strategy.
Keywords: COVID-19, disposition effect, overconfidence, herding behavior | en_US |