IMPACT OF EXTROVERSION AND OVERCONFIDENCE ON STOCK INVESTMENT DECISIONS WITH MEDIATING ROLE OF RISK BEHAVIOR

Abstract

This study aims to identify the impact of extroversion and overconfidence on stock investment decisions with the mediating role of risk behaviour in the Pakistan Stock Exchange, Karachi, under the current unstable situation of the country, and how these circumstances have affected the cognition of the investors. To test these assumptions, hypotheses were formed. The research was conducted over a year; the population was selected to be investors who are investing in shares in the Pakistan Stock Exchange, particularly in Karachi, and the sample size was decided to be 350 respondents. The data collection method was an adapted questionnaire, and the instrument was distributed via online forms. The measurement instrument was a 5-point Likert scale, and data analysis was conducted on SPSS. The collected data were assessed for reliability and normality through the Cronbach alpha and Shapiro-Wilk tests, respectively; these tests reported the instrument to be reliable and the data to be normal. Further data were analysed using various statistical tools, such as mediation analysis and Pearson correlation, to produce results to test against our proposed hypothesis. The findings of the results indicated that there was indeed an influence on the stock investment decisions of investors in Karachi. These results were mostly found to be consistent with the present literature, though some contradictions were found that can be attributed to the difference in respondents and the dynamics of the current situation. Further research must be conducted to elaborate on these findings