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Article
Publication date: 19 February 2025

Prince Kumar Maurya, Rohit Bansal and Anand Kumar Mishra

This study aims to systematically review the literature on how various factors influence investor sentiment and affect financial markets. This study also sought to present an…

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Abstract

Purpose

This study aims to systematically review the literature on how various factors influence investor sentiment and affect financial markets. This study also sought to present an overview of explored contexts and research foci, identifying gaps in the literature and setting an agenda for future research.

Design/methodology/approach

The systematic literature investigation yielded 555 journal articles, with few other exceptional inclusions. The data have been extracted from the two databases, i.e. Scopus and Web of Science. For bibliometric analysis, VOSviewer and Biblioshiny by R have been used. The period of investigation is from 1985 to July 2023.

Findings

This systematic literature review helped us identify factors influencing investor sentiment and financial markets. This study has broadly classified these factors into two categories: rational and irrational. Rational factors include – economics and monetary policy, exchange rate, interest rates, inflation, government mandatory regulations, earning announcements, stock-split, dividend decisions, audit quality, environmental, social and governance aspects and ratings. Irrational factors include – behavioural and psychological factors, social media and online talk, news and entertainment, geopolitical and war events, calendar anomalies, environmental, natural disasters, religious events and festivals, irrationality caused due to government/supervisory body regulations, and corporate events. Using these factors, this study has developed an investor sentiment model. In addition, this review identified research trends, methodology, data and techniques used by researchers.

Originality/value

This review comprehensively explains how various factors affect investor sentiment and the stock market using the investor sentiment model. It further proposes an extensive future research agenda. This study has implications for stock market participants.

Details

Qualitative Research in Financial Markets, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1755-4179

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