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Article
Publication date: 20 July 2015

Mustafa Sayim and Hamid Rahman

The purpose of this paper is to examine the impact of Turkish individual investor sentiment on the Istanbul Stock Exchange (ISE) and to investigate whether investor sentiment…

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Abstract

Purpose

The purpose of this paper is to examine the impact of Turkish individual investor sentiment on the Istanbul Stock Exchange (ISE) and to investigate whether investor sentiment, stock return and volatility in Turkey are related.

Design/methodology/approach

This study used the monthly Turkish Consumer Confidence Index, published by the Turkish Statistical Institute, as a proxy for individual investor sentiments. First, Turkish market fundamentals were regressed on investor sentiments in order to capture the effects of macroeconomic risk factors on investor sentiments. Then, it used the impulse response functions (IRFs) generated from the vector autoregression (VAR) model to examine the effect of unanticipated movements in Turkish investor sentiment to both stock returns and volatility of the ISE.

Findings

The generalized IRFs from VAR shows that unexpected changes in rational and irrational investor sentiment have a significant positive impact on ISE returns. This suggests that a positive investor sentiment tends to increase ISE returns. The study also documents that unanticipated increase in the rational component of Turkish investor sentiment has a negative significant effect on ISE volatility. This might indicate that investors have optimistic expectations of the economy overall with respect to market fundamentals in Turkey. This optimism can result in creating positive expectations, reducing uncertainty, and reducing the volatility of stock market returns.

Research limitations/implications

The study was applied only for the period 2004-2010 on the ISE stock returns and volatility.

Practical implications

Regardless, investors should know the impact of irrational investor sentiments while establishing investment strategies. The results of this study may also help policy makers stabilize investor sentiments to reduce stock market volatility and uncertainty.

Originality/value

This paper adds to the limited understanding of investor sentiment impact on stock return and volatility in an emerging market context.

Details

International Journal of Emerging Markets, vol. 10 no. 3
Type: Research Article
ISSN: 1746-8809

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Article
Publication date: 6 September 2013

Mustafa Sayim, Pamela D. Morris and Hamid Rahman

This paper examines the effect of rational and irrational investor sentiment on the stock return and volatility of US auto, finance, food, oil and utility industries.

4726

Abstract

Purpose

This paper examines the effect of rational and irrational investor sentiment on the stock return and volatility of US auto, finance, food, oil and utility industries.

Design/methodology/approach

The American Association of Individual Investors Index (AAII) is used as a proxy for US individual investor sentiment. The US market fundamentals are regressed on investor sentiment in order to capture the effect of macroeconomic risk factors on investor sentiment. Then impulse response functions (IRFs) are generated from a VAR model to investigate the effect of unanticipated movements in US investor sentiment on both industry‐specific stock return and volatility.

Findings

The results show a significant impact of investor sentiment on stock return and volatility in all the industries. We find that the positive rational component of US individual investor sentiment tends to increase the stock return in these industries. We also document that unanticipated increase in the rational component of US individual investor sentiment has a significant negative impact only on the industry volatilities of US auto and finance industries.

Research limitations/implications

The results are based only on the 1999 – 2010 US industry‐specific stock return and volatility data and are confined to these industries.

Practical implications

The findings of this paper can help investors to improve their asset return generating models by incorporating investor sentiment. The findings can also help policymakers to design policies that stabilize sentiment and reduce volatility and uncertainty in the stock markets.

Originality/value

This paper adds to the growing literature on behavioral finance by filling a gap and addressing the impact of investor sentiment in the various US industries.

Details

Review of Behavioural Finance, vol. 5 no. 1
Type: Research Article
ISSN: 1940-5979

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Article
Publication date: 4 July 2008

Tanuja Agarwala

This paper aims to explore the influence of a range of factors on the career choice of management students in India. The importance of different individuals in the family and at…

11086

Abstract

Purpose

This paper aims to explore the influence of a range of factors on the career choice of management students in India. The importance of different individuals in the family and at work in making career choices among these students is also to be explored. In addition, the study seeks to address the relationship of the cultural values of individualism‐collectivism and the protean/conventional career orientations of MBA students from India, with factors as well as people influencing the choice of a career.

Design/methodology/approach

Participants consisted of 93 students from India entering management, who were starting their first year of the two‐year full time MBA program. Self‐administered questionnaires were used to gather data on factors and types of relationships influencing career choice, individualism/collectivism, and protean/conventional career orientation.

Findings

“Skills, competencies, and abilities” was the most important factor and “father” was the most significant individual influencing the career choice of Indian management students. The predominant cultural value was collectivism, although the students demonstrated individualist tendencies in some contexts. A protean orientation guided the career orientation of these students.

Research limitations/implications

The data were collected only from one management institute in India.

Originality/value

Empirical research on factors and types of relationships influencing career choice, and their correlates, has not been conducted among Indian students. The paper addresses this issue and the study has implications for career counseling.

Details

Career Development International, vol. 13 no. 4
Type: Research Article
ISSN: 1362-0436

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Article
Publication date: 31 August 2021

Rakesh Kumar Verma and Rohit Bansal

This paper aims to identify various macroeconomic variables that affect the stock market performance of developed and emerging economies. It also investigates the effect of these…

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Abstract

Purpose

This paper aims to identify various macroeconomic variables that affect the stock market performance of developed and emerging economies. It also investigates the effect of these factors on the stock markets of both economies. The impact of these variables on broad market indices and sectoral indices is investigated and compared too.

Design/methodology/approach

The publications for the study were retrieved from databases such as Emerald Insight, EBSCO, ScienceDirect and JSTOR using the keywords “Macroeconomic variables” and “Stock market” or “Stock market performance.” The result demonstrated a growing corpus of scholarly work in the domain of stock market. The study was carried out separately for each macroeconomic indicator. Given a large number of articles under consideration, the authors began by reading the titles and abstracts of all publications to identify those that were relevant. The papers are evaluated in Excel and the articles for review range from 1972 to 2021.

Findings

The authors found that gross domestic product (GDP), FDI (Foreign Direct Investment) and FII (Foreign Institutional Investment) have a positive effect on both emerging and developed economies’ stock market while gold price has a negative effect. Interest rates had a negative impact on both economies except for a few developing countries. The relationship with oil prices was positive for oil exporting countries while negative for oil importing countries. Inflation, money supply and GDP are the macroeconomic variables that have the same effect on sectoral indices as they do on broad market indices. The impact was sector-specific for the remaining variables.

Research limitations/implications

This paper gives an overview of relation and effect covering variety of macroeconomic variables and stock market indices. Still, there is a scope for further research to analyze the effect on thematic, strategy and sectoral indices. A longer time horizon with new variables, such as bank deposit growth rate, nonperforming assets of banks, consumer confidence index and investor sentiment, can be studied using high-frequency data. This research may help stakeholders adopt and manage their policies during a crisis or economic slump.

Practical implications

This study will assist investors, researchers and educators in the fields of economics and finance in understanding how macroeconomic factors affect the stock market. Furthermore, this study can guide in portfolio diversification strategy across multiple sectors by examining the impact of macroeconomic factors specific to sectoral indices. This paper provides insight into society and researchers since it integrates a number of macroeconomic variables and their interaction with the stock market. It may also help pension funds and mutual fund firms to hedge their funds and allocate equity portfolios.

Originality/value

With respect to India, this study looked at new macroeconomic variables and sectors. It contrasted the impact of these variables in developed and developing economies. The effect of broad and sectoral stock indexes was also investigated and compared. The authors examined how these variables responded during crisis and economic downturns by using articles from a longer time frame. This research also looked into how changing the frequency of data for the variables altered stock performance. This paper emphasized the need for more research into thematic, strategy and broad market indices, such as small-cap and mid-cap indices.

Details

International Journal of Emerging Markets, vol. 16 no. 7
Type: Research Article
ISSN: 1746-8809

Keywords

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