Abstract:
While other studies have investigated the direct impact of prospect factors
on investment decisions and performance at the individual level, we examine the
mediated link between the two, via fundamental, technical and calendar anomalies.
The study applies a structural equation model to data for 324 individual investors
in Pakistan. Our findings show that two processes, fundamental and calendar
anomalies, mediate the relationship between certain prospect factors and
investment decisions and performance. Of these prospect factors, regret aversion is
the strongest predictor of investment decisions and performance, followed by
calendar anomalies. It is also the strongest predictor of investment decisions and
performance via fundamental anomalies.
