The impact of behavioral factors on environmental issues regarding individual investor’s decision making: Empirical evidence from Pakistan’s stock market

Samina Rooh, Arif Hussain, Muhammad Zahid


The behavioural biases impact the decision-making of individual investor in the stock market, hence, modern finance theories presumed that investor does not make a rational decision. This research paper aims to examine the impact of behavioral factors on environmental issues regarding individual investor’s decision-making in the Stock Market of Pakistan. The data was collected from five provinces of Pakistan through adapted questionnaires; a sample size of 421 individual investors of the Pakistan stock market. This study applied the Structural Equation Model (SEM) using SmartPLS to analyze the influence of individual investor’s behavioural factors on environmental issues. This study finding showed that overconfidence, loss aversion, mental accounting, and herding biases of individual investors positively affect investment decisions on environmental issues. This study attempts to fulfill the gap by analyzing behavioral factors and environmental issues in the Pakistan stock market. However, the current study contributes to the existing literature on behavioral finance and environmental issues in the Pakistan stock market. Furthermore, the current study will be useful for financial professionals, regulatory authorities, or investment advisors, academia as well as practitioners.


Overconfidence, Loss aversion, Mental Accounting, Herding, and Environmental issues

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