An Empirical Investigation of the Behavior of Investors in the Dubai Financial Market (DFM)

Abstract

It has been a challenge to provide an explanation of the behavior of different investors in different markets. Behavioral finance tends to look at the psychological and emotional factors related to the stock market and may influence behavior of investor and the efficiency of the market. The aim of this study is to investigate the influence of psychological and emotional factors on the behavior of investors in the Dubai Financial Market. The importance of this empirical paper is developed through the essential step in investment management which is decision making. This study was conducted to provide an explanation of how factors related to behavioral finance may influence the Dubai Financial Market. The data for this study was collected through a questionnaire distributed to investors in the Dubai stock market and then were analyzed using the multiple correspondence analysis. This paper collected the response of 294 out of 500 questionnaires provided to Dubai investors. The results of the analysis showed that investors with a high level of education are associated with low levels of behavioral biases, and individuals who invest amounts up to 20,000 AED are subject to behavioral biases. Based on these results, it can be concluded that information in the market lead to market efficiency.