Abstract
Investor sentiment is believed to play an increasingly significant role in business and economic activities. By analyzing data collected from a sample of listed nonfinancial firms in Pakistan for the period 2009–2018, we quantify investor behavior and how it affects market returns, cash flows, discount rates, and firm performance. We find that investor sentiment has a significant impact on market activities, and our findings are in line with existing behavioral finance theories. Not only does our study offer theoretical confirmation of the significance of investor sentiment in aggregate market- and firm-level indicators, but it also offers new insights concerning market-based, news-based, and social media–based sentiment in the context of the Pakistani market.
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