The Reversal of Stock Market Trends as a Behavioral Bias: Evidence from Tunisian Stock Exchange

mondher kouki, Mosbeh Hsini

Abstract


This paper examines the behavioral bias in Tunisia, a country with a small stock market in terms of capital, but surprisingly dynamic in comparison to other emerging markets. Our study is consistent with Jegadeesh & Titman (1993)’ approach as presented to highlight an analysis of  such reversal phenomena of portfolio returns, and provides explanatory factors  to the so-called market trends reversal. The empirical investigation is based on a weekly database for a period from January 2002 to January 2013 related to stock prices and index values of market capitalization (TUNINDEX). The empirical test demonstrates the existence of winner-loser phenomenon in accordance with over-reaction hypothesis stating that portfolios with the worst past performance outperform, during the subsequent periods, those having produced best past performance and vice versa. 


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DOI: https://doi.org/10.5296/ber.v6i2.9326

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Business and Economic Research  ISSN 2162-4860

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