THE IMPACT OF HERD BEHAVIOR AND MARKET FACTORS ON THE BEHAVIOR OF INVESTORS IN THE BEAR AND BULL MARKET AN EXPLORATORY STUDY IN "THE IRAQI STOCK EXCHANGE"

Abstract

The traditional theory assumes that investors behave rationally when they start making investment decisions, but  on the contrary the modern theory of behavioral finance has proven the opposite, as it has proven that investors act irrationally in their decisions because the investment decision requires a rational decision based on a complete study, especially when prices rise and fall and their direction changes, and that investors' decisions are sometimes based on irrational behaviors due to their suffering and exposure to biases and many behavioral factors. Thus  , the current study aimed to know the behavioral factors to which investors are exposed and to indicate the extent to which the market factor and herd behavior influence their behavior. So, the research is depended on the analytical exploratory method by targeting a sample of Investors in the Iraqi Stock Exchange amounting to (85), and statistical tests and a set of arithmetic averages have been used by  using the SPSS program, and a set of conclusions have been  reached, the most important of which is the existence of an influence relationship between the herd behavior and the market factor and behaviors of investors along with their trends in the bear and bull market. The current study is concluded with a set of the most important recommendations , most important of  which are raising the cognitive and awareness aspects of investors, especially when making investment decisions, and paying attention to the fundamental and technical analysis of stock market to avoid being influenced by irrational behaviors or following others due to lack of experience and knowledge. The Iraq Stock Exchange Authority must also hold educational courses and seminars for investors and also monitor companies listed in the financial market and demanding disclosure and transparency.