ATTITUDE OF PAKISTAN’S INDIVIDUAL INVESTOR TOWARDS RISK DURING BULL AND BEAR MARKETS

The study is based on analyzing Pakistan’s individual investor by contrasting their behavior in bull market (2007 & 2010) and bear market (2008-2009).The major objective of study is to examine whether the attitude, perception and preferences towards risk, book to market valuations are different between varying market conditions. Empirical investigation is done by using data of 100 companies of different sectors for four years. Price earnings ratio, Book to market value, systematic risk, volatility and abnormal returns are used as measure of risk in six different regression models along with intercept and interactive dummies. Individual level of ownership is used as attitude towards risk. Due to some behavioral biases, Overall Individual investor attitude towards risk is similar in both market condition except  a significant behavioral difference is identified between bull and bear market and such behavior is associated with Book to Market Valuation only.