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The disposition effect in South African Equity markets
Includes bibliographical references.
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| Main Author: | |
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| Other Authors: | |
| Format: | Thesis |
| Language: | English |
| Published: |
Department of Finance and Tax
2015
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| _version_ | 1867613566082744320 |
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| access_status_str | Open Access |
| author | Bashall, James |
| author2 | West, Darron |
| author_browse | Bashall, James West, Darron |
| author_facet | West, Darron Bashall, James |
| author_sort | Bashall, James |
| collection | Thesis |
| description | Includes bibliographical references. |
| format | Thesis |
| id | oai:open.uct.ac.za:11427/13080 |
| institution | University of Cape Town (South Africa) |
| language | eng |
| last_indexed | 2026-06-10T12:38:10.945Z |
| license_str | Not specified — see source repository |
| provenance_str_mv | Harvested via OAI-PMH from UCTD — University of Cape Town Open Access Repository |
| publishDate | 2015 |
| publishDateRange | 2015 |
| publishDateSort | 2015 |
| publisher | Department of Finance and Tax |
| publisherStr | Department of Finance and Tax |
| record_format | dspace |
| source_str | UCTD — University of Cape Town Open Access Repository |
| spelling | oai:open.uct.ac.za:11427/13080 The disposition effect in South African Equity markets Bashall, James West, Darron Willows, Gizelle Financial Management Includes bibliographical references. The “disposition effect” describes the propensity for investors to realise gains sooner than losses through selling profit making investments more readily than loss making investments. This behaviour has been observed in financial markets across the world and across all investor classes, albeit to varying degrees. Such trading behaviour has been found not to be profit or utility maximising. I n the absence of rational motives for the disposition effect, it is concluded as being an irrational feature of investor trading behaviour. In search of the reason behind this behaviour, behavioural finance is turned to. No concrete justification for the disposition effect has been isolated as being the sole cause for this apparently irrational trading behaviour. This study tests for the disposition effect in a South African context across two classes of non-professional investors: those acting in their own capacity, and those acting with the assistance of professional investment advisors. The trade history of a sample of 4 840 investor accounts from a South African stockbroker was analysed over the five year period from October 2008 to October 2013. Three primary issues were addressed: (i) whether South African investors exhibit the disposition effect, (ii) if this behaviour is reduced by non-professional investors through the employment of professional advice, and (iii) if this trading behaviour can be justified based on rational g rounds in a South African context. The results showed, consistent with studies elsewhere in the world, that individual investors in South Africa do exhibit the disposition effect both when acting in their own capacity and when acting with the assistance of professionals . Investors acting with the assistance of professional advisors are found, however, to show the effect to a lesser extent. Further, trading consistent with the disposition effect by investors acting with the assistance of professional advisors is found to be rationally justifiable on the grounds of portfolio rebalancing. It is therefore concluded that professional advice reduces the extent to which this irrational trading behaviour is exhibited, thereby increasing investor profits and utility. 2015-06-15T07:01:39Z 2015-06-15T07:01:39Z 2014 Master Thesis Masters MCom http://hdl.handle.net/11427/13080 eng application/pdf Department of Finance and Tax Faculty of Commerce University of Cape Town |
| spellingShingle | Financial Management Bashall, James The disposition effect in South African Equity markets |
| thesis_degree_str | Master's |
| title | The disposition effect in South African Equity markets |
| title_full | The disposition effect in South African Equity markets |
| title_fullStr | The disposition effect in South African Equity markets |
| title_full_unstemmed | The disposition effect in South African Equity markets |
| title_short | The disposition effect in South African Equity markets |
| title_sort | disposition effect in south african equity markets |
| topic | Financial Management |
| url | http://hdl.handle.net/11427/13080 |
| work_keys_str_mv | AT bashalljames thedispositioneffectinsouthafricanequitymarkets AT bashalljames dispositioneffectinsouthafricanequitymarkets |