Abstract:

(Examining The Effect of Investor Psychology Over Stock Returns By Closed-End Fund Discount) Closed-End funds are collective investment companies that invest in financial assets by the funds they gather through public offering. Closed-end fund shares have two values: net asset value and market value. Closed fund shares would be priced above or below the net asset value. If the shares are priced below the net asset value, they are traded with discount. Otherwise, the shares are traded with premium. It is suggested that the main reason of the discount in closed-end fund shares is the psychological situation of the investors. There are three theories that examine the effects of investor psychology over financial markets: Mental accounting, herd behavior and investor sentiment. Investor sentiment is considered to be proxied by closed-end fund discount. Investor sentiment is defined as optimistic or pessimistic expectations regarding stock market. This study examines the effect of investor sentiment proxied by closed-end fund discount over Turkish stock returns. In the whole research period, closed-end fund discount estimates stock returns. Nevertheless, estimation power of closed-end fund discount diminishes in the second subperiod when the entire research period is divided into two subperiods.

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