Information Vs Investor Sentiment Effect on Stock Market Liquidity During Covid-19 Pandemic

Abstract

: Stock markets are known to be very uncertain. Not only are they affected by announced facts and events but also they are affected by investor sentiment. The present research examines the extent to which announced information and investor sentiment affect stock market liquidity. The study took place during the outbreak of covid-19 during which there was lack of information. During this period there was a little some of information all about the number of new patients, the cumulative number of patients, the number of new deaths and the cumulative number of deaths. Accordingly, many investors based on their sentiment to compensate for this lack of information. The present study asserts that both developed and developing countries stock markets are affected by investor sentiment. The study uncovers the existence of a negative relationship between investors sentiment and the market liquidity and, therefore, it adds to the literature related to the controversy between traditional finance and behavioral finance.