https://orcid.org/0000-0003-0966-6530
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Abstract
The literature on overconfidence has witnessed prolific growth since the beginning of the century. This context underscores the necessity to comprehend and categorize an increasingly diverse body of overconfidence research within the financial domain. This study reviews existing literature on financial overconfidence from its inception to the present with a detailed review of 132 articles from 84 journals by examining theories, context, and methods (TCM) used in overconfidence research. Our review unpacks significant themes (i.e. determinants of overconfidence, overconfidence and risk-taking, overconfidence measures and type of investors, overconfidence in a volatile market, overconfidence, and personal financial behavior). We propose a pertinent research framework to investigate the less investigated aspects of financial overconfidence and suggest future research direction.
Impact statement
The significance of this paper lies in its potential to deepen our understanding of how psychological biases and significant overconfidence influence investment behavior and market outcomes. By synthesizing findings from multiple studies, this literature review highlights common themes, identifies gaps in knowledge, and suggests avenues for future research. Ultimately, insights gained from such a review can inform investors, financial professionals, and policymakers about the importance of recognizing and addressing overconfidence in investment decision-making processes. This understanding can lead to more informed and rational investment strategies, potentially mitigating the adverse effects of overconfidence on individual investors and market efficiency.
Data availability statement
The data for the study were retrieved from SCOPUS within the specified period (as mentioned in the manuscript), following the proper procedure for data retrieval, including keywords. Subsequently, a data filtering process was conducted. Anyone can retrieve the data from SCOPUS by applying the same criteria used in the study.
Author contributions
Dr. Dharmendra Singh: Conceptualizing our thoughts in the manuscript, retrieving data from Scopus, conducting bibliometric analysis, and performing performance analysis. Dr. Garima Malik: Cluster Analysis and Comprehensive TCCM Analysis, Proofreading, and Formatting. Dr. Prateek Jain: Future Research Directions and Implications. Dr. Mahmoud Abouria: Revised the manuscript as per the recommended revisions.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Additional information
Notes on contributors
Dharmendra Singh
Dr. Dharmendra Singh is an Associate Professor and program head (Finance) at Modern College of Business and Science, Muscat (Oman). He possesses rich professional experience of over 23 years in the field of finance. He holds a Ph.D. (Finance), professional certifications like Certified Financial Planner (CFP), an associate diploma (life insurance) from the Insurance Institute of India, and a CFA. He has published several articles & research papers in ABDC, CABS, and Scopus Q1-ranked international and refereed journals. He has published five edited books with renowned publishers. His research areas include banking, corporate finance, entrepreneurial finance, and financial markets.
Garima Malik
Dr. Garima Malik is an Assistant Professor in the Marketing area at Birla Institute of Technology Management (BIMTECH), Greater Noida. She is a Fellow of Xavier School of Management, XLRI Jamshedpur, India, and a recipient of the K.V. Raju (Narajuan Award) Gold Medal awarded to an outstanding Ph.D. student. She has more than twenty years of academic experience. Her research interests span various areas, including gamification, marketing analytics, customer engagement, destination marketing, and gaming marketing experience. She authored more than 80+ research papers. In addition to her research contributions, Dr. Malik has written five books, two of which are textbooks, and four are case study books.
Prateek Jain
Dr. Prateek Jain is working as Associate Professor of Strategy & Entrepreneurship at Birla Institute of Management Technology (BIMTECH), Greater Noida. Before joining Academics he had worked in Corporate sector for 23 years in various Industries & sectors. Dr. Prateek had done his PhD from IIT Delhi and MBA from IIM Lucknow. He had done his graduation in Mechanical Engineering. Dr. Prateek had also authored 3 Books in the area of Management & Strategy.
Mahmoud Abouraia
Dr. Mahmoud Abouraia is a Professor and head of the Ph.D. program at the Modern College of Business and Science, Muscat (Oman). He has published several papers in reputed journals. His research areas include banking, corporate finance, and financial markets.