Title: Nexus of investors' sentiments and firm value

Authors: Sayyed Sadaqat Hussain Shah; Mário Nuno Mata; Rui Miguel Dantas; Warda Javed; Jéssica Nunes Martins

Addresses: Faculty of Arts and Social Sciences, Department of Commerce and Finance, Government College Lahore, Lahore, 54000, Pakistan; University of Religions and Denominations, Qom, Iran ' ISCAL-Instituto Superior de Contabilidade e Administração de Lisboa, Instituto Politécnico de Lisboa, Avenida Miguel Bom, Portugal ' ISCAL-Instituto Superior de Contabilidade e Administração de Lisboa, Instituto Politécnico de Lisboa, Avenida Miguel Bombarda 20, 1069-035 Lisbon, Portugal ' Faculty of Arts and Social Sciences, Department of Commerce and Finance, Government College University Lahore, Lahore, 54000, Pakistan ' NOVA Information Management School, Portugal

Abstract: This study explores how investors' sentiments affected firm value in the non-financial sector of the Pakistan Stock Exchange from 2015 to 2019. Investors' sentiments are measured using a principal component index (PCA), while firm value is assessed through Tobin's Q formula. Control variables include firm size, leverage, and sales growth to enhance internal validity. A generalised method of moments (GMM) is employed for analysis, with Driscoll-Kraay standard error regression for robustness. The findings reveal a statistically significant impact of investors' sentiments on firm value. Consequently, firm managers are advised to actively monitor sentiment, maintain open communication, safeguard their reputation, prioritise financial performance, and engage stakeholders to counteract negative sentiment effects and uphold a positive company outlook.

Keywords: investors' sentiments; firm value; Tobin's Q; PSX; GMM.

DOI: 10.1504/GBER.2025.143082

Global Business and Economics Review, 2025 Vol.32 No.1, pp.31 - 48

Received: 01 Mar 2023
Accepted: 08 May 2023
Published online: 03 Dec 2024 *

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