Does the Bangladesh equity market expose to disposition effects bias under different market conditions?

The study provides an intuitive investigation into the disposition effect within frontier markets such as Bangladesh, particularly focusing on its behavior during various market conditions. The study's novelty lies in its application of a methodological framework of the disposition effect measure of Weber and Camerer, aiming to understand the disposition effect through different market conditions. Dow Theory is applied to disparate bullish and bearish intermediate periods. Disposition effects persist for the entire study period, as well as the different market conditions except for the bearish Bangladesh equity market. The bullish and crisis markets exhibit a rather high disposition effect due to their respective market volatility. Stronger disposition effects are more pronounced for a crisis market in relation to a bullish market. In addition, the disposition effect in Bangladesh's equity market oscillates in crisis periods. The documentation of the disposition effect in the Bangladesh equity market across market conditions suggests that investors' psychology plays a crucial role in their decision processes. Individuals and professional investors should carefully design an appropriate strategy to control their decision-making process since the presence of disposition effects may impair the risk-return payoffs