As I said before, the tendency of behavioral approach and investor sentiment is not a
new field not again discovered, the investor sentiment was introduced earlier in the 1990’s by
Welch who presented the informational cascade theory. But the Behavioral Approach has
sparked the academics’ attention, has intrigued more and more researchers and has taken all
its impetus in this decade. The studies and investigations are more and more numerous trying
to explain the short run IPO anomaly by investor sentiment and behaviour. The research effort
is continuing since the behavioral approach seems to be a very promising field to resolve the
short run IPO phenomenon that is still a puzzle since the other theories and explanations
advanced earlier failed to resolve it.
I begin by presenting the first explanations and the first findings that were observed to
explain the short run phenomenon by the investor sentiment.