scholarly journals Behavioral Factors Influencing Stock Investment Decision of Individuals

2021 ◽  
Vol 6 (1) ◽  
pp. 53-73
Author(s):  
Prem Prasad Silwal ◽  
Shreya Bajracharya
Keyword(s):  
Structural Equation ◽  
Investment Decision ◽  
Equation Modeling ◽  
Individual Investors ◽  
Behavioral Factors ◽  
Investment Performance ◽  
Factors Influencing ◽  
Stock Investment ◽  
Anchoring Bias ◽  
Market Variables

Purpose: The purpose of this study is to identify the behavioral factors influencing individual investors’ decisions and to analyze the relationship between these factors and investment decision performance. Design/Methodology/Approach: The tested variables were: Anchoring bias, Gambler’s Fallacy, Overconfidence bias, Availability and Representativeness bias from heuristics factor, Mental Accounting, Loss and Regret Aversion from prospect factor, and Market variables and Herding factors. The study employed exploratory and confirmatory factor analysis. In addition, structural equation modeling is applied for the testing of the hypotheses. Findings: Prospect behavioral factor is seen to have negative correlation to investment performance. Herding, Market variables and Heuristic (including overconfidence and anchoring bias) are found to have positive correlation to investment performance. Implications: To cope with intense competition among the competitors in Nepali stock market, this study provides strong evidence herding and heuristic approach that have positive indication to investment performance

scholarly journals Impact of Behavioral Factors in Making Investment Decisions and Performance: Study on Investors of National Stock Exchange

2019 ◽  
Vol 11 (8) ◽  
pp. 80
Author(s):  
Sarika Keswani ◽  
Vippa Dhingra ◽  
Bharti Wadhwa
Keyword(s):  
Decision Making ◽  
Stock Exchange ◽  
Investment Decision ◽  
Individual Investors ◽  
Behavioral Factors ◽  
Performance Study ◽  
Investment Performance ◽  
Factors Affecting ◽  
Cronbach Alpha ◽  
The Impact

Market anomalies and irrational behavior caused investors changes in the stock market, and this has led to an investigation into the impact of various behavioral biases and factors affecting decision-making for individual investors. The purpose of this study was to find out the effect of the four factors, heuristic, prospect, market, herding on decisions of investors at NSE. Data are collected from the questionnaire on the basis of a likert scale. To determine the reliability of the questionnaire, the Cronbach alpha factor, which was 0.728, was used. EFA and multiple regression tests have been applied. Cronbach-alpha was used to check the interal consistency of the element. Cronbach alpha emphasized to each factor: Heuristic, Prospect, Market, Herding, Investment performance and Investors decisions that consistency at an acceptable level. The result of the analysis is that the four variables have greatly influenced the investment decision and return on investment. All behavioral variables have a significant impact on the decision-making process of investors, which led to the acceptance of all assumptions regarding the level of influence of behavioral factors in decision making for individual investors.

Perfectionist decision-making style and ethical investment willingness

2018 ◽  
Vol 56 (3) ◽  
pp. 534-549 ◽  
Author(s):  
Yu-Cheng Lin ◽  
Chiung-Yao Huang ◽  
Yu-Shan Wei
Keyword(s):  
Decision Making ◽  
Structural Equation ◽  
Investment Decision ◽  
Moral Intensity ◽  
Equation Modeling ◽  
Individual Investors ◽  
Ethical Investment ◽  
Financial Returns ◽  
Content Type ◽  
Ethical Investments

Purpose The purpose of this paper is to examine the ethical investment willingness decision-making process to understand how investors evaluate corporate social responsibility (CSR) actions. Design/methodology/approach Data were collected through a survey of 298 individual investors and analyzed using structural equation modeling. Findings Results reveal that perfectionist decision-making style is positively related to perceived moral intensity, substitutability of financial returns, and ethical investment willingness. In addition, perceived moral intensity and substitutability of financial returns are positively related to ethical investment willingness. Finally, perceived moral intensity is positively related to substitutability of financial returns, and a two-factor causal mediation model is supported. Research limitations/implications The limitation of this study was that the pre-tests and sampling methods required all participants to have investing experience; however, procurement of trading information for each investor was impossible; thus, actual investment behaviors were undetermined. This study shed light on the mediating roles of perceived moral intensity and the substitutability of financial returns. Future studies can further investigate the factors influencing perceived moral intensity and the substitutability of financial returns. Practical implications Future ethical investment education can focus on cultivate the ability to distinguish ethical investments and change ethical investment willingness into actual investment behavior. Originality/value Understanding the relationship between these variables can help understand why ethical investment willingness varies among investors and how the traditional financial theory investment decision model should be revised as, internationally, more people have begun to observe CSR and sustainable development.

scholarly journals Determinant factors of investors� behavior in investment decision in Indonesian capital markets

2014 ◽  
Vol 17 (1) ◽  
pp. 45
Author(s):  
Indra Listyarti ◽  
Tatik Suryani
Keyword(s):  
Structural Equation ◽  
Positive Impact ◽  
Survey Design ◽  
Investment Decision ◽  
Technical Information ◽  
Investment Decisions ◽  
Financial Information ◽  
Equation Modeling ◽  
Individual Investors ◽  
Positive Effect

This study examines the effect of financial information, macro environment, and subjective norms on investors behavior when making investment decisions in Indonesian capital market. It was conducted by a survey design and involved 190 individual investors in three big cities in Indonesia (Jakarta, Surabaya, and Bandung). By using Structural Equation Modeling with Warp-PLS 3.0, the results showed that macro factors had a significantly positive effect on the technical information, the financial information and the macro factors had a significantly positive effect on the investor intentions, and the intentions of investors and the financial information had a significantly positive impact on investment decisions. It was also found that the financial information held a great contribution to build investor intentions and investment decisions. Thus, Indonesian individual investors were rational and sophisticated investors. They were not influenced by the actions of other investors, analyst opinions, and media. The implication of this research was how to provide information comprehensively to investors, which was very important to influence their decisions.

scholarly journals Stock Investment Decision: The Effects of Personal Factors and Moderating Role of Years of Service

2022 ◽  
Vol 19 ◽  
pp. 107-115
Author(s):  
Tipri Rose Kartika ◽  
Nopriadi Saputra ◽  
David Tjahjana ◽  
Adler Haymans Manurung
Keyword(s):  
Structural Equation ◽  
Investment Decision ◽  
Investment Decisions ◽  
Influential Factors ◽  
Individual Investors ◽  
Personal Factors ◽  
Social Relevance ◽  
Stock Investment ◽  
The Impact ◽  
Moderating Role

This paper aims to elaborate stock investment decision and to examine the impact of five influential factors as independent variables and the influence of years of investment as mediating variable. This paper is based on empirical study which involved 286 individual investors in Indonesia Stock Exchange using data from Riri et.al (2020). Structural equation modelling approach was used for estimating relationship between influential factors (e.g., personal financial needs, overconfidence, advocate recommendation, social relevance, and self or firm image) on stock investment decisions. The result found that decision on stock investment is determined by social relevance, overconfidence, personal financial need, and advocate recommendation significantly and positively. Years of Investment has played moderating role on relationship between for advocate recommendation and personal with stock investment decisions. Years of Investment is moderating variable to become a novelty this paper.

scholarly journals Personality Traits and Stock Investment of Individuals

2019 ◽  
Vol 11 (19) ◽  
pp. 5474 ◽  
Author(s):  
Cheng-Po Lai
Keyword(s):  
Personality Traits ◽  
Structural Equation ◽  
Behavioral Control ◽  
Subjective Norm ◽  
Equation Modeling ◽  
Individual Investors ◽  
Big Five Personality ◽  
Perceived Behavioral Control ◽  
Stock Investment ◽  
Investment Intentions

Behavioral finance has been widely applied in the financial realm from psychological perspectives focusing on herding and disposition effects. However, little research is devoted to the influences of personality traits on the stock investment intentions of individuals. This study extends the theory of planned behavior incorporating the big five personality taxonomies to investigate the effects of the personality traits of individual investors on stock investment intention. Utilizing partial least squares based on structural equation modeling techniques with a sample of 385 subjects, empirical results indicate that the stock investment intentions of individuals are significantly affected by subjective norm, attitude, and perceived behavioral control, and subjective norm significantly affects attitude. Individuals with open and agreeable personalities tend to have influences on subjective norm. Neurotic individuals tend to have negative attitudes toward stock investment. The perceived behavioral control of individuals regarding stock investment is influenced by the personality traits of agreeableness, extroversion, conscientiousness, and openness. Prior stock trading experiences significantly affect the relationships between attitude and stock investment intention, as well as on the linkages between extroversion and subjective norm, attitude, and perceived behavioral control. This study concludes with the discussion of the findings, with insights into theory and managerial implications.

scholarly journals Herd Behavior of Investments: An Assessment of Indian Stock Market

2020 ◽  
Author(s):  
AISDL
Keyword(s):  
Decision Making ◽  
Behavioral Finance ◽  
Structural Equation ◽  
Cognitive Biases ◽  
Investment Decision ◽  
Mediating Effect ◽  
Equation Modeling ◽  
Herd Behavior ◽  
Investment Performance ◽  
Investment Decision Making

Behavioral finance theorists contradict market efficiency and propose that investment decision making is not always rational. Investors base their decisions on factors in addition to stock fundamentals and such factors include cognitive biases such as loss aversion, herd behavior, regret aversion, price anchoring and the like. This paper makes an attempt to analyze the influence of two major factors – herd behavior and market factors on investment decision making and in turn it's mediating effect on perception of investment performance. Structured questionnaire was used for collecting the sample for study and structural equation modeling was performed. The study presents evidence to ascertain significant influence of both the factors – herd behavior and market – on investment decision making. The mediating effect of investment decision making on perception of investment performance was also observed to be strong and significant.

Factors influencing investor’s decision making in Pakistan

2018 ◽  
Vol 10 (1) ◽  
pp. 70-87 ◽  
Author(s):  
Muhammad Haroon Rasheed ◽  
Amir Rafique ◽  
Tayyaba Zahid ◽  
Muhammad Waqar Akhtar
Keyword(s):  
Decision Making ◽  
Locus Of Control ◽  
Structural Equation ◽  
Quantitative Research ◽  
Investment Decision ◽  
Equation Modeling ◽  
Individual Investors ◽  
Content Type ◽  
Investment Decision Making ◽  
The Impact

Purpose The purpose of this paper is to look at the impact of two most commonly used heuristics, namely, representative bias and availability bias on investment decision making and to check that either locus of control interact with the said relations through theoretical proposal and then verification through empirical evidence. Design/methodology/approach The study is a quantitative research using a survey questionnaire for its data collection. Data are collected from 227 investors operating at Islamabad, Lahore, and Sargodha in Pakistan and analyzed using structural equation modeling while the interaction effect is analyzed through simple linear regression following the rules set by Baron and Kenny (1986). Findings The results reveal that both of the heuristics under study significantly cause investors to deviate from rational decision making while the locus of control have no significant moderating effect. Originality/value The proposed model provides insight on how the behavioral factors can lead investors to suboptimal decision making. This study is first of its kind to quantify the degree of irrationality caused by these factors. The findings of this study are practically useful for individual investors, investment managers, and also for policy makers.

scholarly journals How Behavioral Factors Influence Investment Performance of Individual Investors in Pakistan Stock Market: A Moderated Mediation Approach

2021 ◽  
Vol 7 (3) ◽  
pp. 395-405
Author(s):  
Mumtaz Ahmad ◽  
Iqra Mehboob ◽  
Syed Zain ul Abdin
Keyword(s):  
Financial Literacy ◽  
Stock Exchange ◽  
Investment Decision ◽  
Primary Objective ◽  
Primary Data ◽  
Individual Investors ◽  
Security Market ◽  
Investment Efficiency ◽  
Behavioral Factors ◽  
Investment Performance

The primary objective of study is to know the influence of behavioral factors on investor’s investment decision and investment performance. Four behavioral factors as herding, prospect factors and market factors are used in this study and financial literacy as a moderating variable among the behavioral factors and investment decision. We use the questionnaire to collect primary data from individual investors actually trading in Pakistan Stock Exchange. For data analysis, we utilize AMOS software and Hayes Process tool in two stages. The findings reveal that behavioral factors positively influence investment decision and investment performance. But there is no moderating role of financial literacy. In addition to these, individual investors and security organizations can ultimately take advantage from the results of this research as a guide for their analysis and forecasting of security market trends in order to maximize the outcome and to improve their investment efficiency. Further, study recommended investigation of all investor types and in all financial markets including the behaviors of institutional investors along with behavioral financial factors; we should consider some economic factors that could have an impact on investors' decisions.

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