scholarly journals WHAT DRIVES RETAIL INVESTORS’ INVESTMENT DECISIONS? EVIDENCE FROM NO MOBILE PHONE PHOBIA (NOMOPHOBIA) AND INVESTOR FEAR OF MISSING OUT (I – FOMO)

2020 ◽  
Vol 11 (10) ◽  
pp. 2-20 ◽  
Keyword(s):  
Financial Markets ◽  
Mobile Phone ◽  
Media Studies ◽  
Investment Decisions ◽  
Partial Least Square ◽  
Behavioural Finance ◽  
Fear Of Missing Out ◽  
Retail Investors ◽  
Investor Behaviour ◽  
The Relationship

The main objective of the study is to investigate the impact of No-Mobile-Phobia (Nomophobia) on retail investors‟ investment decisions. The relationship was further analysed by incorporating the role of Investor related Fear-of-Missing-Out (I-FoMO) which is different from traditional FOMO in Indian Financial Markets. The information asymmetry is generated by the absence of a mobile phone coupled with the fear of missing important information in financial markets used for extensive investment decisions was determined by conducting a survey method. A total of 265 retail investors were used for analysing the data and to explore this new phenomenon by Partial Least Square Structural Equational Modelling (PLS-SEM) in SmartPLS version 3.3.2. Further, Importance Performance Map Analysis (IMPA) was applied to investigate the critical factors for determining investor behaviour. The results revealed that there is a tendency to exhibit overtrading by retail investors in the state of fear of no investment information and lack of convenience due to news in smartphones. The similar phenomenon was experienced where Nomophobia leads extensively to I-FoMO which mediates the relationship of No-mobiles and investor behaviour. The study provides a new dimension to the theoretical frameworks in behavioural finance where media studies and information dissemination through smartphones to understand investor behaviour. The study not only validates NMP Questionnaire in media studies but also investigates the new scale of I-FoMOin behavioural finance to understand the aspects of fear and anxiety among human behaviour in Information Systems (IS) Research.

The profitability of algorithmic trading systems based on football sentiment

2020 ◽  
Vol 42 (1) ◽  
pp. 33-46
Author(s):  
Raúl Gómez-Martínez ◽  
Camila Marqués-Bogliani ◽  
Jessica Paule-Vianez
Keyword(s):  
Financial Markets ◽  
Investment Decisions ◽  
Futures Market ◽  
Algorithmic Trading ◽  
Investment Strategies ◽  
Measurable Effect ◽  
Behavioural Finance ◽  
Trading Systems ◽  
European Football

Behavioural finance has shown that investment decisions are the result of not just rational but also emotional brain processes. On the assumption that emotions affect financial markets, it would seem likely that football results might have a measurable effect on financial markets. To test this, this study describes three algorithmic trading systems based exclusively on the results of three top European football teams (Juventus, Bayern München and Paris St Germain) opening long or short positions in the next market season of the futures market of the index of each country (MIB (Milano Italia Borsa), DAX (Deutscher Aktien Index) and CAC (Cotation Assistée en Continu). Depending on the outcome of the last game played a long position was taken after a victory and a short position after a draw or defeat. The results showed that the algorithmic systems were profitable in the case of Juventus and Bayern whereas in the case of PSG, the system was profitable, but in an inverse way. This study shows that investment strategies that take account of sports sentiment could have a profitable outcome.

Heuristic biases in investment decision-making and perceived market efficiency

2018 ◽  
Vol 10 (1) ◽  
pp. 85-110 ◽  
Author(s):  
Syed Zulfiqar Ali Shah ◽  
Maqsood Ahmad ◽  
Faisal Mahmood
Keyword(s):  
Financial Markets ◽  
Market Efficiency ◽  
Negative Impact ◽  
Investment Decisions ◽  
Sampling Technique ◽  
Investment Strategy ◽  
Individual Investors ◽  
Content Type ◽  
Specific Investment ◽  
The Relationship

Purpose This paper aims to clarify the mechanism by which heuristics influences the investment decisions of individual investors, actively trading on the Pakistan Stock Exchange (PSX), and the perceived efficiency of the market. Most studies focus on well-developed financial markets and very little is known about investors’ behaviour in less developed financial markets or emerging markets. The present study contributes to filling this gap in the literature. Design/methodology/approach Investors’ heuristic biases have been measured using a questionnaire, containing numerous items, including indicators of speculators, investment decisions and perceived market efficiency variables. The sample consists of 143 investors trading on the PSX. A convenient, purposively sampling technique was used for data collection. To examine the relationship between heuristic biases, investment decisions and perceived market efficiency, hypotheses were tested by using correlation and regression analysis. Findings The paper provides empirical insights into the relationship of heuristic biases, investment decisions and perceived market efficiency. The results suggest that heuristic biases (overconfidence, representativeness, availability and anchoring) have a markedly negative impact on investment decisions made by individual investors actively trading on the PSX and on perceived market efficiency. Research limitations/implications The primary limitation of the empirical review is the tiny size of the sample. A larger sample would have given more trustworthy results and could have empowered a more extensive scope of investigation. Practical implications The paper encourages investors to avoid relying on heuristics or their feelings when making investments. It provides awareness and understanding of heuristic biases in investment management, which could be very useful for decision makers and professionals in financial institutions, such as portfolio managers and traders in commercial banks, investment banks and mutual funds. This paper helps investors to select better investment tools and avoid repeating expensive errors, which occur due to heuristic biases. They can improve their performance by recognizing their biases and errors of judgment, to which we are all prone, resulting in a more efficient market. So, it is necessary to focus on a specific investment strategy to control “mental mistakes” by investors, due to heuristic biases. Originality/value The current study is the first of its kind, focusing on the link between heuristics, individual investment decisions and perceived market efficiency within the specific context of Pakistan.

The Effect of Equity Linked Securities on Financial Stability in Korea

2018 ◽  
Vol 26 (1) ◽  
pp. 85-114
Author(s):  
Sun-Joong Yoon ◽  
Jaehoon Jung
Keyword(s):  
Interest Rate ◽  
Financial Markets ◽  
Rapid Growth ◽  
Financial Stability ◽  
Stability Index ◽  
Negative Effects ◽  
Structured Products ◽  
Korean Economy ◽  
Retail Investors ◽  
The Relationship

Since the introduction of ELS (Equity-linked securities) in 2003, the structured products have become one of the most important investment vehicles to Korean retail investors. However, the rapid growth of those structured products has induced the imbalance of Korean financial markets and may have eventually damaged the financial stability of Korean economy. In this paper, we investigate how Korean securities companies issuing the structured products hedge their positions and how their activities affect the financial stability. In addition, we conduct a simple empirical analysis to examine the relationship between the issue of ELS and the financial stability using FSI (financial stability index) provided by Bank of Korea. According to the results, the balance of ELS affects the financial stability negatively and this is significant even after adjusting for the control variables such as the KOSPI index, VKOSPI, the risk-free interest rate, and CPI. More specifically, the balance rather than the amount of monthly issuance is significant to financial stability. In addition, the decrease in underlying indices reduces the early redemption, thereby damaging the financial stability. Lastly, we suggest several solutions to alleviate the negative effects.

Herding and loss aversion in stock markets: mediating role of fear of missing out (FOMO) in retail investors

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Shilpi Gupta ◽  
Monica Shrivastava
Keyword(s):  
Loss Aversion ◽  
Investment Decision ◽  
Investment Decisions ◽  
Herd Behavior ◽  
Content Type ◽  
Fear Of Missing Out ◽  
Mediating Role ◽  
Retail Investors ◽  
The Impact

PurposeThe study aims to understand the impact of loss aversion and herding on investment decision of retail investors. The study further evaluates the mediating role of fear of missing out (FOMO) in retail investors on these relationships.Design/methodology/approachThe study employed questionnaire survey to collect data from retail investors of Indian stock market. Total 323 data were collected. The collected data were examined using SmartPLS. Factor analysis and partial least square structural equation modeling were employed for fulfilling the objectives of the study.FindingsThe results of the study revealed that investment decisions of retail investors are significantly influenced by loss aversion, herd behavior as well as FOMO. Assessing the impact of herd behavior and loss aversion on investment decision in presence and absence of FOMO exposed that FOMO partially mediates these relations. The mediation was complementary in nature as the presence of FOMO increased the influence of loss aversion and herd behavior on retail investor's investment decisions.Practical implicationsBehavioral predispositions are accountable for numerous irregularities in stock markets. Thus, it is quite substantial to realize the stimulus of these partialities on investment decisions. The outcomes of this study would help financial planners and investors to keep in mind the different ways their decision outcomes could be biased and try to ignore them.Originality/valueThough there have been many studies conducted on behavioral biases and their impact on investment decisions, there are very few studies that have taken into account the FOMO factor in investment, in context of the behavioral biases. Theoretically, FOMO has been linked with herd behavior and greed of earning more, but there are very few empirical supports to this fact. Thus, this study is an attempt to fill this gap by examining the role of FOMO on investment decisions and the different biases associated with it.

scholarly journals How do collectives of amateurs handle complexity on financial markets while deciding?

2018 ◽  
Vol 15 (2) ◽  
pp. 52-68
Author(s):  
Lydia Judith Welbers
Keyword(s):  
Financial Markets ◽  
Group Composition ◽  
Investment Decisions ◽  
Organisational Structure ◽  
Definition Of The Situation ◽  
True Value ◽  
Retail Investors ◽  
Interaction Order ◽  
Ethnographic Data ◽  
Definition Of

This paper questions how investment clubs – as small groups of retail investors that pool their money – cope with issues of hyper-complexity and truth while deciding together where to invest their money. This may be challenging because investment-decisions are characterised by informational complexity, an unknown future and double contingency. By employing ethnographic data, this paper traces how investment clubs reach a collective decision despite hyper-complexity. It will be shown how the members of the group struggle to make sense of and to find a shared definition of a situation. During this process they try to reduce complexity by evaluating and deciding collectively. The ways the different groups achieve this is influenced by the group composition, their organisational structure and the interaction order. In some groups negotiations are an essential part of their meetings whereby complexity is initially cultivated. Negotiations are used to develop a shared definition of the situation. These groups question if the truth can be uncovered in financial markets. Other groups reduce complexity by using certain techniques to uncover the true value of a stock. These ways of coping with complexity are bound to certain ways of organising and types of members. Accordingly, successful evaluating and deciding, which means that decisions are made, is bound to several exclusions that are made legitimate by the inclusion in the financial market. In summary, the paper adds new insights to processes of decision making in situations that are characterised by complexity.

scholarly journals I Ought to Put Down That Phone but I Phub Nevertheless: Examining the Predictors of Phubbing Behavior

2019 ◽  
pp. 089443931988236 ◽  
Author(s):  
Frank M. Schneider ◽  
Selina Hitzfeld
Keyword(s):  
Mobile Phone ◽  
Online Survey ◽  
Injunctive Norms ◽  
Approach And Avoidance ◽  
Fear Of Missing Out ◽  
Worldwide Phenomenon ◽  
The Relationship ◽  
Shed Light

Smartphones are ubiquitous and frequently used in copresent interactions. This behavior is often seen as inappropriate and thus has been termed phubbing, compromising the words “phone” and “snubbing.” Although being a worldwide phenomenon, little is known about what predicts phubbing behavior in the first place. Drawing on injunctive norms (i.e., what ought to be done), the study’s aim was to shed light on the relationship between mobile phone norms (MPN) and phubbing behavior. Furthermore, the role of being permanently online and permanently connected (POPC) and fear of missing out (FOMO), reflecting approach and avoidance orientations, respectively, as additional predictors and moderators was investigated. As expected, the findings of an online survey ( N = 278) supported the assumption that MPN were negatively related to phubbing behavior. Moreover, results showed that both FOMO and POPC were significantly positively connected to phubbing behavior but did not play significant moderating roles concerning the norm–phubbing relationship.

scholarly journals Pengaruh Keputusan Investasi Dan Makro Ekonomi Melalui Operasional Terhadap Nilai Perusahaan

2020 ◽  
Vol 7 (2) ◽  
pp. 181-192
Author(s):  
Lu’lu’il Maknuun
Keyword(s):  
Data Analysis ◽  
Firm Value ◽  
Investment Decisions ◽  
Partial Least Square ◽  
Least Square ◽  
Quantitative Approach ◽  
Analysis Method ◽  
Data Analysis Method ◽  
The Relationship

This study aims to determine and analyze the effect of investment decisions and macroeconomics through operations to firm value. This study uses a quantitative approach. the data analysis method used in this study is the Smart Partial Least Square (PLS) software. The effect of investment decisions on operations, the relationship between the two variables is a significant negative. The effect of investment decisions with firm value, the relationship between the two variables is significantly positive. The influence of macroeconomics on operations, the relationship between the two is negative is not significant. The influence of macroeconomic with firm value, the relationship between two variables is not significant positive. The operational effect on firm value, the relationship between the two variables is significantly positive.

scholarly journals Relationship between nomophobia and fear of missing out among Turkish university students

2018 ◽  
Vol 13 (4) ◽  
pp. 549-561 ◽  
Author(s):  
Nazire Burcin Hamutoglu ◽  
Deniz Mertkan Gezgin ◽  
Gozde Sezen-Gultekin ◽  
Orhan Gemikonakli
Keyword(s):  
University Students ◽  
Social Networking ◽  
Mobile Phone ◽  
Social Networking Sites ◽  
Critical Role ◽  
Total Variance ◽  
Fear Of Missing Out ◽  
Problematic Relationship ◽  
Turkish University Students ◽  
The Relationship

The aim of this study is to investigate the relationship between no mobile phobia (nomophobia) which is defined as a modern fear of being unable to communicate through the mobile phone, and Fear of Missing Out (FOMO) which is known to be related with the problematic relationship with Social Networking Sites (SNSs), and play a critical role in the increased use of Social Networking Sites (SNS). The data were collected from a convenient sample of 538 university students via Nomophobia (NMP-Q) and FOMO Scales, The results show that a positive moderate level of relationship was found between Nomophobia and FOMO levels. The findings showed that FOMO level of university students predicts 41% of the total variance at the Nomophobia level. That is, when FOMO level increases, students’ nomophobia level can be predicted from data depicting the increase. 

A STUDY ON EFFECT OF BEHVIORAL BIASES ON INVESTOR’S PREFERENCE REGARDING 80C TAX SAVING INSTRUMENTS IN SURAT CITY

2021 ◽  
Vol 12 (1) ◽  
pp. 60-69
Author(s):  
Hiral D Mehta ◽  
◽  
Dr. Jitesh Parmar ◽  
Keyword(s):  
Financial Markets ◽  
Sample Size ◽  
Sampling Method ◽  
Investment Decision ◽  
Investment Decisions ◽  
Survey Method ◽  
Behavioural Finance ◽  
Financial Decisions ◽  
Behavioral Biases

Behavioural finance is a new theoretical field which seeks to apply the understandings of the psychologists to recognize the behaviour of both investors and financial markets. It concentrates upon how investor is aware and acts on information to take investment decisions and that their behaviours reason them to make changed Selection about their financial decisions. Investors do not act sensibly in taking verdicts relating to investment. They have positive weaknesses like cognitive and emotional which take a predominating function in taking investment decision of individuals. They have behavioral biases in the event of taking investment decision. In this present paper researchers examines “Effect of Behvioral Biases on Investor’s Preference Regarding 80C Tax Saving Instruments in Surat City.”. Researcher has studied behavioral biases of investors investing in 80C tax saving instruments by conducting the survey with sample size of 100 investors through a wellstructured questionnaire in Surat city. The sampling method used was convenient sampling through personal survey method by contacting investors of Surat city. The purpose of this study was to find out behavioral biases of investors while investing in tax saving 80C instruments in Surat City.

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