scholarly journals Investment Decisions, Herd Behaviour and Retail Investors

2019 ◽  
Vol 8 (10) ◽  
pp. 3291-3294
Keyword(s):  
Decision Making ◽  
Behavioral Finance ◽  
Psychological Factors ◽  
Investment Decisions ◽  
Sampling Technique ◽  
Primary Data ◽  
Individual Investors ◽  
Herd Behavior ◽  
Retail Investors ◽  
The Impact

Behavioral finance explains that cognitive biases influences investor decision making. Due to the influence of different behavioral biases investors do tend to make irrational decisions. Behavioral finance has highlighted the failure of traditional finance theories to account for human emotions when making investment decisions. While traditional finance theories disregard human element in decision-making, behavioral finance theories take into account the human phycology while explaining theories. Many studies have found and explained many biases that are exhibited by investors which lead to irrational investment decision making on their part. One among the many the biases herding can be considered among the most important behavior which leads to low quality investment decisions by investors. While compared to studies about herd behavior of institutional investors, the studies about individual retail investors in less. The motive behind this study is to clarify the role of demographic factors and psychological factors that influence herd behavior among individual investors. In this study the impact of demographics and psychological factors on herd behavior was studied. For this survey, primary data was collected using Judgment sampling technique and the results analyzed. Retail investors in Chennai exhibited herd behavior with regard to investment decisions. Eight factors were found to influence herd behavior.

scholarly journals Influence of Behavioural Biases on Investment Decision Making in Bhubaneswar Region

2019 ◽  
Vol 8 (3) ◽  
pp. 8297-8301
Keyword(s):  
Decision Making ◽  
Investment Decision ◽  
Descriptive Analysis ◽  
Sampling Technique ◽  
Primary Data ◽  
Behavioural Finance ◽  
Investment Decision Making ◽  
Retail Investors ◽  
The Individual ◽  
The Impact

Behavioural Finance has gained a lot more importance in recent era. In the fast moving world where the standard finance fails to explain the irrational behavior of the investors, behavioural finance tries to identify the cause for such behavior which otherwise called as behavioural anomalies. The purpose of this research paper is to identify such anomalies and also to examine whether the behavioural biases has any influence in the investment decision making by the retail investors. This paper also put an emphasis to find out which among the different biases has the most and least influence on the individual investment decision making process. This study has used primary data for knowing the impact of factors such as gender, age, occupation, income, sector preference, and instruments preferred for investments, source of information, intention behind investment and consideration before investment. Descriptive analysis has been done to check the impact of these factors along with correlation and other. The sampling technique used here is non-probabilistic convenience sampling. The data has been collected through structured questionnaire based on five point Likert scale from the retail investors of Bhubaneswar region. This research shall interest the company, policy makers and the issuers of securities about the interest and preferences of individuals before issuing securities in the market.

scholarly journals Impact of Behavioral Factors in Making Investment Decisions and Performance: Evidence from Pakistan Stock Exchange

Market Forces ◽  
2021 ◽  
Vol 16 (1) ◽  
pp. 22
Author(s):  
Muhammad Rehan ◽  
Jahanzaib Alvi ◽  
Lubna Javed ◽  
Baber Saleem
Keyword(s):  
Decision Making ◽  
Behavioral Finance ◽  
Stock Exchange ◽  
Investment Decision ◽  
Investment Decisions ◽  
Individual Investors ◽  
Behavioral Factors ◽  
Factors Affecting ◽  
Investment Decision Making ◽  
The Impact

Market irregularities and irrational behavior triggered investor’s 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 quality of individual investor behavior in making stock investment decisions is very important to be understood as a reference of the movement of the capital market. This study investigated the role of behavioral finance and investor psychology in investment decision-making at the Pakistan Stock Exchange (PSE). Using a sample of 147 individual investors, the study established that behavioral factors such as Herding, Heuristic, Market and Prospect that affected the decisions of the investors operating at the Pakistan Stock Exchange (PSE). As there are a few studies in Pakistan related to behavioral finance, so this study mainly contributes to the field of behavioral finance in Pakistan. This study focusses on existing theories of behavioral finance which led to develop the hypothesis. 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

Effect of Disposition Effect on Investment Decision Making in Property Market in Plateau State, Nigeria

2019 ◽  
pp. 83-98
Author(s):  
Dashol Ishaya Usman ◽  
Mary Pam
Keyword(s):  
Decision Making ◽  
Behavioral Finance ◽  
Investment Decision ◽  
Investment Decisions ◽  
Primary Data ◽  
Property Market ◽  
Financial Decisions ◽  
Descriptive Research ◽  
Investment Decision Making ◽  
Plateau State

The purpose of the chapter was to establish the effect of disposition on investment decision making in property market in Plateau State, Nigeria. Descriptive research design was used in the study. Primary data was collected using standard questionnaires with both closed and open-ended questions. The regression analysis results confirmed that there was a significant positive linear relationship between disposition and investor investment decision making in property market in Plateau State in Nigeria. The study concluded that disposition effects bias does not alter rationality in investment decision making. Disposition affected investment decisions. The main recommendation for investors is to make constant attempts to increase their awareness on behavioral finance by educating themselves on the field. Studying about the biases and reflecting on their decisions are likely to help achieve better self-understanding of the extent and manner to which they are influenced by emotions while making financial decisions under uncertainty.

scholarly journals An Analysis of Behavioral Biases in Investment Decision-Making

2019 ◽  
Vol 10 (4) ◽  
pp. 55 ◽  
Author(s):  
Geetika Madaan ◽  
Sanjeet Singh
Keyword(s):  
Decision Making ◽  
Positive Impact ◽  
Stock Exchange ◽  
Investment Decision ◽  
Investment Decisions ◽  
Individual Investors ◽  
Behavioral Biases ◽  
Investment Decision Making ◽  
Survey Responses ◽  
The Impact

Individual investor’s behavior is extensively influenced by various biases that highlighted in the growing discipline of behavior finance. Therefore, this study is also one of another effort to assess the impact of behavioral biases in investment decision-making in National Stock Exchange. A questionnaire is designed and through survey responses collected from 243 investors. The present research has applied inferential statistics and descriptive statistics. In the existing study, four behavioral biases have been reviewed namely, overconfidence, anchoring, disposition effect and herding behavior. The results show that overconfidence and herding bias have significant positive impact on investment decision. Overall results conclude that individual investors have limited knowledge and more prone towards making psychological errors. The findings of the study also indicate the existence of these four behavioral biases on individual investment decisions. This study will be helpful to financial intermediaries to advice their clients. Further, study can be elaborated to study other behavioral biases on investment decisions.

Developing an instrument for measuring the effects of heuristics on investment decisions

Kybernetes ◽  
2016 ◽  
Vol 45 (7) ◽  
pp. 1052-1071 ◽  
Author(s):  
Kadir C. Yalcin ◽  
Ekrem Tatoglu ◽  
Selim Zaim
Keyword(s):  
Behavioral Finance ◽  
Investment Decisions ◽  
Small Sample ◽  
Equation Modeling ◽  
Individual Investors ◽  
Moderating Effects ◽  
Measurement Scales ◽  
Content Type ◽  
The Usa ◽  
The Impact

Purpose Based on a thorough review and synthesis of the literature in behavioral finance, the purpose of this paper is to develop three measures of heuristics that tend to influence investment decisions of individual investors. Design/methodology/approach Using perceptual data collected from a sample of 167 individual investors in the USA, the reliability and validity of heuristics measures are assessed by confirmatory factor analysis with structural equation modeling. Then, the second-order model is executed in order to indicate the paths among the study’s constructs. Finally, a multiple-group analysis is conducted to analyze the moderating effects of demographic factors on the relationship between the perceived level of heuristics and their constituent dimensions. Findings Of the three groups of heuristics, salience is found to be the most important followed by mental accounting, while representativeness features as relatively less important. Regarding the moderating effects, only investment experience is noted to have a significant moderating impact. Research limitations/implications The data utilized for testing and validating this instrument was acquired from a relatively small sample of individual investors in the USA, which makes the generalization of findings somewhat limited. Practical implications Both researchers and practitioners in behavioral finance can use these measurement scales to better understand the impact of heuristics on individual investment decisions and also to develop models that relate the critical factors of heuristics to the performance of individual investment decisions. Originality/value To date, there has been no systematic attempt in the extant behavioral finance literature to develop a valid and reliable instrument on heuristics which would aid to improve the quality of decision making in investment analysis.

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.

Impact of behavioral factors on investors’ financial decisions: case of the Egyptian stock market

2019 ◽  
Vol 12 (1) ◽  
pp. 30-55 ◽  
Author(s):  
Noura Metawa ◽  
M. Kabir Hassan ◽  
Saad Metawa ◽  
M. Faisal Safa
Keyword(s):  
Stock Market ◽  
Behavioral Finance ◽  
Investor Sentiment ◽  
Investment Decisions ◽  
Demographic Characteristics ◽  
Individual Investors ◽  
Herd Behavior ◽  
Behavioral Factors ◽  
Content Type ◽  
Positive Effects

Purpose This paper aims to investigate the relationship between investors’ demographic characteristics (age, gender, education level and experience) and their investment decisions through behavioral factors (sentiment, overconfidence, overreaction and underreaction and herd behavior) as mediator variables in the Egyptian stock market. Design/methodology/approach This paper collects data from a structured questionnaire survey carried out among 384 local Egyptian, foreign, institutional and individual investors. This paper used a partial multiple regression method to analyze the effect of investors’ demographic characteristics on investment decisions through behavioral factors as the mediator variable. Findings Investor sentiment, overreaction and underreaction, overconfidence and herd behavior significantly affect investment decisions. Also, age, gender and the level of education have significant positive effects on investment decisions by investors. Experience does not play a significant role in investment decisions, but as investors gain experience, they tend to overlook the emotional factors. Practical implications The findings of this paper would help to understand common behavioral patterns of investors and indicate a path toward the growth of the Egyptian stock market. Originality/value There is a lack of research in behavioral finance covering Middle East and North African markets. This paper attempts to fulfill the gap by analyzing behavioral factors in the Egyptian market.

scholarly journals Investigating the Concept of Creative Disposition & Decision Making Styles

2021 ◽  
Vol 10 (2) ◽  
pp. 12-25
Author(s):  
SAYMA ZIA ◽  
ISMAT FATIMA ◽  
SANA AZHER
Keyword(s):  
Decision Making ◽  
Data Collection ◽  
Personal Experience ◽  
Sampling Technique ◽  
Target Population ◽  
Primary Data ◽  
Data Collection Process ◽  
Decision Making Styles ◽  
Linear Regression Technique ◽  
The Impact

This purpose of this study aims to determine the impact of decision making styles in organizations operating in Karachi. It focuses on exploring different components of decision making styles and investigates the concept of creative disposition. Moreover, it determines the correlation of different components of decision making styles to creative disposition of employees. It identifies necessary changes in decision making styles to increase its impact on creative disposition. Explanatory technique is adopted to determine the impact of logic, facts and personal experiences in decision making style on creative disposition; followed by primary data collection. Quantitative paradigms are used to perform the analysis. Target population of current study comprises of employees working in organizations of Karachi. Sampling technique used is non-probability convenient sampling. Sample size is of 384. Survey technique has been adopted for data collection process. Instrument used is questionnaire for data collection multiple linear regression technique has been used for analysis. The results of the study revealed that there is a significant role of logic based decision making style, facts based decision making style and personal experience based decision making style to determine positive creative disposition shows that it has a significant impact on it. This study successfully explained importance of decision making styles in developing creative disposition in organizations. Keywords: Logic Based Decision Making Style, Facts Based Decision Making Style, Personal Experience Based Decision Making Style, Creative Disposition.

scholarly journals PENGARUH PENGGUNAAN INFORMASI AKUNTANSI TERHADAP PERILAKU KEUANGAN INVESTOR INDIVIDUAL UNTUK PENGAMBILAN KEPUTUSAN INVESTASI

2016 ◽  
Vol 2 (2) ◽  
pp. 1
Author(s):  
Loveanis Widya Puspa ◽  
Mukaram Mukaram
Keyword(s):  
Decision Making ◽  
Investment Decision ◽  
Accounting Information ◽  
Investment Decisions ◽  
Position Statement ◽  
Financial Behavior ◽  
Primary Data ◽  
P Value ◽  
Individual Investors ◽  
Complex Situation

Financial behavior intended to understand the behavior of investors in making investment decisions. Decision making is a process of selecting the best alternative from a number of alternatives available under the influence of a complex situation. Investment decision will be influenced by the information received, as well as the level of ability and knowledge of investors about the investment. There is an assortment of information needed in investment to note, one of which is the accounting information. The underlying concept is that the accounting information for the stock value of a company is influenced by the financial performance of the company concerned. Accounting information used by capital market investors are Statements of Financial Position, Statement of Comprehensive Income, Statement of Changes in Equity and Cash Flow Statement. This study aims to determine the effect of the use of accounting information to the financial behavior of individual investors in making investment decisions. The survey was conducted on 110 investor PT Phillips Securities Indonesia Bandung branch. Primary data was collected through questionnaire distribution and it is analyzed descriptively. This study resulted in the average number for the use of accounting information of 3.85 which means that the accounting information has been used well by investors. The average values for financial behavior is of 3.52, it can be interpreted that the financial behavior of investors in making investment decisions is good. For R Square obtained by 0.6%, proving that the accounting information contributed for 0.6% of the financial behavior of investors. As for the P value of 0.406, The figure is greater than 0.05, which is shows us that obtained figures which show that the use of accounting information has no influence on the financial behavior of individual investors for making investment decisions. So, although the results of this study indicate that the effect of accounting information on the behavior of financial investors when deciding on an investment is not significant, but investors stated that the accounting information presented by the company remain a consideration in the investment decision-making process.

scholarly journals Pengaruh Faktor Demografi dan Literasi keuangan dengan Behavior Finance dalam Pengambilan Keputusan Investasi

2021 ◽  
Vol 11 (2) ◽  
pp. 237-248
Author(s):  
Elkunny Dovir Siratan ◽  
Temy Setiawan
Keyword(s):  
Decision Making ◽  
Behavioral Finance ◽  
Financial Literacy ◽  
Structural Equation ◽  
Investment Decision ◽  
Demographic Factors ◽  
Individual Investors ◽  
Portfolio Performance ◽  
Investment Decision Making ◽  
The Impact

The investment decision-making process is influenced by various factors, including financial literacy and demographic factors. This research examines the impact of demographic factors and financial literacy with behavioral finance as a mediation on investment decision making.  This research using structural equation model (SEM) analysis. The result shows that demographic factors through gender, age, education, income, occupation and experience have an influence and cause a specific behavior in investment decision making. Then the financial literacy factor has an influence in reducing negative behavior. Likewise, demographic factors and financial literacy with behavioral finance as a mediation on investment decisions have a positive influence. The existence of behavior that is manages with planning, financial literacy support, and demographic factors owned by individual investors will create an opportunity for market momentum. Which help maximize profit, better investment and portfolio performance, avoid risks, better investment decision, and forming trading strategies.

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