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Factors affect an individual’s stock
investment decision in Vietnam
SUPERVISOR:
STUDENT ID:
STUDENT NAME:

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ABSTRACT
The research aim of the project is to analyse factors affecting an individual’s stock
investment decision in the Vietnamese stock market. With the research aim, the
project has three main objectives as follows: (1) to deepen the theories about factors
impacting on individual investors’ stock investment decision, (2) to identify the
relationships between individual investors’ stock investment decision in the
Vietnamese stock market and its antecedents including education level, psychological
biases, attitudes, risk propensity, financial aspect and market information, and (3) to
provide recommendations for companies in Vietnamese stock market to attract more
individual investors in the future.
Regarding the methodology, the author of this project chooses research philosophy of
positivism, research approach of deduction, study strategy of survey, and quantitative
study method. Questionnaire, stratified sampling approach and size of sampling of 200
individual investors in the Vietnamese stock market have been used by this project.
Moreover, the author of this project has used methods of analysis of study data
including regression analysis, examination of reliability and description analysis. The
research findings of this project indicate that H4, H5, and H6 are rejected while H1, H2,
and H3 are accepted. In detail, there are three factors impacting on the stock
investment decision of individual investors in the Vietnamese stock market and the
three factors are education level of individual investors, psychological biases of
individual investors, and attitudes of individual investors. Education level and attitudes
have positive impacts on stock investment decision of individual investors in the
Vietnamese stock market while psychological biases have negative impacts on stock
investment decision of individual investors in the Vietnamese stock market. In addition,
there are three factors that do not have any influences on stock investment decision of
individual investors in the Vietnamese stock market, mainly risk propensity of
individual investors, financial aspect of individual investors and market information.

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TABLE OF CONTENTS
Abstract................................................................................................................................ i
Table of contents ................................................................................................................ ii
Chapter 1 - Introduction ..................................................................................................... 1
1.1 Research background.................................................................................................... 1
1.2 Research problem ......................................................................................................... 4
1.3 Research aims, objectives and questions ..................................................................... 7
1.4 Research structure ........................................................................................................ 8
Chapter 2: Literature review............................................................................................. 10
2.1 Introduction ................................................................................................................ 10
2.2 Understanding of stock investment decisions of an individual investor.................... 10
2.3 Factors impacting on stock investment decision-making of individual investors ...... 12
2.3.1 The relationship between education level and stock investment decision of
individual investors ........................................................................................................... 13
2.3.2 The relationship between psychological biases and stock investment decision of
2.3.3 The relationship between attidues and stock investment decision of individual
investors .................................................................................................................... 16
2.3.4 The relationship between risk propensity and stock investment decision of
2.3.5 The relationship between financial aspect and stock investment decision of
2.3.6 The relationship between market information and stock investment decision of
2.4 Conclusion ................................................................................................................ 22
Chapter 3: Reserch methodology ..................................................................................... 25
3.1 Introduction ................................................................................................................ 25
3.2 Study philosophy......................................................................................................... 25
3.3 Study approach ........................................................................................................... 26
3.4 Study strategy ............................................................................................................. 27

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3.5 Study method.............................................................................................................. 28
3.6 Method of collection of study data............................................................................. 29
3.6.1 Tool of collection of study data ............................................................................... 29
3.6.2 Technique of sampling and size of sampling ........................................................... 31
3.7 Method of analysis of study data................................................................................ 31
3.8 Evaluation of validity and reliability of study results.................................................. 32
3.9 Ethics of study............................................................................................................. 33
3.10 Limitations of the applied study methodology......................................................... 34
3.11 Conclusion................................................................................................................. 34
Chapter 4: Analysis and discussion of research findings .................................................. 36
4.1 Introduction ................................................................................................................ 36
4.2 Information of demographics of surveyed individual investors in the Vietnamese
stock market .................................................................................................................... 36
4.3 Test of reliability.......................................................................................................... 38
4.4 Research findings about the relationships between stock investment decision of
individual investors and its antecedents in the Vietnamese stock market...................... 40
4.5 Discussions of research findings about the relationships between stock investment
decision of individual investors and its antecedents in the Vietnamese stock market ... 45
4.6 Conclusion................................................................................................................... 55
Chapter 5: Conclusion and recommendations ................................................................. 56
5.1 Introduction ................................................................................................................ 56
5.2 Research conclusions .................................................................................................. 56
5.3 Contributions of this project....................................................................................... 57
5.4 Limitations of this project and suggestions for future projects ................................. 58
5.5 Recommendations for the management of companies in the Vietnamese stock
market .................................................................................................................... 60
5.6 Conclusion................................................................................................................... 62
Reference .................................................................................................................... 63
Appendix 1: Questionnaire .............................................................................................. 72
Appendix 2: Data analysis findings from questionnaires.................................................. 78

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CHAPTER ONE
INTRODUCTION
1.1 Research background
Stock market helps foreign investors and local investors sell and purchase stocks and
then organisations can increase their capital source through the efficient stock
transaction channel (Dimitrios, 2007; Bhatt and Sumangula, 2012). Stock market with
the liquidity has drawn more attention of investors compared with other investment
types. In particular, different rationales for investors to make decisions of stock
investment are that they want to receive dividends of an organisation per year, and that
they want to make business decisions, and set up strategic direction for an organisation
by owning a large number of stocks (Merikas et al., 2004). There are three main types of
stock markets, mainly pre-developing stock markets of Kenya, Vietnam, etc, developing
stock market of China, Mexico, India, etc, and developed stock markets of Japan, the
United States and nations in Europe (Haque and Faruquee, 2013). The stock markets in
developed countries like the United States, and nations in Europe have mutual
dependence and mutual effect. Thus, the global problems like natural disasters,
economic crises, and energy crises have high effects on the fluctuations in stock markets
across the globe (Khan et al., 2015).
Stock market is regarded as the assessment criteria for economy growth and strengths
of a nation. Hence, the growth of stock market demonstrates the health of the economy
of the nation. When there is an investment increase in stocks of a certain organisation in
a nation, a stock price increase of the organisation will happen. Additionally, the
development of business of the organisation in particular and the economic growth of
the nation will be increased (Bhatt and Sumangula, 2012). Organisations want to use
capital of investors in long time while the investors expect that they will not lose the
control of their money in the long time. Then, stock market’s liquidity helps the

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organisations use the investors’ capital in long time but also helps the investors sell and
purchase stocks easily and fast (Halonen et al., 2013). Stock market can impact on the
economic development through diversification of risks, efficient utilisation and
allocation of resources, usage of capital of investors for manufacturing goods and
creating services, fast rearrangement of investors’ portfolios. Hence, the importance
and high impact of the stock markets on the economic growth of countries are
inevitable and not denied (Bhatt and Sumangula, 2012; Khan et al., 2015).
Macroeconomics stabilizing became critically important policy objectives in many
developing countries in the early 1980s. It has been evident that Vietnam’s success
after political and economic renewal campaign and policy in 1980s was attributed to the
macroeconomic policy, especially the demand management one. Vietnam has achieved
remarkable achievements in terms of GDP growth, macroeconomic stability, and export
expansion. Vietnam is now ranked as the low-middle income class. During the first
decade after the open policy, the economy recorded high GDP growth with the average
of over 8 percent annually during the Asia Financial crisis. After the Asian financial crisis
in 1997, Vietnam achieved a rapid development due to the increasing demand of
Vietnamese consumers. From the period of 1997-2007, Vietnam’s growth rate was as
high as 8%, followed by China. It can be said that Vietnamese economy is developing
over time (Hayton, 2011). The openness of the economy of Vietnam has led to a period
of increasing capital flow (both indirect investment and direct investment). The capital
flow was expected to have a push for the Vietnamese economic development. But the
fact was that Vietnam economy has been fluctuated since 2009. In particular, the world
economic crisis in 2009, the rate of growth decreased, the inflation jumped to two digit
numbers, unemployment grew and bankruptcy of companies tended to rise. Under such
circumstances, the demand stimulation policy was conducted. Due to the demand
stimulation policy, the Vietnamese economy was improved. Nowadays, the Vietnamese
economy is growing because the country pays much attention to economic stable
development (Nguyen, 2011; Ha, 2014).

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The Vietnamese government focuses on motivating the growth of the Vietnamese
securities market so that organisations in Vietnam can increase their capital serving
their business activities. In 2000, the first securities market in Vietnam began its
operations in Ho Chi Minh City with the name of HOSE (Ho Chi Minh Stock Exchange)
and in 2005, the second securities market in Vietnam started operating in Hanoi City
with the name of HXN (Hanoi Stock Exchange). Currently, Vietnam has two main
securities markets consisting of HXN and HOSE. The two Vietnamese securities markets
are still smaller in terms of scale and maturity compared with foreign securities markets
in developed nations. Although the securities markets in Vietnam have high developed
in the form of value of stock transactions and the number of listed stocks, the
fluctuations of stock price from 2000 to 2015 high. In particular, in 2000, stock index of
Vietnam (VNINDEX) began at 100 points and in 2001, VNINDEX reached to 571 points.
From 2000 to 2001, investors focused on investing in stocks and wanted to earn high
returns from the investment of stock in the securities market of Vietnam. However, lack
of clear regulations, simple system of stock transaction and limited securities types
made VNINDEX decrease the trough of 139 points in the year of 2003. Then, with the
great efforts of the Vietnamese government, VNINDEX started increasing to 1,170
points in the year of 2007. After reaching the peak point, in 2009, VNINDEX was
decreased at 235 points. The fast decrease in VNINDEX occurred because of the global
economic crisis, serious controls of the Vietnamese government of loans of stock
investment, and lack of suitable intervention of the Vietnamese government (Quan,
2010). Currently, two stock markets in Vietnam (HXN and HOSE) have over 700 stock
types. After over 15 years of operation, the stock markets have increased their
capitalisation of market and the process of making stock investment of individual
investors has been more professional (Nguyen, 2015). The VNINDEX from January, 2000
to January, 2015 is presented in figure 1.

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Figure 1: VNINDEX from January, 2000 to January, 2015
Source: Nguyen (2015)
1.2 Research problem
According to Hayton (2011), Vietnamese stock market has been one of the stock
markets with strongest growth in Asia which increase 18 percent annually. Japan
followed with a lower increase. Along with Japan, Vietnamese stock market has
surpassed other countries in the Asian region such as Philippines, Taiwan, Thailand and
Indonesia. The development of financial markets in general and stock markets in
particular is affected by macro factors, leading to increased investment and contribute
to the growth of the economy. The previous studies showed that the price of securities
is sensitive to economic information and it is also influenced by a few factors that
cannot be predicted. These factors affect directly or indirectly to the price of securities
in two levels of unsystematic risks and systematic risks. Concerning about unsystematic
risks, they are the risks that investors can eliminate through diversifying securities. In
terms of systematic risks, they are the risks of market that no investors can avoid
although they have diversified the portfolio. Normally assessing the risk level of
securities is made through the study of systemic risk. Investors often consider many risk
factors when making investment decisions, and they try maximizing the expected profits
of invested securities based on basic assumptions about systematic risks. In other

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words, investors who want to achieve higher expected returns must accept more risks
(Bhatt and Sumangula, 2012; Chin, 2012).
When participating in the stock market, investors should understand deeply the
measurement of impacts of factors to the invested securities. Currently, there are many
mathematical models have been developed to measure the tradeoff between risks and
returns, including Arbitrage Pricing Theory Model (APT) and Capital Asset Pricing Model
(CAPM). The process of making stock investment decision of individual investors is a
complex one which includes many various steps. The decision-making about stock
investments of individual investors plays a crucial role in identifying the trend of stock
market which affects the economy. Additionally, in comparison with individual investors
in developed nations, stock investment decision-making of the majority of Asian
individual investors including Vietnamese individual investors often bases more on
cognitive biases (Nguyen, 2015). Hence, it is importance for this study to explore factors
affecting individual investors’ stock investment decision-making in Vietnam.
Global financial analysts in general and Vietnamese financial analysts in particular are
still difficult to understand the progress of stock investment decision-making of
Vietnamese individual investors because their forecasts do not match with what have
happened in securities markets in Vietnam. For example, the financial analysts of
Mekong Securities indicated that VNINDEX would reach to 1,140 points in 2008. Other
financial analysts of HSBC affirmed that VNINDEX would increase to 1,110 points in
2008. However, the forecasts of the financial analysts were not exact since there was
great reduction of VNINDEX in 2008. Additionally, other financial analysts of HSBC
asserted that VNINDEX in 2009 would decrease and VNINDEX in 2009 would be smaller
than VNINDEX in 2008. However, the forecast was not exact since VNINDEX in 2009 was
1.5 times higher than VNINDEX in 2008. Hence, it seems that approaches of forecast
according to financial theories cannot be suitable to the securities markets in Vietnam
(Quan, 2010). The financial theories indicate that individual investors can enhance their
returns through following right financial rules and investment decision-making through

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basing on evaluations of the link between returns and risks. However, the degree of
acceptance of risks of the individual investors can be dependent upon their individual
features and their attitudes of acceptance of risks (Riaz et al., 2012). According to
Nguyen (2011), stock investment decision-making of individual investors is not only
affected by rational elements but also behavioural elements. There are many factors
impacting on investment decisions of an individual investor in securities. Then, it is
important to evaluate factors affect an individual’s stock investment decisions in
Vietnam.
Factors impacting on individual investors’ stock investment decision-making are still not
much investigated in the Vietnamese context in particular and the Asian context in
general (Nguyen, 2011). Then, the study focusing on factors impacting on decision-
making of stock investment of individual investors in Vietnam helps business
organisations in Vietnam understand factors affecting decision-making of stock
investment of Vietnamese individual investors so that they can attract attention of the
individual investors to their stocks. In addition, the study can help securities companies
understand factors affecting decision-making of stock investment of individual investors
in Vietnam so that they can give suitable and beneficial forecasts and recommendations
associated with trend of Vietnamese securities markets and other issues of the
securities markets. Additionally, suitable and beneficial forecasts and recommendations
of securities companies in Vietnam help the individual investors in Vietnam make more
efficient decisions about their stock investments in the Vietnamese securities markets.
Because this study wants to handles the above research problems, the study focuses on
investigating the research topic as follows: “Factors affect an individual’s stock
investment decision in Vietnam”.

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1.3 Research aim, objectives and questions
The research aim of the project is to analyse factors affecting an individual’s stock
investment decision in the Vietnamese stock market. With the research aim, the project
has three main objectives and three main questions as follows:
Study objectives
 To deepen the theories about factors impacting on individual investors’ stock
investment decision
 To identify the relationships between individual investors’ stock investment
decision in the Vietnamese stock market and its antecedents including education
level, psychological biases, attitudes, risk propensity, financial aspect and market
information
 To provide recommendations for companies in Vietnamese stock market to
attract more individual investors in the future
Study questions
 What is the main literature about factors affecting individual investors’ stock
investment decision?
 How is individual investors’ stock investment decision in the Vietnamese stock
market impacted by its antecedents including education level education level,
psychological biases, attitudes, risk propensity, financial aspect and market
information?
 What are recommendations for companies in Vietnamese stock market to draw
the attention of more individual investors in the future?

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1.4 Research structure
This study has five chapters as follows:
Chapter one (Introduction) helps the author indicate general background of the study,
research problems of the study. Additionally, this chapter gives the general aim and the
three individual objectives which the study wants to achieve and this chapter indicates
the research structure.
Chapter two (Literature review) helps the author analyse the theories about the concept
of stock investment decision of an individual, and factors impacting on individual
investors’ stock investment decision-making. In particular, the relationships between
individual investors’ stock investment decision-making and its antecedents including
education level of individual investors, psychological biases of individual investors,
attitudes of individual investors, risk propensity of individual investors, financial aspect
of individual investors and market information are critically analysed in this chapter.
Then, hypotheses about these relationships in the Vietnamese stock market context and
the study model will be proposed in this chapter.
Chapter three (Research methodology) presents what philosophy of study, research
approach, study strategy, method of study, and method of data collection will be used
by the author. Methods of analysis of study data will be also presented in the chapter.
Additionally, study ethics, evaluation of validity and reliability of study results, and
limitations of the applied study methodology will be indicated in the chapter.
Chapter four (Analysis and discussion of research findings) helps the author evaluates
how individual investors’ stock investment decision-making in Vietnam is impacted by
its antecedents including education level of individual investors, psychological biases of
individual investors, attitudes of individual investors, risk propensity, financial aspect
and market information. In other words, all hypotheses proposed in chapter two will be
explained. Additionally, the chapter discusses the research findings through comparison
and contrast to research findings of previous studies.

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Chapter five (Conclusion and recommendations) has the aims including giving a
summary of research findings, indicating the study contributions, describing limitations
of the study, and proposing areas of study for future projects. Moreover, the chapter
provides recommendations for companies in the Vietnamese stock market to attract
more individual investors in the future.

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CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
This chapter helps this study analyse the theories about the definition of stock
investment decisions of individuals, and factors impacting on individual investors’ stock
investment decision-making. In particular, the relationships between individual
investors’ stock investment decision-making and its antecedents including education
level of individual investors, psychological biases of individual investors, attitudes of
individual investors, risk propensity, financial aspect of individual investors and market
information are critically analysed in this chapter. Then, hypotheses about these
relationships in the Vietnamese stock market context and the study model will be
proposed in this chapter. Two main contents of this chapter are as follows: (1)
understanding of stock investment decisions of an individual investor and (2) factors
impacting on stock investment decision-making of an individual investor.
2.2 Understanding of stock investment decisions of an individual investor
Constantinides et al. (2003) define individual investor’s stock investment decision is
considered as the way that the investor evaluates how much capital or money will be
used to buy stocks in order to absorb stock investment opportunities. Ritter (2003)
indicates that individual investor’s stock investment decision is defined as a process of
which the investor utilizes both of market information and individual evaluation to make
his or her decision for purchase of particular stocks. The individual investor’s decision is
defined as the decision of purchasing a type of particular stock or types of particular
stocks through evaluation the differences between benefits and losses from the
purchases of the type of stock or the types of stocks. If the individual investor evaluates
that he or she gains many benefits from the purchase of the type of stock or the types
of stocks, he or she will make an investment decision about the type of stock or the

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types of stocks. If the individual investor believes that he or she will gain profits lower
than costs of investment of stocks, he or she will not make an investment decision of
the stocks (Kim and Nofsingger, 2008).
According to Laopodis (2009), stock investment decision of an individual is regarded as
the determination made by the individual as to how much, where, when and how
capital will be spend on opportunities of stock investment. This investment decision
often follows research to identify returns and costs for each option. When an individual
has a good stock investment decision, he or she will gain returns that help him or her
pay all costs related to the stock investment. On the contrary, when an individual has an
ineffective investment decision, he or she will not gain enough returns to pay all
expenses associated with the stock investment. According to Press (2013), stock
investment decision of an individual is considered as the way that the individual
evaluate how much, how, when, and where capital or money will be used to buy stocks
in order to absorb stock investment opportunities or in order to make profits from stock
investment. When the individual makes a stock investment decision, he or she often can
reach his or her stock investment advisors to gain consult from the advisors or can make
stock investment decision without listening to consult of the advisors. To have an
effective stock investment decision, the individual has to investigate factors impacting
the effectiveness of investment decision such as available opportunities, specific
investment strategy, capital availability and general market conditions. Through
reviewing many definitions of previous studies, this study recognises that stock
investment decision of an individual is defined the way that the individual evaluates
how much, how, where and when capital or money will be used to buy stocks in order
to absorb stock investment opportunities and make high profits from this stock
investment.

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2.3 Factors impacting on stock investment decision-making of individual investors
The scope of this study takes into account six factors having high impacts on stock
investment decision-making of an individual investor, including education level of
individual invesstor, individual investor’s psychological biases, individual investor’s
attitudes, risk propensity of individual investor, financial aspect of individual investor,
and market information because many earlier studies recognise that the six factors have
high impacts on stock investment decision-making of an individual investor. In
particular, Jain and Mandot (2012) explore the relationship between education level and
individual investors’ stock investment decision because the individual investors with the
higher education level invest more stocks and more careful stock investment decision-
making. According to Baber and Odean (2000), there is a negative correlation between
investors’ psychological biases and their stock investment decision because
overconfident individual investors often have stock investment decisions that result in
negative performance of investment. Le and Doan (2011) indicate that attitudes of
individual investors toward stocks have positive effects on their stock investment
decision since individual investors with positive attitudes towards certain stocks will
increase to buy the stocks. According to Azwadi (2011), risk propensity is defined as the
level of willingness of individual investors to grasp opportunities of investment in terms
of acceptance of the certain level of risk of investment when they make investments in
stocks and it has a positive effect on stock investment decision of individual investors.
Fischer and Jordan (2006) strongly indicate that when individual investors conduct stock
investment, they often take into account their budgets and the prices of stocks and then
financial aspect has a positive impact on stock investment-making. In addition, Chou et
al. (2010) indicate that individual investors’ stock investment decisions are highly
influenced by the market information and the changes in market information leads to
the changes in individual investors’ stock investment decisions.

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2.3.1 The relationship between education level and stock investment decision of
individual investors
Education level is considered as demographical information of individual investors.
Demographical information is key factor influencing on individual investors’ stock
investment decision and this statement has been explored in many previous studies
(Barber and Odean 2001; Barber et al., 2009). In particular, Barber and Odean (2001)
indicate that the higher the educational level of an individual investor, the higher stock
investment decision effectiveness is. Barber et al. (2009) indicate that an individual
investor with the high educational level will pay much attention to many factors and will
carefully evaluate these factors to make timely and effective stock investment decision.
In comparison with individual investors with the high educational level, individual
investors with the low educational level do not evaluate all aspects related to their stock
investment because they do not have enough skills and knowledge about factors
impacting on stock investment. Then, the individual investors with the low educational
level often have the lower effectiveness of stock investment compared with the
individual investors with the high educational level.
The study of Jain and Mandot (2012) explore the relationship between various
demographic information (such as gender, age, education, income, and living location)
and individual investors’ stock investment decision and assert that only gender and
living location do not impact on the individual investors’ stock investment decision while
age, education, and income of the individual investors have significant impact on their
stock investment decision. The researchers indicate reasons for the significant link
between educational level and stock investment decision are that the high educational
level helps individual investors make more exact and suitable stock investment decisions
compared with individual investors with the low educational level, and that individual
investors with the high educational level know how much, where, how and when they
should invest in stocks and know what types of stocks should be invested.

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There are also several studies that are conducted with the highlight on the relationship
between demographical information and individual investors of stocks. For instance, Le
(2009) indicates that there are relationships between demographical information
(including education level) and stock investment decision of an individual investor. In
addition, Nguyen (2012) indicates that the lower the educational level of an individual
investor, the lower the effectiveness of stock investment decision is. In other words,
there is a significant difference in the effectiveness of stock investment decision
between individual investors with the high educational level and individual investors
with the low educational level. In short, many earlier studies including Barber and
Odean (2001), Barber et al. (2009), Le (2009), Jain and Mandot (2012) and Nguyen
(2012) indicate that educational level of individual investors has a positive link with
stock investment of the individual investors. Based on these earlier studies, in order to
examine the positive correlation between educational level of individual investors and
their stock investment decision in the context of the Vietnamese stock market, the
author proposes a hypothesis as follows:
H1: Individual investors’ education level has a positive effect on their stock investment
decision in the Vietnamese stock market.
2.3.2 The relationship between psychological biases and stock investment decision of
According to Baber and Odean (2000), there is a negative correlation between individual
investors’ psychological biases and their stock investment decision. In particular,
overconfident individual investors often have stock investment decisions that result in
negative performance of stock investment. On the contrary, confident and careful
individual investors often have stock investment decisions which lead to positive
effectiveness of stock investment. According to Riaz et al. (2012), individual investors
often have high psychological biases and then the individual investors often purchase
“hot” stocks instead of purchase of “non-hot” stocks. However, in fact, non-hot stocks in

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the current period do not mean that they will have low effectiveness in the future
period. “Hot” stocks with high effectiveness in the current period do not mean that they
will have high effectiveness in the future period. In the case, it is crucial for individual
investors to buy many more types of stocks to reduce risks related to high dependence
on some types of certain stocks with the high effectiveness. The researchers also
indicate that overconfident individual investors do not focus on analyse all factors
impacting on the effectiveness of stock investment factors impacting on the
performance of stock investment and then the stock investment effectiveness will be
low. According to Chin (2012), psychological biases of an individual investor happen
when the individual investor uses available information excessively and easily. In stock
market, when an individual investor invests in stocks through his or her preference for
local organisations which are familiar with him or her and he or she only believe that he
or she will receive high returns from the stock investment in the local organisations, his
or her psychological biases occur. The individual investor believes that he or she will
receive high returns from stock investment in the familiar organisations although the
basic principles are portfolio diversification for optimisation of stock investment values.
According to Sahi et al. (2013), stock investment decision-making reasons of an
individual investor are dependent on preferences and psychological biases of the
individual investor and then understandings of psychology of individual investors will
help securities companies in better comprehending the approach that the stock
investment decisions of individual investors are made. In addition, Adel and Mariem
(2013) indicate that overconfident individual investors often are motivated to buy
securities that have high returns and do not evaluate all factors impacting on the
effectiveness of stock investment and then their performance of stock investment is low
and the trading expenses are high. Overconfident individual investors believe that they
have better knowledge and skills than other people. Then, subjective biases make
individual investors highly assess their capabilities and then, their decision of stock
investment can have low stock investment performance. In short, many earlier studies

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including Baber and Odean (2000), Riaz et al. (2012), Chin (2012), Sahi et al. (2013) and
Adel and Mariem (2013) indicate that psychological biases of individual investors have a
negative link with stock investment of the individual investors. Based on the earlier
studies, in order to examine the negative correlation between psychological biases of
individual investors and their stock investment decision in the context of the
Vietnamese stock market, the author proposes a hypothesis as follows:
H2: Individual investors’ psychological biases have a negative effect on their stock
investment decision in the Vietnamese stock market.
2.3.3 The relationship between attitudes and stock investment decision of individual
investors
According to Krishnan and Booker (2002) and Gray and Carlisle (2012), attitudes of
individual investors have positive effects on their investment decision. In particular,
individual investors have positive attitudes towards certain stocks and have positive
thoughts about the stocks and then they will concentrate on buying the stocks. On the
contrary, when individual investors have negative attitudes towards certain stocks, they
are not willing to buy the stocks. According to Pleis (2007), it is importance for
organisations to pay much attention to attitudes of individual investors because the
attitudes of individual investors are a determinant for their stock investment decision-
making. Indeed, when individual investors prefer certain stocks, they will invest in the
stocks and they do not have careful evaluation about issues related to investment of
stocks. Le and Doan (2011) indicate that when they have high belief and positive
attitudes towards stocks of companies that they prefer, they will invest in the stocks
although they do not have many investigations about the stocks in the current period
and in the future period. When individual investors have negative attitudes towards
stocks of organisations, they will avoid investing in stocks although returns of stocks are
higher than other stocks. It is necessary for organisations to investigate attitudes and

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thoughts of individual investors about their stocks compared with stocks of their
opponents in their business markets.
Azwadi (2011) also agree that attitudes of individual investors have positive effects on
their investment decision. The researcher indicates two reasons for the positive link.
The first reason is that individual investors with positive attitudes towards stocks of an
organisation will believe that they will gain high returns in the future and their belief is
created from positive experience of stock investment in the past time. The second
reason is that individual investors with positive attitudes towards stocks of a company
will believe that they will be safe and will avoid risks when investing in the stocks of the
company rather than investing in stocks of other companies. In addition, Furnham
(2014) recognises that it is not easy to investigate attitudes of individual investors
toward stocks of a company because the attitudes of individual investors will change
over time. However, when companies can investigate attitudes of individual investors
towards their stocks and evaluate changes in the attitudes of the individual investors,
the companies’ stocks will attract more attention of individual investors. In short, many
earlier studies including Krishnan and Booker (2002), Pleis (2007), Le and Doan (2011),
Azwadi (2011), Gray and Carlisle (2012), and Furnham (2014) indicate that attitudes of
individual investors have a positive link with stock investment of individual investors.
Based on the earlier studies, in order to examine the positive correlation between
attitudes of individual investors and their stock investment decision in the context of the
Vietnamese stock market, the author proposes a hypothesis as follows:
H3: Individual investors’ attitudes have a positive effect on their stock investment
decision in in the Vietnamese stock market.
2.3.4 The relationship between risk propensity and stock investment decision of
Financial analysts take into account risk before taking any investment decision and risks
and returns are always come along with each other. This means that the higher risks

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deliver higher returns and vice versa. In general, when the investors conduct stock
investment decision, they often take into account both of risks and returns but they
cannot perceive risks and returns objectively (Hunjra et al., 2011). On the other hand,
the investors’ stock investment decisions are often influenced by how the investors
perceive about risk and the level of risk propensity. According to Azwadi (2011), risk
propensity is defined as the level of willingness of investors to grasp opportunities
although they can face risks of loss. In other words, risk propensity means that the
degree of willingness of investors to accept the certain level of risk of investment to gain
benefits from the investment. This means that the investors’ decision is influenced by
how the investors are aware about risks and expected returns when they make
investments in financial instruments (Fischer and Jordan, 2006).
According to Johnson and Bruce (2008), risk propensity has a direct impact on decision
of stock investment of individual investors. In particular, individual investors with the
high risk propensity will are willing to invest in more risky stocks to gain high returns. On
the contrary, individual investors with the low risk propensity are not willing to buy risky
stocks and then returns from their stock investment are small or average over time.
According to Hamid et al. (2013), risk awareness is considered as the evaluation of
individual investors about the inherent risks in their investment. The evaluation of risks
is based on probabilistic assessment of the level of controllability, uncertainty and
confidence in the investment. The researchers indicate that stock investment decision-
making of individual investors is positively impacted by risk-taking or risk propensity of
the individual investors. In detail, when individual investors have the high risk-taking,
they will not be scrupulous to invest in risky stocks and they will be willing to accept
high risks of stock investment to gain higher profits. By contrast, when individual
investors have the high risk-aversion, they will be scrupulous to buy risky stocks and
they expect that they only gain average or low returns from their stock investment
rather than gain high returns from risk stocks. In short, many earlier studies including
Fischer and Jordan (2006), Johnson and Bruce (2008), Hunjra et al. (2011), Azwadi

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(2011) and Hamid et al. (2013) indicate that risk propensity of individual investors have
a positive link with stock investment of the individual investors. Based on the earlier
studies, in order to examine the positive correlation between risk propensity and stock
investment decision of individual investors in the context of the Vietnamese stock
market, the author proposes a hypothesis as follows:
H4: Individual investors’ risk propensity has a positive effect on their stock investment
2.3.5 The relationship between financial aspect and stock investment decision of
Financial factor refers to personal financial needs for taking investments of an individual
(Krishnan and Booker, 2002). According to Carter and Van Auken (1990), the impact of
financial factor on investors’ stock investment decision is sourced from prospect theory
of the individual investors. If an individual investor recognises that stocks have suitable
price levels and he or she has enough capital to buy the stocks, he or she will buy the
stocks. However, when an individual investor prefers certain stocks and forecasts that
the stocks have the high returns in the future period but he or she do not have enough
capital to buy the stocks, he or she cannot have opportunities to buy the stocks.
Therefore, the financial aspect of individual investors is an important determinant factor
for their stock investment decision-making. Krishnan and Booker (2002) strongly
indicate that when the investors conduct a stock investment, they often take into
account their budgets and prices of the stock. Their budgets for stock investment and
prices of stocks decide the ability to investment of stocks of organisations. Although
individual investors have enough capital to buy stocks of an organisation, they feel that
the stock price level is too high, the stocks’ returns in the future period will be not high
and the stock price level is not suitable to the business effectiveness of the organisation
and then they will not buy stocks of the organisation. According to Clark-Murphy and
Soutar (2003), many individual investors are scrupulous to buy stocks with the high risks

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and the high price levels because they have limited financial sources while other
individual investors are willing to buy risky stocks because of their strong financial
sources. In addition, with the strong financial sources, the individual investors are willing
to buy the stocks with the high price levels to gain the high returns.
Fischer and Jordan (2006) indicate that a crucial determinant factor for stock investment
of an individual investor is his or her financial aspect. The financial aspect of an
individual investor is indicated through three main factors, namely financial sources of
the individual investor, the ability of the individual investor to retain the investment in
stocks of a certain organisation in the long time and the ability of the individual investor
to earn profits from the investment of stocks of a certain organisation. In addition,
according to Dimitrios (2007), financial sources of individual investors decide how many
stocks, and what types of stocks that they will invest to gain profits. In particular, if
individual investors have the small financial sources, they will invest in types of stocks
with the low price levels, will buy stocks with the low risk level, and will buy a small
number of stocks. On the contrary, if individual investors have the large financial
sources, they will invest in types of stocks with the higher price levels, will buy stocks
with the lower risk level, and will purchase a larger number of stocks. In short, many
earlier studies including Carter and Van Auken (1990), Krishnann and Booker (2002),
Clark-Murphy and Soutar (2003), Firscher and Jordan (2006) and Dimitrios (2007)
indicate that financial aspect has a positive link with stock investment of individual
investors. Based on the earlier studies, in order to examine the positive correlation
between financial aspect and stock investment decision of individual investors in the
context of the Vietnamese stock market, the author proposes a hypothesis as follows:
H5: Individual investors’ financial aspect has a positive effect on their stock investment

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2.3.6 The relationship between market information and stock investment decision of
Market information is important factor that has high effects on individual investors’
decision-making on financial instruments. In particular, market information makes the
individual investors have a trend to focus on popular stocks. If securities companies or
securities investment advisors provide information about the high potential of certain
stocks, individual investors often base on the information to make decisions of stock
investment (Riaz et al., 2012). According to Chou et al. (2010), investors’ stock
investment decisions are highly influenced by the market information about stocks and
the changes in the market information result in the changes in investors’ stock
investment decision-making. When the market information about certain stocks is clear,
candid and exact, the market information will help individual investors make right stock
investment decisions, the market information will decrease loss of wrong stock
investment and the stock investment effectiveness of individual investors will be high.
Generally, the market information is assessed by the investors carefully and the quality
of information about stocks will significantly influence on the effectiveness of individual
investors’ stock investment decisions (Abosede and Jimoh, 2011).
According to Ivkovic and Weisbenner (2007), it is crucial for individual investors to
evaluate market information about stocks of organisations before they buy the stocks.
Indeed, when individual investors have the critical evaluation of the information about
the stocks, they will have high effectiveness about the stock investments. However, it is
necessary for individual investors to know what important and right information of
stocks is and what unimportant and wrong information of stocks. In addition, it is
necessary for individual investors to know the approach to apply the right information
about stocks in their stock investment practices and they should avoid using the wrong
market information about stocks to make stock investment decisions. By contrast, when
individual investors are not much interested in the market information about stocks and
do not base on the market information about stocks to make decisions of stock

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investments, they will face high risks about the investment of the stocks and their
effectiveness of stock investment will be low. In addition, Tucci (2014) agree that it is
important for securities companies should provide exact, candid and clear information
about stocks of organisations so that individual investors and corporate investors have
right investments in the stock of the organisations. Any inexact information about stocks
causes negative impacts on the effectiveness of stock investment of individual stocks. In
general, many earlier studies including Ivkovic and Weisbenner (2007), Chou et al.
(2010), Abosede and Jimoh (2011), Riaz et al. (2012) and Tucci (2014) indicate that
market information has a positive link with stock investment of individual investors.
Based on the earlier studies, in order to examine the positive correlation between
market information and stock investment decision of individual investors in the context
of the Vietnamese stock market the author proposes a hypothesis as follows:
H6: Market information has a positive effect on stock investment decision of individual
investors in the Vietnamese stock market.
2.4 Conclusion
This chapter has helped this study analyse the theories about the definition of stock
investment decisions of individuals, and factors impacting on individual investors’ stock
investment decision-making. In particular, the relationships between individual
investors’ stock investment decision-making and its antecedents including education
level of individual investors, psychological biases of individual investors, attitudes of
individual investors, risk propensity of individual investors, financial aspect of individual
investors and market information are critically analysed in this chapter. Many earlier
studies recognise that factors having high impacts on stock investment decision-making
of individual investors are individual investor’s education level, individual investor’s
psychological biases, individual investor’s attitudes, individual investor’s risk propensity,
individual investor’s financial aspect, and market information. Hence, this study
examines the relationship between stock investment decision-making of individual

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investors in the Vietnamese securities markets through the six factors. In order words,
in order to examine the relationship between stock investment decision-making of
individual investors in the Vietnamese securities markets and the six factors, six
hypotheses in the Vietnamese stock market context have been proposed. Based on the
discussion of factors impacting on individual investors’ decision of earlier studies, the
conceptual research model is set as figure 2.
Figure 2: Conceptual research model
The six hypotheses from the conceptual research model are as below:
H1: Individual investors’ education level has a positive effect on their stock investment
H2: Individual investors’ psychological biases have a negative effect on their stock
investment decision in the Vietnamese stock market.
Individual
investors' stock
investment
decision
Individual
investors'
education
level (H1+)
Individual
investors'
psychological
biases (H2-)
Individual
investors'
attitudes (H3+)
Risk
propensity of
individual
investors (H4+)
Financial
aspect (H5+)
Market
information
(H6+)

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H3: Individual investors’ attitudes have a positive effect on their stock investment
H4: Individual investors’ risk propensity has a positive effect on their stock investment
H5: Individual investors’ financial aspect has a positive effect on their stock investment
H6: Market information has a positive effect on stock investment decision of individual
The next chapter is the chapter of research methodology. The next chapter will present
what philosophy of study, research approach, study strategy, method of study, and
method of data collection will be used by the author. Methods of analysis of study data
will be also presented in the next chapter. Additionally, evaluation of validity and
reliability of study results, study ethics and limitations of the applied study methodology
will be indicated in the next chapter.

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CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Introduction
Regarding the chapter, it presents what philosophy of study, research approach, study
strategy, and method of study. In this chapter, method of data collection will be used by
the author of this project. Methods of analysis of study data will be also presented in
the chapter. Additionally, aspects of ethics of study, evaluation of validity and reliability
of study results, and limitations of the applied study methodology will be indicated in
the chapter.
3.2 Study philosophy
In academic researches, study philosophy expresses the philosophy or the stance that
researchers pursue to achieve their own purposes. Researchers can pursue one of three
popular study philosophies, mainly pragmatism, interpretivism and positivism
(Tugendhat, 2006). Regarding the pragmatism stance relates to exploring aspects of
study by applying both objective evidences and subjective interpretations (Covington,
2008). The interpretivism stance is associated with interpreting factors of study through
subjective meaning and using qualitative method to explore various aspects of the study
issues. The development of interpretivism stance is high in social sciences that focus on
investigate human characteristics (Yoshida, 2014). The positivism stance is a contrast
stance to interpretivism stance because it uses quantitative method to reflect aspects of
the study and exploring factors of study through objective evidences. The sustainable
growth of the positivism philosophy is based on the criticism of interpretivism in natural
sciences and physical sciences (Aliyu et al., 2014).
This study uses positivism stance because of three rationales. First, the positivism stance
is objective study philosophy and then it ensures the validity and reliability of

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investigated issues (Swales and Feak, 2012). Then, due to the positivism stance, this
project’s investigated issues will be objective. Hence, the research findings of this
project will be able to be applied in the practice – the Vietnamese stock market.
Secondly, the positivism stance is often used in the case of investigating correlations
between elements (Booth et al., 2008). The positivism stance is appropriate to the
purpose of the project because this research explores factors impacting on stock
investment decision of individual investors in the Vietnamese stock market. Finally, the
author of this project seeks the positivism stance because it uses quantitative method to
reflect aspects of the study and exploring factors of study through objective evidences
(Weber, 2004).
3.3 Study approach
In academic researches, study approach expresses the approach or the way that
researchers use to explore their own research phenomena. Researchers can explore
their own research phenomena through one of two popular study approaches, mainly
deduction and induction (Heinrichs et al., 2013). For the deduction approach,
researchers aim to utilising the existing availability of literature to explaining their own
study phenomena and then the time for undertaking and completing the deduction
research is short (Rubin and Rubin, 2004). Regarding the induction approach that is a
contrast approach to deduction approach, researchers aim to developing the new
literature for new study phenomena (Miller and Brewer, 2003). This study uses
deduction approach because it utilizes the current literature of earlier studies about
factors impacting on investment decisions of individual investors, and proposes
hypotheses about the relationships between individual investors’ decision and its
antecedents in the Vietnamese stock market including education level of individual
investors, psychological biases of individual investors, and attitudes of individual
investors, risk propensity of individual investors, financial aspect of individual investors
and market information. In addition, the deduction approach is applied because it uses
less time to complete this study compared with induction approach. In fact, the project

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has the restricted time of study and then the deduction approach becomes more useful
for the project compared with induction approach (Booth et al., 2008; Fetterman, 2009;
Fetterman, 2009).
3.4 Study strategy
In academic researches, study strategy expresses the strategy that researchers use to
collect data to explore their own research phenomena. Researchers can explore their
own research phenomena through one of three popular study strategies, mainly action
research, survey and case study. Regarding action research strategy, researchers will
collect data from their working environment to explore problems or difficulties in their
working environment (Woods, 2006). For survey strategy, researchers will collect data
from the representative population rather than collect data from the whole target
population and then they will use the data to explore their own research phenomena
(Carr, 2002). With regard to case study strategy, researchers will collect data from
relevant individuals of a single organisation or organisations to explore their own study
phenomena (Noddings, 2011).
The author of the research chooses the survey strategy because of three rationales.
Firstly, the survey strategy helps the author collect data from the representative
population rather than collect data from the whole target population and and then the
author will use the data to explore the research phenomena of the project. Secondly,
collecting data from the representative population will decrease the costs and time
collecting data (Costley et al., 2010). Finally, the survey strategy is often more suitable
to the deduction approach and the positivism stance because it increases the objectivity
of research results and builds a useful model for explaining relations between factors
(Bolton, 2014).

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3.5 Study method
For academic projects, scholars can use quantitative method or qualitative method or
mixed method applying both qualitative and quantitative types (Tweksbury, 2009).
Regarding the quantitative method, researchers expect that use of numeric data can
help them explore their own study problems. Indeed, the quantitative method helps
researchers evaluate and explain the study problems based on numeric data.
Concerning about the qualitative method, it is suitable to projects investigating features
of human beings and the research method helps researchers explore and explain their
problems of study based on non-numeric data, especially text data (Castellan, 2010).
However, there are other projects that need to be explored based on both non-
numerical data and numeric data. Such projects will apply the mixed method (Punch,
2005).
This study applies quantitative method because of three causes. Firstly, this project will
gather numeric data that are assembled from relevant individuals through
questionnaires and will analyse the numeric data through various approaches of
quantitative analysis like examination of reliability and analysis of regression (Yilmaz,
2013). Secondly, this project uses the numeric data to explain the relationships between
individual investors’ decision and its antecedents in the Vietnamese stock market
including education level of individual investors, psychological biases of individual
investors, attitudes of individual investors, risk propensity of individual investors,
financial aspect of individual investors and market information. Finally, the quantitative
method will be applied by the positivism study to ensure the objectivity of the
positivism study. With this positivism project, the quantitative method is suitable to the
project (Krathwohl ad Smith, 2005).

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3.6 Method of collection of study data
3.6.1 Tool of collection of study data
Concerning about tool of data collection, this study will apply questionnaires because it
helps this study collect numeric data to achieve study objectives. In addition,
questionnaires are very useful to save the time of study and the costs of study due to
reaching many participants with the short time, help researchers collect true data due
to the feature of anonymity, and help researchers collect uniform data due to well-
designed questions (Kelley et al., 2003; Brace, 2013). During the progress of design of
the questionnaire, the author considers and evaluates words of questions and orders of
questions carefully to create valid and suitable questionnaire. Additionally, after this
questionnaire is designed, a test of this questionnaire is conducted to understand the
degree of validity of this questionnaire and the test is undertaken with 15 individual
The questionnaire’s contents consist of two main aspects with 35 questions as follows:
the first aspect of the questionnaire is to ask information of demographics of individual
investors in the Vietnamese stock market and consists of 5 questions, and the second
aspect of the questionnaire is to ask ideas of individual investors in the Vietnamese
stock market about factors impacting on their decisions of stock investment and consists
of 30 questions. Table 1 expresses the questionnaire’s main contents.

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Table 1: the questionnaire’s main contents
Elements of
questionnaire
The number of questions The types of
questions
References
Information of
demographics of
5 questions (like monthly
income, age, marital
status, gender and
education level)
Closed-
ended
questions
By the project’s
the author
Education level of
4 questions Likert scale
questions
Barber et al. (2009)
and Jain and
Mandot (2012)
Psychological biases
of individual
investors
5 questions Chin (2012) and
Sahi et al. (2013)
Attitudes of
4 questions Le and Doan
(2011) and Azwadi
(2011)
Risk propensity of
5 questions Azwadi (2011) and
Hamid et al. (2013)
Financial aspect of
4 questions Firscher and
Jordan (2006) and
Dimitrios (2007)
Market information 4 questions Riaz et al. (2012)
and Tucci (2014)
Stock investment
decision
4 questions Chou et al. (2010)
and Tucci (2014)

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3.6.2 Technique of sampling and size of sampling
In academic projects, two sampling techniques that a researcher can use are probability
sampling and non-random sampling (Cochran, 2007). The probability sampling approach
reflects the way that researchers concentrate on the generalisation of data rather than
convenience of collecting data (Valliant et al., 2013). The non-random sampling
approach is a contrast sampling to the probability sampling method because it focuses
on saving time and costs of the progress of data collection rather than collecting
generalised data (Lumley, 2010). Sampling technique of the project is probability
sampling, especially stratified random sampling because it is appropriate with the
survey strategy, and the positivism stance (Lohr, 2009). Indeed, the stratified random
sampling will increase the data generalization and then it ensures the objectivity of
research findings of the positivism stance. In addition, the stratified random sampling
only requires a basic understanding about the targeted population (Lee and Forthofer,
2005).
Regarding the sampling size, the project decides to collect quantitative data from 200
individual investors in the Vietnamese stock market because Ryan (2013) indicates that
150-200 people are the suitable sampling size for surveying applying questionnaire. In
addition, Fuller (2009) indicates that the sampling size should be at least five times
higher than variables in the questionnaire. With the 30 variables in the questionnaire,
the sampling size of 200 individual investors in the Vietnamese stock market is very
suitable. The sampling frame of the project is all individual investors in the Vietnamese
stock market. The questionnaire is delivered to 200 individual investors by hand and is
assembled later.
3.7 Methods of analysis of study data
According to Heeringa et al. (2010), the quantitative analysis methods like test of
reliability, analysis of regression, analysis of correlation, and analysis of t-test and
statistics of description are useful for researchers to analyse their gathered quantitative

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data. However, based on the research goals of this project, the author chooses three
main test of reliability, analysis of regression, and statistics of description as methods of
analysis of quantitative study data for this project. In particular, with the test of
reliability, the author can identify the reliability degree of variables that are used to
measure factors impacting on individual investors’ stock investment decision in the
Vietnamese stock market including education level of individual investors, psychological
biases of individual investors, and attitudes of individual investors, risk propensity of
individual investors, financial aspect of individual investors and market information.
With the regression analysis, the author can examine the negative or positive
relationships between factors. In addition, with the description analysis, the author can
describe information of demographics (like monthly income, age, marital status, gender,
and education level) of surveyed individual investors in the Vietnamese stock market.
3.8 Evaluation of validity and reliability of study results
When performing an academic project, it is crucial for researchers to evaluate the
reliability and validity of their own study findings (Bolton, 2014). According to Noddings
(2011), the reliability of study outcomes of a project is evaluated through two aspects,
mainly biases of researchers and respondents’ biases. If a project ensures that it rejects
the two aspects, the project has research outcomes with the high reliability. Regarding
this project, the author uses the anonymous questionnaire and the author collect true
data due to the feature of anonymity. In other words, respondents (individual investors
in the Vietnamese stock market) are willing to offer true data for the project because
the project protects their anonymity. Then, this project rejects the biases of the
respondents. In addition, the author uses main test of reliability, analysis of regression,
and statistics of description as methods of analysis of quantitative study data for this
project and then there are any biases of the author of this project during the progress of
data analysis. Then, this project rejects the biases of the author of this project. In short,
the reliability of research outcomes of the project is high.

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According to Tweksbury (2009), the validity of research outcomes of a project is
assessed through two aspects, mainly interior validity and exterior validity of the
research outcomes. If a project ensures that its research outcomes have the two
validities, the project has the research outcomes with the high validity. Regarding this
project, the author focuses on designing questionnaires to collect quantitative data and
using the quantitative data to achieve all research objectives and then the interior
validity of the research outcomes is high. In addition, the author uses the survey
strategy that collects data from representative cases rather than case study strategy.
Therefore, the research outcomes are valid for the whole Vietnamese stock market or
have the high exterior validity. Therefore, the validity of research outcomes of the
project is high.
3.9 Ethics of study
Many earlier researchers indicate that a study project that violates requirements of
study ethics is not only non-value but also receives criticisms from people (Punch and
Oancea, 2014; Adams, 2014; Chitty, 2014). The earlier researchers indicate the following
crucial requirements of study ethics which each scholar needs to pay much attention:
(1) introducing or giving goals of study to participants, (2) protecting the privacy issues
of participants, (3) ensuring the anonymity of participants, (4) maintaining the right
behaviours within the research process, (5) ensuring the voluntariness of participants,
(6) ensuring the capability of participants to withdraw information and data collecting
process, and (7) goals of using information and data gathered from participants.
For study ethics, the study informs the purposes of the study to participants, collects
data from voluntary participants, and uses the data from the participants for the study
aims. The author designs the anonymous questionnaire so that privacy information of
participants is protected and ensures that all participants have the right to withdraw the
progress of gathering data whenever they want to withdraw the progress. In addition,
the author maintains the right behaviours and positive attitudes within the research

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progress and the data gathering progress and ensures that information and data that
are gathered from participants are only used in this academic project.
3.10 Limitations of the applied study methodology
Any research methodology also has its own weaknesses or limitations that can influence
the value of research findings. For the research methodology applied by this research, it
has three main weaknesses. Firstly, under the deduction approach, this study utilises
the existing availability of literature to deduce hypotheses about how individual
investors’ stock investment decisions are impacted by education level, psychological
biases, attitudes, risk propensity, financial aspect and market information in the
Vietnamese stock market. In addition, the deduction approach is selected by the author
of this project because the time for undertaking and completing the deduction project is
short. However, the deduction approach has a main weakness, that is, it does not allow
researchers to explain their own study phenomena according to multiple ways (Bell,
2010). Secondly, the quantitative method is used to explore what factors impacting on
individual investors’ stock investment decisions. However, the quantitative method has
a main weakness, that is, it cannot offer a deeper understanding about study
phenomena compared with the qualitative method (Bailey, 2010). Finally, the size of
sampling is 200 individual investors in the Vietnamese stock market and the sampling
size is suitable to a survey strategy using questionnaires to collect study data. However,
the sampling size cannot cover all points of view of all individual investors in the
Vietnamese stock market.
3.11 Conclusion
In terms of the chapter, it has presented why the author chooses research philosophy of
positivism, research approach of deduction, study strategy of survey, and quantitative
study method. In this chapter, reasons for using the method of data collection
(questionnaire, stratified sampling approach and size of sampling of 200 individual
investors in the Vietnamese stock market) have been indicated. This chapter indicates

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why the author uses methods of analysis of study data (regression analysis, examination
of reliability and description analysis). In addition, aspects of ethics of study, evaluation
of validity and reliability of study results, and limitations of the applied study
methodology have been indicated in the chapter.
The next chapter will help the author evaluates how individual investors’ stock
investment decision-making in Vietnam is impacted by its antecedents including
education level of individual investors, psychological biases of individual investors,
attitudes of individual investors, risk propensity, financial aspect and market
information. In other words, all hypotheses proposed in chapter two will be explained in
the next chapter. Additionally, the chapter will discuss the research findings through
comparison and contrast to research findings of previous studies.

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CHAPTER FOUR
ANALYSIS AND DISCUSSION OF RESEARCH FINDINGS
4.1 Introduction
This chapter helps the author evaluates how individual investors’ stock investment
decision-making in Vietnam is impacted by its antecedents including education level of
individual investors, psychological biases of individual investors, attitudes of individual
investors, risk propensity of individual investors, financial aspect of individual investors
and market information. In other words, all hypotheses proposed in chapter two will be
explained in this chapter. Additionally, the chapter discusses the research findings
through comparison and contrast to research findings of previous studies. This chapter
covers four main contents as follows: (1) description of information of demographics of
surveyed individual investors in the Vietnamese stock market, (2) test of reliability, (3)
research findings about the relationships between stock investment decision of
individual investors and its antecedents in the Vietnamese stock market and (4)
discussions of the research findings.
4.2 Information of demographics of surveyed individual investors in the Vietnamese
stock market
In terms of the result of response rate, it is 88%. This means that after delivering 200
questionnaires to 200 individual investors in the Vietnamese stock market, there were
176 individual investors answering the questionnaire. Hence, the data assembled from
the 176 individual investors in the Vietnamese stock market are used to achieve the
research objectives and examine all research hypotheses that are proposed in the
chapter two. It is crucial for the author of this project to describe information of
demographics of the 176 individual investors in the Vietnamese stock market. The

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information of demographics (monthly income, maritual status, gender, educational
level, and age) of the individual investors is expressed in table 2.
Table 2: Information of demographics of surveyed individual investors in the
Vietnamese stock market
Information of demographics of surveyed
Frequency Percentage
Gender Male 111 63.1%
Female 65 36.9%
Age Less than 30 years old 53 30.2%
30-40 years old 71 40.3%
More than 40 years old 52 29.5%
Marital status Single 51 29%
Married 125 71%
Education level Postgraduate 23 13.1%
University 137 77.8%
College 16 9.1%
Other 0 0%
Monthly income Less than 25 VND million 38 21.6%
25-40 VND million 127 72.2%
More than VND 40
million
11 6.2%
Regarding the table 2, it helps the author indicate main information of demographics
(monthly income, maritual status, gender, educational level, and age) of individual
investors in the Vietnamese stock market participating in the survey of this project.
Concerning about gender, there are 63.1% of male investors in the Vietnamese stock
market participating the survey of this project compared with 36.9% of female

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investors. These numbers quite accurately express that the number of male investors in
the Vietnamese stock market is nearly two times higher than the number of female
investors in the Vietnamese stock market. For age, there are 70.5% of individual
investors aged 40 and below in the Vietnamese stock market participating in the survey
of this project compared with 29.5% of individual investors with more than 40 years old.
The figures exactly reflect that individual investors in Vietnamese stock market are
young people who like to find investment opportunities with the high investment
profits. In addition, the young people are individuals who like to invest risky stocks with
the high stock investment profits. Regarding marital status, there are 29% of single
investors compared with 71% of married investors in the Vietnamese stock market
participating in the survey of this project. These figures reflect that married investors
prefer invest in stocks compared with single investors in the Vietnamese stock market.
With regard to education level, the majority of surveyed individual investors in the
Vietnamese stock market (90.9%) have the high educational level (postgraduate and
university). In fact, the individual investors in the Vietnamese stock market are people
having the high educational level and high social position. Moreover, Vietnam is
applying policies related to enhancement of the education development in all provinces
and all cities and then the number of Vietnamese citizens with the high educational
level is increasing in recent years. For monthly income, the majority of surveyed
individual investors in the Vietnamese stock market (72.2%) have the high monthly
income of VND 25-40 million. With the high monthly income, individual investors have
the high capability to invest stocks in the long time.
4.3 Test of reliability
Many earlier researchers agree that factors are measured through other items need to
be evaluated their reliability. In other words, factors are measured through items need
to be evaluated the reliability level of the scales containing these items (Bachman, 2004;
Min, 2008; Loewenthal and Lewis, 2015). According to Dmitrienko et al. (2007) and
Loewenthal and Lewis (2015), a factor is measured through a scale containing items is

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reliable when Cronbach’s alpha of the factor is higher than 0.7. In the case of this
project, the author uses items to measure seven factors including education level (EL),
psychological biases (PB), risk propensity (RP), attitudes (AT), financial aspect (FA),
market information (MI), and stock investment decision (SID). Therefore, this study
evaluates the reliability of the seven factors through Cronbach’s alpha higher than 0.7.
Table 3 indicates what things drawn from the test of reliability.
Table 3: Results drawn from the test of reliability
Factors Items measuring factors Cronbach’s alpha
coefficients
Educational level (EL) 3 items 0.959
Psychological biases (PB) 4 items 0.978
Attitudes (AT) 3 items 0.974
Risk propensity (RP) 4 items 0.996
Financial aspect (FA) 3 items 0.966
Market information (MI) 3 items 0.990
Stock investment decision
(SID)
3 items 0.978
Regarding the table 3, it helps the author indicate results related to the reliability level
of factors that are measured through items. In particular, the factors are highly reliable
because the coefficients of Cronbach’s alpha of seven factors including education level
(EL), psychological biases (PB), risk propensity (RP), attitudes (AT), financial aspect (FA),
market information (MI), and stock investment decision (SID) are in turn 0.959, 0.978,
0.974, 0.996, 0.966, 0.990, and 0.978 that are higher than 0.7. Hence, the seven factors
are remained to evaluate how stock investment decision of individual investors in the
Vietnamese stock market is impacted by its antecedents including education level,
psychological biases, risk propensity, attitudes, financial aspect, market information,
and stock investment decision

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4.4 Research findings about the relationships between stock investment decision of
individual investors and its antecedents in the Vietnamese stock market
According to Miles and Shevlin (2001) and Hayes (2013), it is crucial for researchers to
identify methods of data analysis that help them test relationships between factors. One
of the most popular methods of data analysis that help researchers to evaluate
relationships between factors easily and fast is regression analysis. The researchers also
indicate that a crucial standard for the correlation or the relationship between factors is
p-value (value of sig.) is smaller than 0.05. This means that when a predictor variable (an
independent variable) has an impact on a dependent variable (criterion variable), the
value of sig. of the independent variable is smaller than 0.05. Therefore, the author of
this project evaluates how stock investment decision of individual investors in the
Vietnamese stock market is impacted by its antecedents including education level,
psychological biases, risk propensity, attitudes, financial aspect, market information,
and stock investment decision through the regression analysis with the standard of
value of sig. smaller than 0.05. Table 4 and table 5 indicate what things drawn from the
conduction of regression analysis.

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Table 4: Coefficients of the stock investment decision of individual investors in the
Vietnamese stock market
Hypotheses Variables
Unstandardized
Coefficients
Standardized
Coefficients
t Sig.
Acceptance
or
rejection of
hypotheses
B Std. Error Beta
Constant 1.253 0.295 4.246 0.000
H1 Education
level (EL)
0.909 0.265 1.047 3.435 0.001
Accepting
H1
H2 Psychological
biases (PB)
-0.477 0.174 -0.427 -2.747 0.007
Accepting
H2
H3 Attitudes (AT)
0.313 0.136 0.379 2.292 0.023
Accepting
H3
H4 Risk
propensity
(RP)
0.177 0.175 0.203 1.016 0.311
Rejecting
H4
H5 Financial
aspect (FA)
-0.311 0.190 -0.321 -1.637 0.103
Rejecting
H5
H6 Market
information
(MI)
0.073 0.127 0.074 0.578 0.564
Rejecting
H6
 The relationship between education level and stock investment decision of
individual investors in the Vietnamese stock market
Regarding table 4, the value of sig. of the factor – educational level (EL) of individual
investors in the Vietnamese stock market is 0.001 that is lower than 0.05 and the value
of Beta of this factor is 1.047. The figures reflect that individual investors’ education

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level has a positive effect on their stock investment decision in the Vietnamese stock
market. Therefore, H1 is accepted.
 The relationship between psychological biases and stock investment decision of
Table 4 indicates that the value of sig. of the factor – psychological biases (PB) of
individual investors in the Vietnamese stock market is 0.007 that is lower than 0.05 and
the value of Beta of this factor is -0.427. The figures reflect that psychological biases of
individual investors have a negative effect on their stock investment decision in the
Vietnamese stock market. Hence, H2 is accepted.
 The relationship between attitudes and stock investment decision of individual
investors in the Vietnamese stock market
Table 4 indicates that the value of sig. of the factor – attitudes (AT) of individual
investors in the Vietnamese stock market is 0.023 that is lower than 0.05 and the value
of Beta of this factor is 0.379. The figures reflect that attitudes of individual investors
have a positive effect on their stock investment decision in the Vietnamese stock
market. Hence, H3 is accepted.
 The relationship between risk propensity and stock investment decision of
Table 4 indicates that the value of sig. of the factor – risk propensity (RP) of individual
investors in the Vietnamese stock market is 0.311 that is higher than 0.05. The figure
reflects that risk propensity does not have any effect on stock investment decision of
individual investors in the Vietnamese stock market. Hence, H4 is rejected.

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 The relationship between financial aspect and stock investment decision of
Table 4 indicates that the value of sig. of the factor – financial aspect (FA) of individual
investors in the Vietnamese stock market is 0.103 that is higher than 0.05. The figure
reflects that financial aspect of individual investors does not have any effect on stock
investment decision of individual investors in the Vietnamese stock market. Hence, H5 is
rejected.
 The relationship between market information and stock investment decision of
Table 4 indicates that the value of sig. of the factor – market information (MI) is 0.564
that is higher than 0.05. The figure reflects that market information does not have any
effect on stock investment decision of individual investors in the Vietnamese stock
market. Hence, H6 is rejected.
Table 5: Model summary of the stock investment decision of individual investors in
the Vietnamese stock market
Model R R Square Adjusted R
Square
Std. Error of
the Estimate
1 0.926 0.858 0.853 0.40075
Regarding table 5, it indicates that R Square of the model describing factors impacting
on stock investment decision of individual investors in the Vietnamese stock market is
0.858. The R Square value of 0.858 indicates that 85.8% of the variance of the stock
investment decision of individual investors in the Vietnamese stock market is explained
by three factors impacted on it, mainly educational level of the individual investors,
psychological biases of the individual investors and financial aspect of the individual
investors. Hence, the three factors are main ones impacting on the stock investment

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decision of individual investors in the Vietnamese stock market. In addition, 14.2% of
the variance of the stock investment decision of individual investors in the Vietnamese
stock market can be explained by other factors that are not investigated by the author
of this project.
In short, after the author of this project undertakes the analysis of regression to
evaluate how individual investors’ stock investment decision in Vietnam is impacted by
its antecedents including education level education level, psychological biases, attitudes,
risk propensity, financial aspect and market information, H4, H5, and H6 are rejected
while H1, H2, and H3 are accepted. In other words, there are three factors impacting on
the stock investment decision of individual investors in the Vietnamese stock market
and the three factors are education level of individual investors, psychological biases of
individual investors, and attitudes of individual investors. In particular, education level
and attitudes have positive impacts on stock investment decision of individual investors
in the Vietnamese stock market while psychological biases have negative impacts on
stock investment decision of individual investors in the Vietnamese stock market. In
addition, there are three factors that do not have any influences on stock investment
decision of individual investors in the Vietnamese stock market, mainly risk propensity
of individual investors, financial aspect of individual investors and market information.
With the research findings, the author of this propose expresses the positive
relationships of two factors (education level – EL and attitudes - AT) and the stock
investment decision (SID) of individual investors in the Vietnamese stock market and the
negative relationship between psychological biases (PB) and the stock investment
decision of individual investors in the Vietnamese stock market through the equation as
follows:
SID = 1.253 + 1.047 EL – 0.427 PB + 0.379 AT
With the above equation, it describes that if education level of individual investors in
the Vietnamese stock market increases 1 unit and factors including psychological biases
and attitudes of individual investors in the Vietnamese stock market remain unchanged,

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the stock investment decision effectiveness of individual investors in the Vietnamese
stock market will increase 1.047 units. Similarly, if attitudes of individual investors in the
Vietnamese stock market increase 1 unit and factors including psychological biases and
educational levels of individual investors in the Vietnamese stock market remain
unchanged, the stock investment decision effectiveness of individual investors in the
Vietnamese stock market will increase 0.379 units. In addition, if psychological biases of
individual investors in the Vietnamese stock market increase 1 unit and factors including
education level and attitudes of individual investors in the Vietnamese stock market
remain unchanged, the stock investment decision effectiveness of individual investors in
the Vietnamese stock market reduces 0.427 units.
The above equation describes that education level of individual investors in the
Vietnamese stock market has the highest coefficient of Beta of 1.047. This indicates that
education level has the strongest impact on the stock investment decision of individual
investors in the Vietnamese stock market. In other words, the education level is the
most crucial factor impacting on the stock investment decision of individual investors in
the Vietnamese stock market.
4.5 Discussions of research findings about the relationships between stock investment
decision of individual investors and its antecedents in the Vietnamese stock market
 The relationship between education level and stock investment decision of
This research recognises that individual investors’ education level has a positive effect
on their stock investment decision in the Vietnamese stock market. Then, H1 is
accepted. This research result is similar to the research result of previous studies
including Barber and Odean (2001), Barber et al. (2009), Le (2009), Jain and Mandot
(2012) and Nguyen (2012) since the previous studies recognise the positive correlation
between education level of individual investors and their stock investment decision. In
detail, education level is considered as demographical information of individual

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investors that has a high influence on the individual investors’ stock investment
decision. Barber and Odean (2001) indicate that the higher the educational level of an
individual investor, the higher stock investment decision effectiveness is. Barber et al.
(2009) indicate that an individual investor with the high educational level will pay much
attention to many factors and carefully evaluate the factors to make timely and
effective stock investment decision. In comparison with individual investors with the
high educational level, individual investors with the low educational level do not
evaluate all aspects related to their stock investment because they do not have enough
skills and knowledge about factors impacting on stock investment. Then, the individual
investors with the low educational level often have the lower effectiveness of stock
investment compared with the individual investors with the high educational level. Le
(2009) indicates that there are relationships between education level and stock
investment decision of an individual investor. The study of Jain and Mandot (2012)
assert that education level of the individual investors have significant impact on their
stock investment decision. The researchers indicate reasons for the significant link
between educational level and stock investment decision are that the high educational
level helps individual investors make more exact and suitable stock investment decisions
compared with individual investors with the low educational level, and that individual
investors with the high educational level know how much, where, how and when they
should invest in stocks and know what types of stocks should be invested. Nguyen
(2012) indicates that the lower the educational level of an individual investor, the lower
the effectiveness of stock investment decision is. In other words, there is a significant
difference in the effectiveness of stock investment decision between individual
investors with the high educational level and individual investors with the low
educational level. In short, many earlier studies indicate that educational level of
individual investors has a positive link with stock investment of the individual investors.
In the Vietnamese stock market, an individual investor with the high educational level
will be much interested in analysing many factors and will carefully evaluate the factors

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to make timely and efficient stock investment decisions. In comparison with individual
investors with the low educational level, individual investors with the high educational
level have the higher effectiveness of stock investment because they have enough skills
and knowledge about factors impacting on stock investment.
 The relationship between psychological biases and stock investment decision of
This project recognises that psychological biases of individual investors have a negative
effect on their stock investment decision in the Vietnamese stock market. Then, H2 is
accepted. This research result is similar to the research result of previous studies
including Baber and Odean (2000), Riaz et al. (2012), Chin (2012), Sahi et al. (2013) and
Adel and Mariem (2013) since the previous studies recognise the negative correlation
between psychological biases of individual investors and their stock investment
decision. In particular, according to Baber and Odean (2000), there is a negative
correlation between individual investors’ psychological biases and their stock
investment decision. Overconfident individual investors often have stock investment
decisions that result in negative performance of stock investment. On the contrary,
confident and careful individual investors often have stock investment decisions which
lead to positive effectiveness of stock investment. The researchers also indicate that
overconfident individual investors do not focus on analyse all factors impacting on the
effectiveness of stock investment factors impacting on the performance of stock
investment and then the stock investment effectiveness will be low. According to Riaz et
al. (2012), individual investors often have high psychological biases and the individual
investors often purchase “hot” stocks instead of “non-hot” stocks. However, in fact,
non-hot stocks in the current period do not mean that they will have low effectiveness
in the future period. “Hot” stocks with high effectiveness in the current period do not
mean that they will have high effectiveness in the future period. In the case, it is crucial
for individual investors to buy many more types of stocks to reduce risks related to high
dependence on some types of certain stocks with the high effectiveness. According to

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Chin (2012), psychological biases of an individual investor happen when the individual
investor uses available information excessively and easily. In stock market, when an
individual investor invests in stocks through his or her preference for local organisations
which are familiar with him or her and they only believe that they will receive high
returns from the stock investment in the local organisations, his or her psychological
biases occur. The individual investor believes that he or she will receive high returns
from stock investment in the familiar organisations although the basic principles are
portfolio diversification for optimisation of stock investment values. According to Sahi et
al. (2013) and Adel and Mariem (2013), stock investment decision-making reasons of an
individual investor are dependent on preferences and psychological biases of the
individual investor and then understandings of psychology of individual investors will
help securities companies in better comprehending the approach that the stock
investment decisions of individual investors are made. In short, many earlier studies
indicate that psychological biases of individual investors have a negative link with stock
investment of the individual investors.
In the Vietnamese stock market, overconfident individual investors often are motivated
to buy stocks that have high returns and do not evaluate all factors impacting on the
effectiveness of stock investment and then their performance of stock investment is low
and the trading expenses are high. Overconfident individual investors believe that they
have better knowledge and skills than other people. Then, subjective biases make
individual investors highly assess their capabilities and then, their decision of stock
investment can have low stock investment performance.
 The relationship between attitudes and stock investment decision of individual
investors in the Vietnamese stock market
This project recognises that attitudes of individual investors have a positive effect on
their stock investment decision in the Vietnamese stock market. Then, H3 is accepted.
This research result is similar to the research result of previous studies including

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