This document provides a literature review on factors that influence individual investor behavior in the stock market. It summarizes several past studies that examined demographic factors like age, gender, income, and psychological factors. Internal factors like risk tolerance, goals, and external factors like information, recommendations also impact decisions. The literature identifies many determinants of behavior like herding, cognitive biases, past performance, dividends. In conclusion, investor characteristics and various economic, social, psychological influences shape their stock market participation and choices.
According to the EMH, stocks always trade at their fair value on stock exchanges, making it impossible for investors to either purchase undervalued stocks or sell stocks for inflated prices. As such, it should be impossible to outperform the overall market through expert stock selection or market timing, and that the only way an investor can possibly obtain higher returns is by purchasing riskier investments.
This is the project of Stock Market that tells us what is the environment of stock market and related investor.This is my first project of MBA from Bhai Gurdas Institute of Engineering & Technology
email amanpandher712@gmail.com
According to the EMH, stocks always trade at their fair value on stock exchanges, making it impossible for investors to either purchase undervalued stocks or sell stocks for inflated prices. As such, it should be impossible to outperform the overall market through expert stock selection or market timing, and that the only way an investor can possibly obtain higher returns is by purchasing riskier investments.
This is the project of Stock Market that tells us what is the environment of stock market and related investor.This is my first project of MBA from Bhai Gurdas Institute of Engineering & Technology
email amanpandher712@gmail.com
A Study of Behavioural Factors Affecting Individual Investment Decisionsijtsrd
Although finance has been studied for thousands of years, behavioral finance which considers the human behaviour in finance is a pretty new area. Behavioral finance theories, which might be based totally at the psychology, try to apprehend how feelings and cognitive mistakes impact man or woman traders' behaviour buyers referred to on this look at are referred to person traders .The primary goal of this have a look at is exploring the behavioral factors influencing person buyers' selections on the NSE and BSE Stock Exchange. Furthermore, the members of the family among these elements and funding overall performance also are tested. The have a look at begins with the present theories in behavioral finance, based totally on which, hypotheses are proposed. Then, those hypotheses are examined via the questionnaires dispensed to individual buyers on the Broking Firms, college students and professionals. The data collected from the Stock Broking firms, Students, Professionals through structured questionnaire were examined and data collected were analyzed using Cronbachs Alpha Reliability Test, based totally on which, hypotheses are proposed. The result indicates that there are 5 behavioral elements affecting the funding selections of person investors at the NSE and BSE Stock Exchange Herding, Market, Prospect, Overconfidence gamble's fallacy, and Anchoring ability bias. Most of these elements have mild impacts whereas Market element has high affect. This test also tries to discover the correlation among these behavioral factors and investment overall performance. Among the behavioral factors referred to above, best 3 elements are located to influence the Investment Performance Herding inclusive of shopping for and promoting choice of trading shares extent of buying and selling stocks velocity of herding , Prospect such as loss aversion, remorse aversion, and mental accounting , and Heuristic inclusive of overconfidence and gamble's fallacy . The heuristic behaviors are determined to have the highest advantageous impact at the investment overall performance while the herding behaviors are stated to persuade undoubtedly the investment overall performance on the lower degree. In assessment, the possibility behaviors provide the negative impact on the funding overall performance. Pawankumar S Hallale | Manjiri Gadekar "A Study of Behavioural Factors Affecting Individual Investment Decisions" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-3 | Issue-6 , October 2019, URL: https://www.ijtsrd.com/papers/ijtsrd28100.pdf Paper URL: https://www.ijtsrd.com/management/business-economics/28100/a-study-of-behavioural-factors-affecting-individual-investment-decisions/pawankumar-s-hallale
: Security and Portfolio Analysis :Efficient market theoryRahulKaushik108
Key Concepts of Efficient market theory: Very Lucid presentation , very Useful for MBA student to understand the Concepts of Efficient Market theory( Random walk hypotheses ) .The key idea of the hypotheses is" no one can efficiently out predict the market" or in other terms, technical analysis or fundamental analysis can not beat "the naive buy and hold strategy".
Factors Influencing Investment Decisions of Retail Investors- A Descriptive S...inventionjournals
Investment decisions have gained importance due to the general increase in employment opportunities and economic development of a nation. Awareness of investment avenues has led to the ability and willingness of working people to save and invest their funds for returns, in that perspective this study was conducted. The volatile behaviour of markets has challenged the hypothesis of efficient markets which motivates ones to understand the driving forces behind it. It is the major concern for academicians, investors and portfolio managers to understand the reasons causing irrationality in the markets. This paper uses the theory of behavioural finance to examine the factors influencing investment decisions of individual investors. From the extensive literature review, it was found that there is no single factor which influences the investment decisions of an individual. Moreover factors influencing investment decision varies from time to time, place to place, person to person, securities to securities etc. It was suggested that the policy makers of investment avenues must consider all the variables and its impact on the investors investment decisions while introducing any investment avenues to the market.
A Study of Behavioural Factors Affecting Individual Investment Decisionsijtsrd
Although finance has been studied for thousands of years, behavioral finance which considers the human behaviour in finance is a pretty new area. Behavioral finance theories, which might be based totally at the psychology, try to apprehend how feelings and cognitive mistakes impact man or woman traders' behaviour buyers referred to on this look at are referred to person traders .The primary goal of this have a look at is exploring the behavioral factors influencing person buyers' selections on the NSE and BSE Stock Exchange. Furthermore, the members of the family among these elements and funding overall performance also are tested. The have a look at begins with the present theories in behavioral finance, based totally on which, hypotheses are proposed. Then, those hypotheses are examined via the questionnaires dispensed to individual buyers on the Broking Firms, college students and professionals. The data collected from the Stock Broking firms, Students, Professionals through structured questionnaire were examined and data collected were analyzed using Cronbachs Alpha Reliability Test, based totally on which, hypotheses are proposed. The result indicates that there are 5 behavioral elements affecting the funding selections of person investors at the NSE and BSE Stock Exchange Herding, Market, Prospect, Overconfidence gamble's fallacy, and Anchoring ability bias. Most of these elements have mild impacts whereas Market element has high affect. This test also tries to discover the correlation among these behavioral factors and investment overall performance. Among the behavioral factors referred to above, best 3 elements are located to influence the Investment Performance Herding inclusive of shopping for and promoting choice of trading shares extent of buying and selling stocks velocity of herding , Prospect such as loss aversion, remorse aversion, and mental accounting , and Heuristic inclusive of overconfidence and gamble's fallacy . The heuristic behaviors are determined to have the highest advantageous impact at the investment overall performance while the herding behaviors are stated to persuade undoubtedly the investment overall performance on the lower degree. In assessment, the possibility behaviors provide the negative impact on the funding overall performance. Pawankumar S Hallale | Manjiri Gadekar "A Study of Behavioural Factors Affecting Individual Investment Decisions" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-3 | Issue-6 , October 2019, URL: https://www.ijtsrd.com/papers/ijtsrd28100.pdf Paper URL: https://www.ijtsrd.com/management/business-economics/28100/a-study-of-behavioural-factors-affecting-individual-investment-decisions/pawankumar-s-hallale
: Security and Portfolio Analysis :Efficient market theoryRahulKaushik108
Key Concepts of Efficient market theory: Very Lucid presentation , very Useful for MBA student to understand the Concepts of Efficient Market theory( Random walk hypotheses ) .The key idea of the hypotheses is" no one can efficiently out predict the market" or in other terms, technical analysis or fundamental analysis can not beat "the naive buy and hold strategy".
Factors Influencing Investment Decisions of Retail Investors- A Descriptive S...inventionjournals
Investment decisions have gained importance due to the general increase in employment opportunities and economic development of a nation. Awareness of investment avenues has led to the ability and willingness of working people to save and invest their funds for returns, in that perspective this study was conducted. The volatile behaviour of markets has challenged the hypothesis of efficient markets which motivates ones to understand the driving forces behind it. It is the major concern for academicians, investors and portfolio managers to understand the reasons causing irrationality in the markets. This paper uses the theory of behavioural finance to examine the factors influencing investment decisions of individual investors. From the extensive literature review, it was found that there is no single factor which influences the investment decisions of an individual. Moreover factors influencing investment decision varies from time to time, place to place, person to person, securities to securities etc. It was suggested that the policy makers of investment avenues must consider all the variables and its impact on the investors investment decisions while introducing any investment avenues to the market.
IOSR Journal of Business and Management (IOSR-JBM) is an open access international journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
A synopsis of Final research Report ON Investors' preference on various Investment Avenues in India.
A research report will be generated at the end of the final period evaluating the hypothesis of the reasearch
Behavioural Finance Paradigms and Its Influences on Investment Decisions and ...ijtsrd
According to conventional theory of stock market, the institutional investors and individual investors are rational by nature who would like to maximize their wealth within a stipulated period. However, there are many paradigms related to financial behaviour of individuals where it influences their investment decisions, leading to behave in irrational ways. Most of the investor's attitude towards investment states that their attitudinal behaviour always influences their investment decisions and will have an impact on their portfolios, so it clearly states that the psychological aspects of investor's will always have an impact on investment pattern what they choose and helps them to decide their investment avenues. Behavioral finance predicts the trading behavior of investors based on some paradigms in the stock market and is used as a basis for creating more efficient trading strategies for the purpose of maximizing returns. In this research study attempt has been made to understand and explain the impact of behavioural paradigms of financial market influencing on individual trading and investment behaviour around the world as well as the efforts has been made to put forth to find out the paradigms and its reasons for existence and acceptance of behavioural biases in the modern financial theory. In present scenario there are most cases where the performance of the financial market depends on the attitude of investors who invest in criterion portfolio and play a major role towards the investment, so there is a need of studying the above said existing paradigms for the purpose of evaluating the performance of various stocks and shares of the organizations and others in the financial market. And the research has proved that behavioural finance influences the investment decision making and their trading behaviour and also have an impact on the equity market as well. Dr. H. Prakash | Rekha D. M "Behavioural Finance Paradigms and Its Influences on Investment Decisions and Performance of Equity Market- A Study in Bangalore" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-4 | Issue-1 , December 2019, URL: https://www.ijtsrd.com/papers/ijtsrd29614.pdfPaper URL: https://www.ijtsrd.com/management/accounting-and-finance/29614/behavioural-finance-paradigms-and-its-influences-on-investment-decisions-and-performance-of-equity-market--a-study-in-bangalore/dr-h-prakash
Investment Preferences and Risk Level: Behavior of Salaried IndividualsIOSR Journals
The study aimed to analyze the relationship of demographic variables with the investment preferences consisting of stock investment and gambling decisions of salaried individuals of finance teachers and bankers of Gujrat and Sialkot .The questionnaires were distributed to analyze the significant differences in risk level and investment preferences by taking a sample of 120 individuals. Findings of this research indicated that females are more risk averse than males whereas young and educated people are attracted more towards new risky investment opportunities and want to invest their money but they are reluctant because of limited resources and lack of investment opportunities and absence of investment trends. In addition the emergence of frequent religious issues, non conducive economic environment and culture are found to be the main factors having negative relationship with gambling while making investment decisions.
This is my little research work towards Behavioural finance for Investors' decision-making.
This article will explore the research gaps for those who are working on Behavioural Finance.
This is open-source and you can use it for your educational purpose.
Impact of Financial Knowledge of Investors Investment Making Decisionsijtsrd
The objective of the study is to find the impact of financial knowledge of investors on their investment making decisions. Investors are said to rational but due to the human nature, biasness comes into picture while making investment decisions. Financial literacy and financial knowledge are taken as an imperative terms for regulating human nature of investors while making essential investment decisions The study was conducted on 150 investors in the city of PUNE. The data was collected through structured questionnaire and data so obtained was analyzed with the help of SPSS software. Sunil Deshpande | Dr. Sanjay Patankar "Impact of Financial Knowledge of Investors Investment Making Decisions" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-4 , June 2021, URL: https://www.ijtsrd.compapers/ijtsrd42536.pdf Paper URL: https://www.ijtsrd.commanagement/accounting-and-finance/42536/impact-of-financial-knowledge-of-investors-investment-making-decisions/sunil-deshpande
A CONCEPTUAL FRAMEWORK FOR RESEARCH ON INVESTMENT DETERMINANTS AMONG NON-INST...IAEME Publication
In modern economic world income plays a very vital role in every one’s daily life.
Investment has been one of the major concerns for the Non-institutional investors as
their today’s small savings would be meeting with the expenses of tomorrow. The risk
and returns proportion from each of these investment options varies from one to
another. Investor’s behavior plays an important role in investment decision making,
which is influenced by many a factors during the process of investment decision
making. Today, investors have many avenues of investment with different features to
cater their present and future needs. The focus of this paper (non-institutional
investors), unlike institutional investor, suffers from various sort of perception while
deploying their funds due to their low investible funds, risk taking capacity, low
investment education and their exposure to evaluate the available information. This
situation of the non-institutional investors motivates to study as these investors are the
finest source of small savings in investment set-up of the country. This paper presents
a conceptual framework for research on investment determinants among noninstitutional investors to be carried out further by the researchers.
A Study of Investment Pattern of a Common Man A Literature Reviewijtsrd
In India where and how the people make investment of their earned money is a very important decision because all investment avenues professed risky by investors. Investment refers to any mechanism used for the purpose of generating future income. The main features of investment are safety of principal amount, regular return, and liquidity. there are various avenues of investment available such as shares, bonds, debentures, gold, mutual funds, FDs etc. Indian people usually having a habit to save money for future but mostly people are not able to make appropriate investment decisions because people are not much aware about the various financial product available in market. As each financial product is unique in terms of risk and return. The objective of the research is to study the various factors that affects the choice of investment of a common man. Various research has been conducted in this area but there is scarcity of literature that shows whether people are able to make appropriate decision in regard to achievement of their investment goals and whether the performance of their selected avenues are able to meet their expectations. So this study is conducted to analyze the available literature on investment patterns to get an insights of the investment pattern of different class of people. Divya Verma | Dr. Deepak Sahni "A Study of Investment Pattern of a Common Man: A Literature Review" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-1 , December 2020, URL: https://www.ijtsrd.com/papers/ijtsrd38178.pdf Paper URL : https://www.ijtsrd.com/management/accounting-and-finance/38178/a-study-of-investment-pattern-of-a-common-man-a-literature-review/divya-verma
Evaluating the Effect of Financial Knowledge on Investment Decisions of Inves...Dr. Amarjeet Singh
In recent time, people don’t have enough money to
invest because of high maintenance life style, still few people
try to balance their life by investing their hard earned money.
But while taking decision on investment, Investors consider
different resources and information, mean while they forget
to check their own knowledge on financial terms and wisdom
on how to invest and where to invest. It is important to know
the effect of financial knowledge on the choice of investment
avenues in order to study the reliability of their investment
decisions. The problem is to check whether the investment
decisions are based upon simple investment tips and opinions
of other investors or a rational analysis of risk and return
associated with the various investment avenues. In this paper
an attempt has been made to evaluate the effect of Financial
Knowledge on investment decisions of 200 Investors from
Gandhinagar District. The study is based upon primary data
collected through a structured questionnaire administered to
100 rural and 100 urban investors, drawn through quota
sampling according to their various occupation categories. It
is hypothesized that investors take rational decisions based
upon their financial knowledge.
Evaluation Research on Development Level of Energy InternetDr. Amarjeet Singh
Considering the process of energy development and
utilization and based on the development objectives of low
carbon, high efficiency and electrification, this paper selects
key indicators from three aspects, i.e., energy supply, energy
consumption and energy trading. On the basis of the
established indicator system, the structural entropy and
factor analysis optimization model is built to select and
optimize the final indicators. The selected indicators can
provide a theoretical research framework for the study of
development level and the prediction of development trend of
global energy internet.
Impact of Age on Risk Preference and Investment Time Period of Retail Investo...ijtsrd
Stock market investments have become the most friendly and convenient form of investment for every investors age group. At present, almost everyone is investing in the stock markets. However, what type of security they invest in and what affects their investment decision depends upon several factors, which may include factors like age, gender, education, occupation, investment objective, risk appetite, income, etc. Age is one of the prominent factors influencing investment preferences not only directly but also indirectly. It is generally seen that the younger generation prefers investing in direct equity in the stock market, which is considered a risky investment, whereas people of old age are likely to invest in stable and risk free securities like debt securities and mutual funds. It is also seen that young investors prefer investing for a short period because of their impatient behavior, but as they grow old, they start holding their investments for the medium to long term. This study attempts to determine the effect of age on the risk preference and investment period choice of retail stock market participants. 256 retail investors were selected for the study from Kanpur city, and data was collected using a structured questionnaire. Chi square test, conducted under the study to determine the impact of age on the risk preference and investment period preference of retail investors. In addition to this, the value of Phi, Cramers V statistic, and the contingency coefficient were all computed so that the degree of association between the variables could be determined. The findings of this study reveal that investors age affects their risk preferences and the period for which they prefer investing. However, between age and risk preference, there was a moderate degree of association found, but in the case of age and investment period preference, the degree of association was weak. Prof. Shashi Kant Tripathi | Sameer Pandey | Smarika Mishra "Impact of Age on Risk Preference and Investment Time Period of Retail Investors of Kanpur City" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-6 | Issue-6 , October 2022, URL: https://www.ijtsrd.com/papers/ijtsrd52162.pdf Paper URL: https://www.ijtsrd.com/humanities-and-the-arts/social-science/52162/impact-of-age-on-risk-preference-and-investment-time-period-of-retail-investors-of-kanpur-city/prof-shashi-kant-tripathi
Similar to Determinants that influence the individual investor behavior in Stock Market (20)
Osisko Development - Investor Presentation - June 24
Determinants that influence the individual investor behavior in Stock Market
1. 1
A SEMINARREPORT
ON
“Determinants that influence the Individual
Investor’s behavior in Stock Market”
Submitted by
Abhishek Shrivastava
Sch.No.
Under the Guidance of
Dr.
Assistant Professor
DEPARTMENTOf
2. 2
TABLE OF CONTENT
S.no TOPIC PAGE
1.
INTRODUCTION
5
2. FACTORS INFLUENCING INVESTOR BEHAVIOR 6
3. OBJECTIVES OF THE STUDY 7
4. RESEARCH METHODOLOGY 7
5. REVIEW OF LITERATURE 8
6. CONCLUSION 12
7. LIMITATIONS 12
8. REFERENCES 13
3. 3
Determinants that influence the Individual Investor’s Behavior
In Stock Market
Abstract
The investment decisions of the individuals are greatly influenced by the benefits
each individual owning on a particular investment. In order to understand the
individual investors’ behavior there are many factors to consider viz. investors’
portfolio construction, stock preferences, risk perceptions, investments pattern,
awareness level of investors’, investment behavior and problems encountered by
them to analyze the investments. Demographic profile, investor attitude,
investors risk profile, expectations about the returns also plays a vital role in the
financial markets. The present study has tried to collect the literature from
worldwide relating to individual investors behavior. The study has been mainly
made to know and understand the individual investor behavior. The relevant
research papers have been collected from various refereed journals relating to
the investors behavior. The objectives, methodology, sample, data and results of
the study have been considered for the further studies. The study has tried to
build a strong conceptual framework on investors’ behavior in different countries
of the world. The paper shows the different variables that result in the behavior
of investors.
1. Introduction
The SEBI (Issue of Capital and Disclosure Requirement) regulations,2009 define a
investor as “A retail investor is an individual investor in the Indian securities
market whose subscription to securities is of a value less than Rs. 2 lakh”. The
investors prefer to invest in particular InvestmentAvenueaccording to their need,
risk bearing capacity and expected return. When the investors want high return
they have to choose the investment avenue that is risky. Compared to females,
males prefer to invest in investment avenues that are risky. The people with less
education prefer to invest in risk free investment avenues. The unmarried people
4. 4
prefer to invest in investment avenues where high risk is involved. Investment is
one of the major issues of the middle class families as their small savings of today
are to meet the expenses for the future. Behavioral finance is a relatively new
field that seeks to combine behavioral and cognitive psychological theory with
conventional economics and finance to provide explanations for why people
make irrational financial decisions. Cognitive psychology and the limits to
arbitrage are two building blocks of behavioral finance. Psychologists explain
investor behavior by focusing on individual characteristics. The operational
definition of individual investors runs as “the people, who earn or receive money
from spouse or parents on a monthly basis or occasional basis and invest in
different investment avenues such as shares, mutual funds, deposits, etc. in order
to save for future requirements.
2. Factors Influencing Individual Investor Behavior
2.1 Internal Factors
Demographic factors: Investors’ gender, age, marital status, education, income,
occupation etc.
Stock fundamentals: Beta, returns and risk, EPS, firm size, share price, share
turnover, market equity ratio.
Lifestyle characteristics: Personal ability, confidence level, dependency level of
investors.
Psychological influences: Desires, goals, prejudices, biases and emotions.
Risk bearing capacity: Safety, liquidity, capital appreciation, return and risk
coverage.
2.2 External Factors
a. Neutral information: information from government holders, information from
internet, changes in stock market and price movements
5. 5
b. Accounting information: information about stock merchantability, expected
corporate earnings, financial position, expected dividend and paid
c. Self-image: Information regarding product and service, reputation of the firm,
expectation of getting rich and firm status
d. Advocate recommendation: Advice from broker, family members, friends and
stock holder
e. Personal financial needs: diversification needs easy availability of funds, need
for minimizing risk and maximizing gains.
3. OBJECTIVES OF THE STUDY
1. To study the various factors affecting individual investors behavior as identified
by various Indian researchers.
2. To makea comprehensivereview on studies on individual investors behavior in
financial markets.
4. RESEARCH METHODOLOGY
The present study has been conducted by considering the research work made by
the researchers in the field of investor behavior. The research papers published
has been considered for the study to review. The research papers have been
collected from database and search engines such as SSRN and Google Scholar.
The study tries to gather the information about the attitude and behavior of
investors in relation to stock markets. The study on literature was undertaken in
order to bring out the factors that influence an investor to invest in the stock
market and suggest policy makers and investment agencies to respond to the
needs of the different types of investors. The studies have been reviewed by
considering objectives, methodology, respondents and factors influencing
investors’ decisions.
6. 6
5. REVIEW OF LITERATURE
5.1 Demographic and Psychological Factors
According to Kiran and Rao, who examined whether “Demographic and
psychographic variables were effective on risk-bearing capacity of Indian
investors”by conducting a sampling survey. By analyzing the collected data
through multinomial logistic regression and factor analysis (FA) of SPSS, they
verified a strong relationship between risk taking attitude and demographic and
psychographic variables. They also find that investors with five-year-or-more
investment experience often take higher risks than the others..
According to Rajarajan, who tried to identify “The association between
demographic profile and the risk bearing capacity of individual investors in
Chennai”, 405 individual from Chennai were taken, chi square test and
correspondence analysis was done .He found that there was a strong association
between demographic profile of individuals and risk bearing capacity.
As per Priya Vasagadekar, puts his views in her words in “To find out the
investment habits of Indian working women, role of investment women in
investment decisions and risk bearing capacity while making investment
decisions,” 100 investors were examined through descriptive studies and was
found that most of the women are low in financial literacy, so it becomes hardly
possible for them to manage their own portfolios. Instead they prefer to take
services of professional expert or family elders regarding the investment
decisions.
According to Krishna Mohan Vaddadi and Merugu Pratima , in their paper titled
“Socio-demographic profile of online investors, identify investment motives,
objectives and preferences and to examine the influence of demographic factors
and risk taking ability”, 500 investors of Greater Visakhapatnamcity were taken as
for sample and examined using chi-square test .They found that majority of the
online investors are self-directed individuals who prefer to make their own
investment decisions.
7. 7
According to N Geetha and Dr. M Ramesh, in their paper cited “To study the
factor that influence investment behavior of people and the attitude of
respondents towards different investment choices”, 210 investors of Kurumbalur
town were taken and percentage analysis was done. It was found that all the age
groups have given importance to invest in insurance, PPF, bank deposits.
Investors prefer less risky investment avenues like gold, mutual funds and bank
deposits and this could probably because of their tendency to avoid high risks.
As Kavitha C, put her views in words in the paper “To find out various attitudes
and perceptions towards stock market investments and to analyze how investors
level of awareness influence their attention to invest in stock market” in which
125 respondents were taken as a sample size and descriptive analysis and
correlation matching was done. Itwas found that there is a significant relationship
between investors attitudes and stock market investors.
5.2 Lifestyle and Risk Profiles of Individual
According to N Panjali and R Kasilingam, in paper titled ”To study the common
life style characteristics of investors in chennai and their influence on investment
pattern” 200 investors of Chennai were queried and results were interpreted by
Factor analysis, cluster analysis, Chi-Square analysis and ANOVA .It is said that
investors of 25-35 age group are achievers and understand their inner self.
Investors from service sectors and business groups are risk takers and believe
good value for their purchase.
In the views of Kabra et.al., in the paper titled “To study the factors that
influenced the investment risk tolerance and decision making process on the basis
of gender and age”, 196 investors working in government and private sector were
taken and conclusion was formed through in regression and factor analysis The
investors age and gender affected their risk taking ability. Majority of the online
investors are self-directed individuals who prefer to make their own investment
decisions
According to Aparna Samudra and M A Burghate in their paper titled “To know
the preference of middle class households on investment instruments and
objectives of investment”, 100 investors of Nagpur city were sampled through
8. 8
percentage analysis .It was found that the largest share of households have
savings bank deposit and insurance is the most preferred investment alternative.
Also single investors show a tendency to take higher risks than married investors.
According to Lal, in “To know the profile of Indian Investors”, 1200 individual
investors from different regions of India were examined through descriptive
analysis and found that Indian investors preferred to invest in the larger portfolios
with five or more companies.
5.3 Stock Returns Expectation
According to Gupta et. Al, “To examine and compare the pattern of investor’s
preference among mutual fund schemes and other financial products”, 312
household investors were sampled through descriptive analysis. The study
revealed that among mutual fund schemes UTI was the most popular and its
position in equity schemes was weaker than others.
In the views of Goodfellow, who investigated “Institutional and individual
investors’ trading behavior by testing for the presence of herding on the Polish
stock market from July 1996 to November 2000”. According to empirical
evidence, contrary to institutional investors, individualinvestors exhibited herding
during market downswings and to a lesser extent also in market upswings which
implied that individual investment decisions were prone to sentiment during
market stress, while they mostly trusted their beliefs and information when stock
prices rose.
According to Gupta and Jain, in their paper titled “To bring out the investors
preferences among the various types of financial assets and also their problems
concerning the stock market”, 1463 household investors were sampled by doing
descriptive analysis. They found out that the household investors preferred
investing in shares as compared to mutual funds due to relatively lower returns
because of entry loads and management fees charged by the funds.
9. 9
5.4 External factors
The Accounting information factor includes factors like, Financial Statements,
Annual Reports, Prospectuses, Valuation Techniques, and Expected Earnings,
cited by Nagy and Obenberger. Baker and Haslem stress the importance of
accounting information among investors during the stock selection process. They
also stress the importance of improving the quality of the financial reports which
caters to the needs of all classes of investors. Investors perceive the quality of the
reported earnings as low, they tend to rely more on the firm’s financial
statements and hence more into fundamental analysis.
According to Krishnan and Booker, who studied “The impact of analysts’
recommendation on the proposition of investors to commit the error of
disposition”, which is the sale of winning stocks at the earliest and the
postponement of the sale of losing stocks. The study revealed that the presence
of the recommendation report reduces the disposition error for gains but not for
losses. The disposition error for losses and gains is reduced only with more
information justifying the position of the analysts.
According to Nagy and Obenberger, found that among the decision variables
surveyed, the wealth maximization criteria which include minimizing risk,
diversification needs and expected earnings were the most significant but only for
less than half the respondents. Wealth maximization criteria which include
expected corporate earnings and get rich quick also seem to be the most
influential factor affecting the behavior of UAE investors.
According to Al-Tamimi, the self-Image/firm-image coincidence factor includes
factors like Firm Reputation, Film Status, Feelings about Products/Services, and
perceived ethics of firm after studying the factors influencing the individual
investor behavior of the UAE equity market. Factors include like get rich quickly,
reputation of the firm and perceived ethics with high scores.
10. 10
6. CONCLUSION
From the review of above studies, it can be concluded that there are numerous
determinants that influence the individual investor’s behavior in stock market.
Some factors influence majorly while other have slight role in influencing the
behavior of an individual investor. The factors can be grouped into demographic,
economic, social, and psychological in nature. The most common determinants
that have a significant impact on the investors’ behavior are herding, over-
reaction, cognitive bias, irrational thinking, confidence (over or under), gender,
age, income, education, risk factor, dividends, influence of people’s opinion
(friends or family), past performance of the company, accounting information,
ownership structure, bonus payments, expected corporate earnings, get rich
quick. On the other hand there are several determinants which were found
uncommon in various studies conducted across differentcountries. They are stock
marketability, expected losses in international financial markets, perceived ethics
of the firm, diversification purpose, tax consequences of an investment, inflation,
trading opportunity, publicity, composition of the board of directors of
companies, brand perception, social responsibility, economic expectation and
control orientation.
7. LIMITATIONS
1. This study/review paper limits to Secondary data analysis.
2. Targeted audience behavior changes rapidly with respect to new innovations
and social channel.
3. The way things are measured may change over time, making historical
comparisons difficult.
4. Validity and authenticity could be erroneous.
11. 11
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