Identifying and Prioritizing Factors Affecting Investor Decision Making: A Model Based on Investor Attitude and Behavior

Document Type : Research Paper

Authors

1 PhD student in accounting, Islamic Azad University, Sirjan branch, Sirjan, Iran

2 Assistant Professor of Industrial Management, Islamic Azad University, Tehran Branch, Tehran, Iran

3 Assistant Professor of Accounting, Islamic Azad University, Sirjan Branch, Sirjan, Iran

Abstract

In financial-behavioral theory, analyzing the impact of investor attitude and behavior on investment decisions can lead to a fair distribution of service to capital market actors. Establishing such equity requires identifying and prioritizing the important factors that influence investor decision-making behaviors. Therefore, the present study has attempted to identify the factors influencing investor attitude and behavior in investment decision making, and by their conceptual and operational definition, and the formulation of their relationship, develop a comprehensive decision making model based on investor behavior and attitude in Tehran Stock Exchange. In order to formulate the research model and fit it, 350 questionnaires were distributed by non-random sampling method and 225 questionnaires were completed and collected. Factor analysis was used to test the data obtained from the questionnaire. The main components of the research include understanding of their performance, financial ability, cognitive bias, behavioral attitude and investor optimal decision making. Findings of the study indicate that understanding of their performance is negatively and significantly correlated with behavioral attitude and positively and significantly correlated with financial ability. Also, other research results show that behavioral attitude has a negative and significant relationship with investor optimal decision, but financial ability has a positive and significant relationship with investor optimal decision.

Keywords

References

Abdorrahimian, M. H., Torabi, T., Sadeghisharif, J., & Darabi, R. (2018). "Behavioral decision-making pattern for individual investors in Tehran stock exchange". Investment knowledge, 7(26), 113-130. (In Persian).
Antonios, S., Evangelos, V., & Patrick, V. (2014). "Facebooks daily sentiment and international stock markets". Journal of Economic Behavior and Organization, 107(B),730-743.
Baghdadabad. M., Habibi. F., & Halid. N. (2018). "A study on small investors’ behavior in choosing stock, case study: Kuala-Lumpur stock market". African Journal of Business Management, 5(27), 11082- 11092.
Baharmoghaddam, M., & Jokar, H. (2018). "Investigating the effect of quality accounting information and information uncertainty on the investor sentiment". Accounting and Auditing Review, 25(1), 21-50. (In Persian).
Baharmoghaddam, M., Pourhidari, O., & Jokar, H. (2019). "Investigating the effect of investor sentiment on the expected earnings growth rate". Financial Knowledge of Securities Analysis, 12(42), 17-33. (In Persian).
Bilinski, P., Strong, N. (2011). "Managers’ private information, investor underreaction and long-run SEO performance". European Financial Journal, 19(5), 956-990.
Chandra, A., & Kumar, R. (2016). "Determinants of individual investor behaviour: An orthogonal linear transformation approach". Working Paper. Available at SSRN: https://ssrn.com/abstract=1790713
Chavoshi, S. K, & Falatoon Nejhad, F. (2017). "An analytical modeling of investments decision-making behavior in Tehran stock exchange". Investment knowledge. 6(23), 105-128. (In Persian).
Curseu, P. L., Vermeulen, P. A. M., & Bakker, R. M. (2010). The Psychology of Entrepreneurial Strategic Decisions. Edward Elgar publishing, 41-68.
Daghbandan, A., Najafi, A. A., & Taskiri, A. (2015). "Investigating the Impact of Investor Emotion on Investment Decision Making in Companies Listed in Tehran Stock Exchange". Third International Accounting and Management Conference, Tehran, Iran. (In Persian).
Daubechies, I. (1992). Ten Lectures onWavelets. SIAM, Philadelphia
Chambers, D. J., Freeman, R. N., & Koch, A. S. (2004). "The effect of risk on price responses to unexpected earnings". Workin Paper, Available at SSRN: https://ssrn.com/abstract=156569
Dhaoui, A., & Khraief, N. (2014). "Sensitivity of trading intensity to optimistic and pessimistic beliefs: Evidence from the French stock market". Arab Economic and Business Journal, 9(2), 115-132.‏
Duclos, R. (2015). "The psychology of investment behavior: biasing financial decision-making one graph at a time". Journal of Consumer Psychology, 25 (2), 317-325.
Ebrahimi Sarve Olia, M., Babajani, J., Hanafizadeh, P., Ebadpour, B. (2017). "Assessment of the behavioral determinants of individual investors in Tehran stock exchange based on structural equation modeling". Investment Knowledge, 6(22), 131-146. (In Persian).
Ebrahimi, H., Grekes, M. (2013). "Investigating the effect of investor sentiment on surplus returns between the ninth and tenth presidencies using GARCH model in Tehran Stock Exchange". Second National Conference on Accounting, Financial Management and Investment. Gorgan, Golestan Scientific and Professional Association of Managers and Accountants, 24-49. (In Persian).
Glaser, M., & Weber, M. (2008). "Which past returns affect trading volume?" Journal of Financial Markets. 12(1), 1-31.
Chen, G., Kim, K. A., Nofsinger, J. R., & Rui, O. M. (2007). "Trading performance, disposition effect, overconfidence, representativeness bias, and experience of emerging market investors." Journal of Behavioral Decision Making, 20(4), 425–451.
Gulnur. M, Aslihan, S., & Muhammet, M. (2005). "A behavioral approach to efficient portfolio formation, cubs faculty of finance". Working Paper.
Hoang, T., Lean, H., & Wong, C. (2015). "Is gold good for portfolio diversification? A stochastic dominance analysis of the Paris stock exchange". International Review of Financial Analysis, 42, 98–108.
Hens, T., & Bachmann, K. (2012). Behavioural Biases, Behavioural Finance for Private Banking. Published Wiley.
Ilmanen, A. (2012). Expected Returns: An Investor's Guide to Harvesting Market Rewards. John Wiley & Sons Ltd, Chichester, United Kingdom.
Ishikawa, A, & Takahashi, H. (2010). "Overconfident managers and external financing choice”. Review of Behavioral Finance Journal, 2(1), 37–58.
Kaplanski, G., & Levy, H. (2010). "Sentiment and stock prices: The case of aviation disasters". Journal of Financial Economics, 95(2), 174-201.
Khadadroshi, M., & Ghazizadeh, M. (2007). "Investigating factors affecting shareholder decision making in Tehran stock exchange based on structural equation modeling". Daneshvar Behavior, 1(1), 1-12. (In Persian).
Kim, K. A., & Nofsinger, J. R. (2008). "Behavioral finance in Asia". Pacific-Basin Finance journal, 16(1-2), 1-7.
Long, C.S., Abdul Aziz, M.H., Kowang, T.O., & Ismail, W.K.W. (2015). "Impact of TQM practices on innovation performance among manufacturing companies in Malaysia." South African Journal of Industrial Engineering, 26(1), 75-85.
Nagy, R.A., & Obenberger, R.W. (1994). "
Financial Management Strategy
Volume 10, Issue 4 - Serial Number 39
January 2023
Pages 197-216

Files

History

  • Receive Date: 03 September 2021
  • Revise Date: 14 November 2021
  • Accept Date: 28 November 2021

Share

How to cite

Statistics