Identifying Factors Influencing Investor Behavior in the Stock Market
DOI:
https://doi.org/10.47611/jsrhs.v11i3.3701Keywords:
Behavioral Finance, Overconfidence, Anchoring, Disposition Effect, Herding, Familiarity, Mental Accounting, Investor Behavior, Investor Biases, Qualitatative ResearchAbstract
The purpose of this qualitative study is to compare and contrast various factors influencing individual investor behavior in the stock market as detailed in surveys and interviews conducted in Sri Lanka, Nigeria, Vietnam, and Pakistan. The aim is to determine whether behavioral biases are consistent or vary depending on regional context, and if so, what determines the presence or expression of some biases over others. Searches were conducted and the conclusions from the four studies were extracted and comparatively analyzed. The findings indicate that investors are most likely to experience overconfidence above any other behavioral bias, and that the biases seen in the different markets were largely in agreement. Unique regional attributes, such as culture were identified and analyzed as potential influences on the relative presence or absence of behavioral biases, including overconfidence and herding.
Downloads
References or Bibliography
Babajide, A., & Adetiloye, K. (2012). Investors' Behavioral Biases and the Security Market: An Empirical Study of the Nigerian Security Market. Accounting and Finance Research, 1(1), 219–229. https://doi.org/10.5430/afr.v1n1p219
Barber, B. M., & Odean, T. (2001). Boys will be boys: Gender, overconfidence, and common stock investment. The Quarterly Journal of Economics, 116(1), 261–292. https://doi.org/10.1162/003355301556400
Barber, B. M., & Odean, T. (2013). The behavior of individual investors. In Handbook of the Economics of Finance (Vol. 2, pp. 1533–1570). https://doi.org/10.1016/B978-0-44-459406-8.00022-6
Barberis, N., & Huang, M. (2001). Mental accounting, loss aversion, and individual stock returns. The Journal of Finance, 56(4), 1247–1292. https://doi.org/10.1111/0022-1082.00367
Baxter, P. & Jack, S. (2008). Qualitative Case Study Methodology: Study Design and Implementation for Novice Researchers. The Qualitative Report, 13(4), 544–559. https://doi.org/10.46743/2160-3715/2008.1573
Fama, E. F. (1970). Efficient Capital Markets: A Review of Theory and Empirical Work. The Journal of Finance, 25(2), 383–417. https://doi.org/10.2307/2325486
Fossey, E., Harvey, C., McDermott, F., & Davidson, L. (2002). Understanding and evaluating qualitative research. Australian & New Zealand journal of psychiatry, 36(6), 717–732. https://doi.org/10.1046%2Fj.1440-1614.2002.01100.x
Hsee, C. K., & Weber, E. U. (1999). Cross-national differences in risk preference and lay predictions. Journal of Behavioral Decision Making, 12(2), 165–179. https://doi.org/10.1002/(SICI)1099-0771(199906)12:2%3C165::AID-BDM316%3E3.0.CO;2-N
Kahneman, D. & Tversky, A. (1979). Prospect Theory: An Analysis of Decision Under Risk. Econometrica, 47(2), 263–292. https://doi.org/10.2307/1914185
Katper, N., Azam, M., Karim, N., & Zia, S. (2019). Behavioral biases and investors’ decision-making: The moderating role of socio-demographic variables. International Journal of Financial Engineering, 6(3), 1–15. https://doi.org/10.1142/S2424786319500208
Kengatharan, L., & Kengatharan, N. (2014). The influence of behavioral factors in making investment decisions and performance: Study on investors of Colombo Stock Exchange, Sri Lanka. Asian Journal of Finance & Accounting, 6(1), 1–23. http://dx.doi.org/10.5296/ajfa.v6i1.4893
Kumar, S., & Goyal, N. (2015). Behavioural biases in investment decision making – a systematic literature review. Qualitative Research in Financial Markets, 7(1), 88–108. https://doi.org/10.1108/QRFM-07-2014-0022
Luong, L. P., & Ha, D. T. (2011). Behavioral factors influencing individual investors' decision making and performance: A survey at the Ho Chi Minh Stock Exchange. Vietnam: Umea School of Business.
Malkiel, B. G. (2003). The Efficient Market Hypothesis and Its Critics. The Journal of Economic Perspectives, 17(1), 59–82. http://doi.org/10.1257/089533003321164958
Tversky, A., & Kahneman, D. (1974). Judgment under Uncertainty: Heuristics and Biases: Biases in judgments reveal some heuristics of thinking under uncertainty. Science, 185(4157), 1124–1131. https://doi.org/10.1126/science.185.4157.1124
Yates, J. F., Lee, J. W., & Shinotsuka, H. (1996). Beliefs about overconfidence, including its cross-national variation. Organizational Behavior and Human Decision Processes, 65(2), 138–147. https://doi.org/10.1006/obhd.1996.0012
Published
How to Cite
Issue
Section
Copyright (c) 2022 Jonathan Hartanto; Dr. Stuart A. Meyers, Ed.D
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
Copyright holder(s) granted JSR a perpetual, non-exclusive license to distriute & display this article.
