A study on small investors’ behavior in choosing stock case study: Kuala-Lumpur stock market

Abstract

This study follows a qualitative methodology to investigate small investors’ behavior in choosing stock in Kuala-Lumpur stock market. Small investors usually capture the numerous factors to purchase a definite share within the security market. These factors dramatically influences investors’ behavior and change their decisions to purchase a particular stock. According to this description, the main purpose of this study is to identify the key determinants of choosing stock by small investors. A purposive sampling technique is employed to recruit 12 small investors based on desired range of demographic characteristics (for example sex and age), experience levels in purchasing stock and value of purchasing per time in ringgit. The research evidence reveals 13 effective factors in choosing stock which can influence small investors’ decisions for stock selection. These factors are in order of importance involving “financial statements of companies, accounting instruments, past stock price (return), firms’ public information, profitability variables, consult with anybody, financial ratios, past trading volume of stocks, second-hand information resources, discounted cash-flow tools, government policies, calculation of risk and economic variable. Key words: Small investors, investors’ behavior, institutional investors, individual investors, stock market.