Effect of Herding Behaviour Marred with Irregularities/Illegalities of Individual Investors on Individual Investment Decision at Safaricom Co. Ltd

Abstract

Personal Finance is a broad aspect in the world of finance whereby individuals or groups of persons come together to invest, that is, buy/sell in funds/shares to make profits with considerations of uncertainties (risks). Behavioural Finance is a branch of personal finance whereby individuals are driven by certain behavioural biases while making individual investment decisions which can be both positively/negatively impacted. In this scenario, in the form of audit research, the author has examined a report provided by major stakeholders, the Safaricom Co. Ltd and other subsidiaries such as Cooperative Bank of Kenya and Hazina Sacco Co. Ltd in comparison on how activities were carried out during a five and half years (January 2017-June 2022). The main objective was to establish effect of herding behavior marred with irregularities/illegalities of individual investors on individual investments decision at Safaricom Co. Ltd. Specific objectives: 1. To determine the effect of exaggeration on herding behavior marred with irregularities/illegalities of individual investors on individual investments decision at Safaricom Co. Ltd. 2. To establish the effect of assumption on herding behavior marred with irregularities/illegalities of individual investors on individual investments decision at Safaricom Co. Ltd. 3. To examine the effect of disposition on herding behavior marred with irregularities/illegalities of individual investors on individual investments decision at Safaricom Co. Ltd. 4. To explain the effect of manipulation on herding behavior marred with irregularities/illegalities of individual investors on individual investments decision at Safaricom Co. Ltd. 5. To determine the effect of repetition on herding behavior marred with irregularities/illegalities of individual investors on individual investments decision at Safaricom Co. Ltd. Null Hypotheses tests were: HO1:- Exaggeration, HO2:- Assumption, HO3:- Disposition, HO4:- Manipulation, and HO5:- Repetition, all having no significant effect on herding behavior marred with irregularities/illegalities of individual investors on individual investments decision at Safaricom Co. Ltd. No much of Literature Review was carried out since research project was based on actual raw data provided by the concerned organizations. The target population sample was 337 individuals/transactions and receipts/payments marred with irregularities/illegalities of 2,936,323/1,755,044, respectively. For that fact, Cron Bach Alpha was determined by the average percentage of receipts and payments marred with irregularities/illegalities (74.04%, which is greater than 70%: the normal required %). Several tests were carried out, including central tendency (mean and standard deviation), hypothesis tests, simple regressions/multiple regressions, coefficient of correlations (between positive 1 and negative 1), variances in the determination of VIF (normal being less than 3), using tables and graphs for cross-tabulations. The results showed positive responses: that there was a significant level of herding behavior marred with irregularities/illegalities of individual investors individual investments decision at Safaricom Co. Ltd. All five factors:- exaggerations, assumptions, dispositions, manipulations, and repetitions were massively felt with marred irregularities and illegalities hence interested with the true position carried out during the period. Investigations are recommended to establish these kinds of massive transactions, which are marred with irregularities/ illegalities, and further research to be carried out on similar activities while individual investors are investing using individual investment decisions at NSE or any other Trading Bells Organizations.