Abstract
The study seeks to determine the main factors influencing investment decisions of investors and how these factors are related to the investors’ socio-economic characteristics in the Nigerian Capital Market. The study covers individual investors using convenient sampling method to obtain information from 297 respondents through a modified questionnaire developed by Al-Tamimi (2005). Independent t- test, Analysis of variance (ANOVA) and post hoc tests were employed. The results indicate that the five most influencing factors on investment decisions of investors in Nigeria are past performance of the company’s stock, expected stock split/capital increases/bonus, dividend policy, expected corporate earnings and get-rich-quick. Also, the five least influencing factors include religions, rumors, loyalty to the company’s products/services, opinions of members of the family and expected losses in other investments. The study finds that the socio-economic characteristics of investors (age, gender, marital status and educational qualifications) statistically and significantly influenced the investment decisions of investors in Nigeria. With regard to the past performance of the company’s stock as an assessing factor, groups of investors statistically differed in factor assessment, as segments of a group considered the factor as the most important/unimportant. Since the identified most influencing factors are usually classified as wealth maximising factors, the study recommends that the investment climate and the market environment be made friendly and conducive to attract investors by creatively developing programmes and policies that impact on investors’ decisions in order to maximise the value of the firms and enhance the wealth of the investors. The market players should re-organise the market and implement accommodating policies which will eliminate fraud and resolve the leadership crisis in the market.
Highlights
Abstract. e study seeks to determine the main factors in uencing investment decisions of investors and how these factors are related to the investors’ socio-economic characteristics in the Nigerian Capital Market. e study covers individual investors using convenient sampling method to obtain information om 297 respondents through a modi ed questionnaire developed by Al-Tamimi (2005)
As Nwude (2012a) observed, the decline was propelled by the actions of pro t takers who disposed stocks in order to reap o quick gains. e actions of the investors con rmed the study by Shanmugsundaram and Balakrishnan (2011) that small corrections in a capital market have o en disintegrated into full-scale crashes fueled by panicked investors, who made rash decisions to avoid losing money in the short term, rather than focusing on an investment’s long term potential. e position of the investors is understandable, when viewed from the point of psychological studies, as cited by Shanmugsundaram and Balakrishnan (2011) that the pain of losing money from investments is nearly three times greater than the joy of earning money
Results indicate that male investors reported signi cantly higher preference for past performance of the company’s stock (M = 4.20, Std Deviation (SD) = .835) than did the females (M = 3.90, SD = 1.030). e results imply that the gender of investors ma ers when making investment decision based on the past performance of the company’s stock, expected corporate earnings and dividend policy
Summary
Abstract. e study seeks to determine the main factors in uencing investment decisions of investors and how these factors are related to the investors’ socio-economic characteristics in the Nigerian Capital Market. e study covers individual investors using convenient sampling method to obtain information om 297 respondents through a modi ed questionnaire developed by Al-Tamimi (2005). E study seeks to determine the main factors in uencing investment decisions of investors and how these factors are related to the investors’ socio-economic characteristics in the Nigerian Capital Market. E results indicate that the ve most in uencing factors on investment decisions of investors in Nigeria are past performance of the company’s stock, expected stock split/capital increases/bonus, dividend policy, expected corporate earnings and get-rich-quick. E motivation, for embarking on this research is to answer the questions above and the fact that there have been limited empirical studies that investigated the factors in uencing individual investors’ decision making in the capital market in Nigeria E basic questions arising from the scenario above are: What are the main factors that have a racted the investors to invest in the capital market? Are these factors of investment decisions related to the investors’ socio-economic characteristics? e motivation, for embarking on this research is to answer the questions above and the fact that there have been limited empirical studies that investigated the factors in uencing individual investors’ decision making in the capital market in Nigeria
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