Abstract
The purpose of this study was to investigate the effects of risk tolerance, financial well-being, financial literacy, overconfidence bias, herding behavior, and social interaction on stock market investment intention and stock market participation among working adults in Malaysia. Adopting the cross-sectional design, this study collected quantitative data from a total of 349 respondents in an online survey via Google form link across various social media platforms. This study used the partial least squares structural equation modeling (PLS-SEM) approach to test the hypotheses. This study revealed the significant positive effects of risk tolerance, herding behavior, and social interaction on stock market investment intention. Stock market investment intention also had a significant effect on stock market participation. Stock market investment intention was also found to successfully mediate the relationships of risk tolerance and overconfidence bias with stock market participation. When it comes to stock market investment, the government and related authorities should focus on developing programs and policies that provide a financial safety net for investors and promote investment-related social platforms. This study linked risk tolerance, financial well-being, financial literacy, overconfidence bias, herding behavior, social interaction, stock market investment intention, and stock market participation. This is one of the few early attempts to address issues in light of the stock market investment participation among the working adults in a developing country.
Highlights
The stock market becomes a crucial key for the development of the financial system in developing countries
This study proved that the intention to invest among the majority of Malaysian working adults does not mediate the effects of certain factors on stock market participation, such as financial well-being, financial literacy, herding behavior, and social interaction
Stock market investment intention among working adults is crucial for their future assets
Summary
The stock market becomes a crucial key for the development of the financial system in developing countries. The stock market provides opportunities for both new or experienced investors to increase their wealth [1]. In Malaysia, the Chinese have the highest average wealth of RM 128,325, 76% and 47% higher than Malays and Indians, respectively [2]. This evidence indicates the high correlation between ethnicity and investment behavior in relation to future financial decision-making [3]. During the Covid-19 outbreak, many countries suffered an economic recession. Due to the uncertainties caused by the Covid-19 outbreak, major shareholders of some listed companies even disposed their shares during the first few trading days when the movement control order (MCO) was enforced [4]
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