Investment Decision Behavior Research Articles

Investment Decision Behavior of Indian Retail Investors with Respect to IPOs

Retail investors consider time horizon, liquidity, risk, and return while making investing decisions in IPOs in order to achieve their financial goals. But limited financial literacy, information overload, emotional decision- making, lack of diversification, high transaction costs, and regulatory complexity are some of the difficulties Indian ordinary investors face while investing in IPO. Examining the variables influencing Indian retail investors' investment choices and decision-making procedures in IPOs is the primary purpose of this research. The researcher collected data from primary sources. The data was collected from 92 investors using a random sample method. The stated hypotheses were assessed at the 0.05 level of significance using the ANOVA test. Various aspects of IPOs, such as brand, profitability, financial standing, product offerings, size, industry track record, price bands, promoter track record, and risks, play an important role in forming investor perceptions on the basis of occupation. The result also states that there are significant differences in means of various groups of respondents on the basis of annual savings observed for the brand and reputation of the IPO-issuing company, while for other factors, there are no significant differences in means. Key Words: Investment Decision, Initial Public Offerings, Indian Retail Investors, Investment behaviour

Influence of Overconfidence and Loss Aversion Biases on Investment Decision: The Mediating Effect of Risk Tolerance

This study aims to examine the effects of overconfidence and loss aversion on Investing behavior with the mediating role of risk tolerance. Employing a quantitative methodology, data was collected using a structured questionnaire featuring multiple choice and Likert scale questions. Convenience sampling was used to gather responses, and the data was analyzed through multiple regression techniques. The mediating effect of risk tolerance was measured using Andrew F. Hayes’ Process V4.2 Macro. The study found that risk tolerance partially mediates the relationship between overconfidence and investment decision-making behavior, with both direct and indirect effects being statistically significant. Similarly, the study found that loss aversion has a statistically insignificant direct effect on investment decisions, while its indirect effect through risk tolerance is statistically significant. The study discloses that risk tolerance partially mediates the relationship between overconfidence and investment decision behavior, while it fully mediates the relationship between loss aversion and investment decision making behavior. Risk tolerance significantly influences investment decisions, influencing both overconfidence and loss aversion, while loss aversion’s influence is partially explained by risk tolerance.

Research on the Decision-Making Mechanism of Human Capital Investment in the Behavior of “Returning to School for a Master Degree”—An Interview Analysis Based on Grounded Theory

Currently, it has become increasingly common for individuals engaged in social work to pursue a Master’s degree as part of their professional development. Following the qualitative research approach of grounded theory, this study conducted in-depth interviews with six graduate students majoring in education from local universities and performed a three-level coding analysis on the collected data. The motivations behind social candidates’ pursuit of a Master’s degree are primarily driven by material needs, spiritual aspirations, and other factors. Drawing upon the human capital theory, this study examines the investment decision-making behavior of this particular cohort. The decision mechanism underlying this behavior is as follows: the anticipated income level associated with a master’s degree surpasses the current income level; the expected return on investment outweighs the investment cost; while human capital investment in graduate school entails minimal risk, its return rate exceeds that of other investments; substantial hidden benefits are derived from investing in human capital. The research findings can serve as a valuable reference for the reform and adjustment of graduate enrollment and training in higher education institutions.

The behavioral biases on investment decision behavior: Evidence from Indonesia

The purpose of this study to analyze the behavior of investors in making financial investments in Indonesia. Although the overall financial literacy level in Indonesia has increased, individuals with higher levels of financial literacy tend to make more rational investment decisions. Being well-literate can be interpreted as the personal ability to understand and create financial concepts. However, some individuals still need help understanding investment products and services in Indonesia. This is due to the fact that there are still individuals who invest in illegal products. This study focuses on four biases: overconfidence bias, optimism bias, herding effect, and flexing, using quantitative analysis. The decision to invest is influenced by the thoughts of each investor and their optimistic behavior in seeking the highest return on their investment. This study used primary data with descriptive quantitative analysis. The number of respondents used in the overall research was 400, with criteria for investment products. The result of this study shows that the variable of overconfidence, optimism, and flexing affects the behavior of financial investment decisions. However, the variable bias herding effect does not affect the behavior of financial investment decisions. In conclusion, investors should be more cautious in making investment decisions by paying attention to the variables of overconfidence, optimism, herding effect, and flexing social media in Indonesia.

Exploring Market Dynamics: A Qualitative Study on Asset Price Behavior, Market Efficiency, and Information Role in Investment Decisions in the Capital Market

This qualitative study explores market dynamics, asset pricing behavior, market efficiency, and the role of information in investment decisions within the financial markets. The research aims to provide insights into the underlying motivations, perceptions, and experiences of market participants, offering a comprehensive understanding of these complex phenomena. Employing qualitative methods such as semi-structured interviews and textual analysis, data was collected from a diverse range of participants including investors, financial analysts, and market regulators. The study found that market dynamics are influenced by various factors including investor sentiment, economic indicators, regulatory changes, and technological advancements. Behavioral biases among investors, such as herd mentality and overconfidence, challenge traditional theories like the efficient market hypothesis (EMH), indicating the presence of market inefficiencies. Moreover, information plays a central role in shaping investor perceptions and driving market trends, though concerns exist regarding the reliability of information sources in the era of social media and algorithmic trading. The study underscores the importance of investor education, diversified investment strategies, transparency, and regulatory interventions in fostering fair, efficient, and resilient financial markets. Moving forward, addressing these issues will be crucial for informed investment decision-making and advancing our understanding of financial market dynamics.

Exploring Market Dynamics: A Qualitative Study on Asset Price Behavior, Market Efficiency, and Information Role in Investment Decisions in the Capital Market

Exploring Market Dynamics: A Qualitative Study on Asset Price Behavior, Market Efficiency, and Information Role in Investment Decisions in the Capital Market

An elicitation study to understand the equity investment motivation and decisions among Indian millennials

Purpose Millennials are a vital generational cohort of the Indian population, and understanding their motivation to participate in the stock market is crucial. This study aims to understand the investment decision-making behavior among millennials in the Indian Stock Market. Design/methodology/approach Using a cross-sectional research design that entails in-depth personal interviews, this study aims to understand the equity investment behavior of millennials. Verbatim texts from interview transcripts were used to analyze the content and arrive at themes. Findings The study investigated the motivation to enter the stock market and gained insights into how individuals make equity investment decisions considering economic and behavioral dimensions. The basis for stock selection was predominantly on the self-analysis of investors. Multiple stock selection priorities are also discussed. In addition, informants ensured asset diversification and exercised various strategies to overcome emotions. Furthermore, they suffered from various behavioral biases. Practical implications Individual investors are the least informed and most impacted stakeholders in the stock markets; therefore, this study contributes fresh insights to enhance their financial security. The paper also examines some noticeable behavioral tendencies retail investors exhibit and gathers helpful strategies for mitigating behavioral biases. Originality/value The uniqueness of the research lies in its adoption of a qualitative methodology that uses the investment experience of millennial investors to reveal the components of decision-making behavior and investor psychology. The findings are thereby unique and have significant managerial implications.

Integrating Personality Traits and Behavioral Theories in Mutual Fund Investments: Unveiling Investor Dynamics

This article explores the interplay between personality traits, particularly the Big Five model, and the Theory of Planned Behavior (TPB) in shaping individual investment decisions in mutual funds. Utilizing the TPB's framework, the study examines attitudes, subjective norms, and perceived control, linking them to investor intentions. Focusing on India's growing mutual fund industry, the article highlights key industry metrics, indicating robust growth in assets under management and retail participation. Comparisons with developed countries underscore India's untapped potential in mutual fund investments. The research delves into the determinants of investment decisions, considering rationality, socioeconomic factors, and the impact of personality traits. Theoretical frameworks and literature synthesis support the proposed behavior intention model. The findings emphasize the vital role of personality, particularly openness to experience, in influencing investment behavior. In conclusion, the study contributes insights for asset management companies in tailoring schemes to align with investor commonalities. Keywords: Investor, personality traits, Theory of Planned Behavior, Mutual Funds investment

The Influence of Risk and The Crowdfunding Ecosystem on Investment Decision Behavior: The Role of Financial Literacy

One way to support the government's smooth running of inclusive economic development is to help MSMEs (Micro, Small, and Medium Enterprises) gain access to funding. Along with technological developments, there is a new way for people to obtain external funding, namely through Crowdfunding Services. Crowdfunding has enormous potential in terms of helping people (especially MSMEs) to get external funds to develop their businesses. This research aims to analyze the influence of risk and the crowdfunding ecosystem on investment decision behavior in several crowdfunding companies in Indonesia with financial literacy as a moderating variable. The objectives of the research will be achieved using a problem-solving approach empirical and quantitative analysis. The research results show that risk and the crowdfunding ecosystem have a significant influence on investment decision behavior. The results of this research will be distributed to member companies of the Indonesian Sharia Fintech Association (AFSI) and it is hoped that it will provide information that helps them make decisions.

Gender differences in risk perception and investment behavior

Purpose- Gender differences in investment behavior have been reported by various studies. Behavioral investing seeks to bridge the gap between psychology and investing. Behavioral finance is becoming more predominant in the financial and investment industry. The general concept of behavioral finance suggests that investors do not necessarily make rational investment decisions. Many results of behavioral finance studies show that men and women have different strengths and weaknesses in terms of skills required for investment management. This study focuses on the role of gender in risk perception and investment behavior, with a sample size of 288 respondents. In other words, the aim of the research is to reveal whether there is a difference in investment preferences between men and women. It is investigated whether the gender factor affects investment decision-making behavior. Using an experimental finance approach, the relationship between gender diversity and investment decisions is examined. Methodology- This study focuses on the role of gender in risk perception and investment behavior, with a sample size of 288 respondents. Gender differences in investment behavior have been reported by various studies. Behavioral investing seeks to bridge the gap between psychology and investing. Behavioral finance is becoming more predominant in the financial and investment industry. The general concept of behavioral finance suggests that investors do not necessarily make rational investment decisions. In accordance with the aim of the research, to reveal whether there is a difference in investment choices between men and women, the investment differences between the genders are shown using the graphic method in this study. Then, the normality test and Mann-Whitney U test were applied by using 288 respondents, respectively. Findings- According to the graphic method results it is found that women generally prefer to invest between 10% and 25% of their monthly income in financial markets. T cryptocurrency market is riskier than the stock market for both women and men. Women experience more stress than men at the thought of losing money because of their investment choices. The Cronbach Alpha coefficient for estimating the reliability of the scale employed for respondents’ investment preference was found to be 0.701. The results of data processing obtained by the value of the Kolmogorov-Simirnov significant which means the data were not normally distributed residuals. According to Mann-Whitney U test results, it is underlined that the gender factor differs according to the following variables based on 95% significance level: Conclusion- Survey with different aspects of questions focus on investors’ risk perception. “How often do you check your investments?”; “What is your approximate holding time of an investment instrument?”; “What percentage of your monthly income would you prefer to invest in financial markets?”; “The thought of losing money because of my investment choices is stressed me out”; “Have you ever invested in Cryptocurrencies?”; “What is the most suitable option for your knowledge of the cryptocurrency market?”. It is concluded that there is a significant difference between gender and investment preference. Keywords: Behavioural finance, financial market, cryptocurrency, gender factor, risk perception. JEL Codes: G10, G40, G41

Bid-Ask Spread, Market Value, and Return Risk on Stock Holding Period in the Banking Sector Listed on the Indonesian Stock Exchange (BEI) from 2018 to 2022

This research is of high relevance as it provides new insights in the context of shareholding duration in the banking sector on the Indonesia Stock Exchange (IDX) over the period 2018-2022. Factors such as bid-ask spread, market value, and return risk have been analyzed to understand their influence on the stock holding period. The implications of the research findings can be used by practitioners, regulators, and academics in finance to develop more effective investment policies and risk management strategies. The results showed that simultaneously, bid-ask spread, market value, and return risk affect the holding period of banking stocks on the IDX during the period February 2018-January 2022. Partially, bid-ask spread and market value have a positive but insignificant effect on the holding period. Conversely, return risk has a negative and significant effect on the holding period of banking stocks. These findings contribute to the development of financial theory and industry practice, paving the way for further research. Therefore, this study has important value in the context of investment decision-making, risk management, and understanding investor behavior in the banking sector.

Investment Decision-Making Behavior in the Era of Covid-19: An Analysis on the Basis of Mental Accounting, Loss Aversion Bias, and Risk Tolerance

Abstract The era of Covid-19 is a condition that illustrates the uncertainty of national and world economic conditions, which encourages individuals to be able to manage their economy and finances. Therefore, this research aims to explain whether mental accounting, loss aversion bias, as well as risk tolerance can affect investment decision-making in the Covid-19 situation from the point of view of behavioral finance theory. The results of research using SEM PLS analysis show that Mental Accounting, Loss Aversion Bias, as well as Risk Tolerance, have an effect on investment decision-making. Based on behavioral finance theory, the results of the study illustrate that in the Covid 19 pandemic situation, individuals will generally respond to information received as a basis for making decisions by paying attention to the level of risk and optimizing the rate of return from the investment made.

The Influence of Socio-Economic and Psychological Factors on Millennial Generation’s Stock Investment Decisions

Purpose : Increasing investment awareness among the public, especially among millen- nials, is crucial for the development of the stock market and overall financial growth. As a significant potential force, millennials can play a vital role in increasing stock investment decisions and fostering economic progress. This study aims to develop an integrated model of the influence of socioeconomic and psychological factors, namely return expectations, self-efficacy, and risk perception, on millennial stock investment decision-making behavior. Method : The research population was millennial stock investors. Non-probability sampling technique was used to obtain 336 respondents. Data were collected through the survey method using a questionnaire. Data were analyzed using the partial least square (PLS) technique. Findings : Based on the analysis, socioeconomic factors influence investment deci- sions, return expectations, self-efficacy, and risk perception. Socioeconomic factors influence investment decisions through return expectations, self-efficacy, and risk per- ception. However, risk perception does not directly affect millennial stock investment decisions. The results of this study can be used as a reference to motivate young people to invest intelligently in the stock market. Novelty : The research was conducted on the millennial generation, who have an im- portant role in stock investment decisions, considering that the millennial generation is the generation that has an important role in increasing stock investment. Keywords : Expected Return; Self Efficacy; Risk Perception; Investment Decision

Research on the Decision-Making Mechanism of Human Capital Investment in the Behavior of “Returning to School for a Master Degree”—An Interview Analysis Based on Grounded Theory

Currently, it has become increasingly common for individuals engaged in social work to pursue a Master’s degree as part of their professional development. Following the qualitative research approach of grounded theory, this study conducted in-depth interviews with six graduate students majoring in education from local universities and performed a three-level coding analysis on the collected data. The motivations behind social candidates’ pursuit of a Master’s degree are primarily driven by material needs, spiritual aspirations, and other factors. Drawing upon the human capital theory, this study examines the investment decision-making behavior of this particular cohort. The decision mechanism underlying this behavior is as follows: the anticipated income level associated with a master’s degree surpasses the current income level; the expected return on investment outweighs the investment cost; while human capital investment in graduate school entails minimal risk, its return rate exceeds that of other investments; substantial hidden benefits are derived from investing in human capital. The research findings can serve as a valuable reference for the reform and adjustment of graduate enrollment and training in higher education institutions.

Impact of financial literacy, mental budgeting and self control on financial wellbeing: Mediating impact of investment decision making.

The topic of financial wellbeing is a current concern within the realm of personal and household finance. This study aims to examine the influence of cognitive factors, specifically financial literacy, mental budgeting, and self-control, on subjective financial wellbeing. While there exist multiple determinants of financial wellbeing, this research focuses on these particular cognitive factors. The present study aims to examine the mediating role of investment decision-making behavior in the association between cognitive factors and financial well-being. The study employed Partial Least Squares Structural Equation Modeling (PLS-SEM) to analyze the data collected from a sample of 449 Chinese university students, with the aim of assessing the empirical associations. The results indicate that financial literacy, mental budgeting, and self-control exert a favorable and noteworthy influence on an individual's financial well-being. The results indicate that individuals with a greater degree of financial literacy are more prone to achieving superior financial well-being. Moreover, individuals who practice mental budgeting, a technique that entails mentally classifying and monitoring their expenditures, demonstrate elevated levels of financial well-being. Likewise, the exercise of self-regulation is identified as a pivotal element that impacts an individual's financial wellbeing. The findings indicate that there is evidence to support the mediator, investment decision-making behavior. This mediator partially mediates the association between the independent variables, namely financial literacy, mental budgeting, and self-control, and financial well-being. The results suggest that individuals with elevated levels of financial literacy, proficient mental budgeting skills, and self-regulatory abilities are inclined towards demonstrating favorable investment decision-making conduct. Consequently, this contributes to their general financial welfare. In general, the study's theoretical implications augment the current knowledge repository, while its practical implications provide feasible perspectives for policymakers, financial institutions, and individuals to foster financial wellness and enhance financial results.

A study of investment decision behavior based on risk analysis

Abstract Risk analysis of investment decision-making behavior is to improve the ability to prevent investment risks in order to guarantee the success rate of investment decisions. In this paper, the risk evaluation level is determined by calculating the correlation degree of risk indicators through the establishment of the material topology matrix, and the gray evaluation coefficients are determined by using the gray correlation analysis of the whitening weight function to construct the gray evaluation model. The risk index factors and the overall gray evaluation were analyzed by using the material topology model and the gray evaluation model. From the physical topology evaluation, the market risk correlation is −0.00825, which means the special level risk. From the grey comprehensive evaluation score, the overall evaluation score is 6.884 overall risk level is medium grade line. This shows that using the model constructed in this paper can effectively realize the risk analysis of investment decisions and provide a guidance basis for investors to take effective measures for different types of risks.

Emergency Volunteer Participation in the Evolutionary Game of Public Security Governance under Community Incentives

The outbreak of the COVID-19 epidemic has brought profound changes to all aspects of our society and also reflects the importance of community emergency volunteers actively participating in epidemic prevention and control in the face of unexpected public security events. As a bridge between the implementation of government policies and the masses of the community, community emergency volunteers have the characteristics of high efficiency and low cost, which has a great impact on the advancement of modern social governance. In order to motivate volunteers, the community will introduce incentive mechanisms. How does the evolutionary process of a dynamic game between volunteer engagement and community motivation change? How should communities maximize the service investment of volunteers in the game process? However, the current research rarely focuses on the role of community volunteers in the modernization of Community Governance. In order to clarify this game process, this article constructs a public safety governance incentive game model consisting of communities and emergency volunteers. Based on evolutionary game theory, we obtain the evolutionary stable equilibrium point by solving the replicator dynamic equations of all parties in the dynamic system under different constraints. Finally, some numerical examples were provided to simulate the selection of agents. The research results show that the degree of community public security risk, the degree of active involvement of volunteers, the degree of inactive involvement of volunteers, and the level of community incentives have an important impact on the enthusiasm of volunteer community service investment decision-making behavior. In addition, the choice of community incentive-volunteer service investment strategy is a dynamic process, which can converge to the ideal state under certain conditions after continuous adjustment and optimization. In addition, this study puts forward suggestions and measures conducive to the game between both sides, which can provide valuable guidance for the practice of community public security governance and the improvement of government efficiency in China.

Does a New Electric Vehicle Manufacturer Have the Incentive for Battery Life Investment? A Study Based on the Game Framework

Motivated by the electric vehicle battery life performance, we studied the optimal investment decision-making behaviour of duopoly automakers. Based on the framework of game theory, this paper explores the influence of various parameters in the static game and dynamic game on the results, in combination with consumers’ preference for the battery life of electric vehicles. In the static game, a smaller investment coefficient is more beneficial to a firm that adopts an investment strategy rather than a firm that does not. When the investment coefficient increases, the difference between the two manufacturers will become smaller. The change of parameters in the dynamic game system may lead to complex dynamic phenomena, and the system will experience period-doubling bifurcation and N-S bifurcation from a stable state into a chaotic state. It will also significantly impact the basins of attraction, which affect the decision-makers’ initial choice. Consequently, we can use the control method to return the unstable system to stability. Based on these findings, some management insights and suggestions are presented.

A Comparative Study of the Investment Behavior of Financial Asset Investors

In China's capital market, investors can be divided into two categories: individual investors and institutional investors. Different from foreign capital markets, in China's capital market, individual investors account for a relatively high proportion of investors, China's market is basically dominated by individual investors, retail characteristics are obvious. Due to the short establishment of China's capital market, it is not a completely effective market, the entry threshold is low, the education of investors is not perfect, the investment literacy and investment knowledge accumulation of individual investors is not high enough, and due to the existence of investor cognitive bias, individual investors are often in a weak position in the capital market, and the investment returns of individual investors are often lower than those of institutional investors. Therefore, the research in this paper is aimed at the investment behavior of individual investors. The research includes the influence of individual characteristics of investors on investment decision-making behavior, the effect of Internet media use on urban and rural households' financial investment behavior, the regional heterogeneity of residents' choice of financial assets, the role of risk aversion and subjective well-being on family participation in risk financial markets, and the influence of family age structure, health status, financial experience, financial literacy and trust on household financial asset allocation.

The Psychological, Neuroscience, and Socio-Economic Factors of Mindset Investors in Buying Mutual Fund for Investments Decisions

Investment decision is a problem in selecting the desired investment from an individual on the available opportunities by choosing one or more investment alternatives that are considered to have advantages. The researcher analysis how cognitive, neural process, and social-economic factors influence the investors buying mutual fund. In this research focus on cognitive constraints and a low a knowledge about mutual fund to effects on investment decision. This research use qualitative study aims to analyze the psychological, neuroscience, and socio-economic factors of mindset investors in buying reksadana for investment decisions. In this research used to answer the research question is descriptive qualitative. Then, the data collection method used in this study is in-depth interview. The results in this research that psychology has a role in the behaviour of mindset investors in buying reksadana for investment decisions. The objective to explore factors buying mutual fund by investors. This research uses six participants. The main outcome measure it can be concluded that investor behavior in mindset stock investment decisions is always based on psychological and socio-economic attitudes when buying mutual funds.
 
 Keywords: The psychological, neuroscience, socio-economic factors, mutual fund, investment decisions.