Group Of Investors Research Articles

Investors’ Perceptions of Sustainability Reporting—A Review of the Experimental Literature

Prior research has shown that companies’ sustainability reporting in relation to environmental, social, and governance disclosures influences investors’ investment decisions. Since the credibility of these disclosures is often questionable, it is important to understand how investors perceive sustainability reporting and include it in their decision-making process. Although the high relevance of this topic has already been clarified in research, the extant literature is heterogeneous and poorly connected on several levels. Against this background, we conducted a systematic literature review of 27 experimental studies on this topic published in leading accounting journals between 2000 and 2021. By clustering the results according to Mercer’s credibility factors, we synthesize the research on investors’ perceptions of sustainability reporting in a novel way, and derive suggestions for future research. We find that the interest in experimental research on sustainability reporting perception has grown in recent years. Researchers so far have examined sustainability performance and external assurance as the most relevant factors determining the credibility of sustainability information. Other factors, such as disclosure precision and inherent plausibility, are sparsely explored. We provide avenues for future research to investigate the perception of sustainability disclosures more comprehensively, by focusing on understudied credibility factors and on new theories and heuristics. Additionally, we suggest considering diverse experimental settings, such as different investor groups, company characteristics, or experimental procedures in general.

Pengaruh Literasi Keuangan, Illusion of Control dan Overconfidence terhadap Keputusan Investasi pada Investor di Tulungagung

This study aims to analyze financial literacy, illusion of control and overconfidence on investment decisions for investors in Tulungagung. This research uses accidental sampling technique with a sample of 40 respondents from novice investors in Tulungagung. The results of this study indicate that the variables of financial literacy and overconfidence simultaneously affect investment decisions. Respondents belong to the group of investors who understand financial concepts well and feel confident. Meanwhile, the illusion of control variable has no effect on investment decisions. Respondents are included in the group of investors who are categorized as having higher financial literacy. The conclusion of this study is that financial literacy has a significant positive impact on investment among investors in Tulungagung.
 Keyword: illusion of control, investation, financial literacy, overconfidence

The concept of private placement in Polish and American federal law: The comparative analysis

Private placement as an offering of securities or shares to a specific group of investors is eagerly chosen by company authorities due to low costs and uncomplicated formal requirements. The entry into force of Regulation 2017/1129 resulting in the amendment of the Public Offering Act has changed the definition of a public offering in Polish law, significantly expanding its scope. At the same time, transactions that were previously considered private placements have become public offerings under the new legal definition. In this article the author compares the solutions of the American federal law regarding private and public offerings to the Polish regulations. Moreover, he proves that American law has developed a clear distinction between public and private offerings, treating private offerings as a separate class of offerings, while Polish law treats private placements as a type of public offerings. The author also tries to create a definition of a private placement that is consistent with the new legal environment in Poland.

A Study of Herding Behavior on Vietnam Stock Market

Herding behavior is a term used to describe how a group of investors will imitate one another in order to make judgments and take action. The CSAD model developed by Chang et al. (2000) is used in this study to investigate herding behavior in the Vietnamese stock market. The empirical findings demonstrate the presence of a herding tendency in this market. The market return is further separated into subgroups to show that herd behavior manifests under various market situations. The findings show that when markets start to fluctuate, investors have a larger tendency to follow the crowd (the market is going up or going down, or the market has an extremely high return or extremely low return). The impact of the Singapore stock market on the Vietnam stock market is then evaluated. This empirical finding may be used by investors to develop investment plans and broaden their prospects for profit.

Search Funds Characteristics of a New Group of Investors in Poland for Family Businesses Facing the Lack of Succession

Purpose: To analyze search funds as a new group of investment vehicles in Poland that constitutes a group of potential investors for family companies facing the lack of succession. Methodology: The theoretical part presents family businesses, considers the problem of succession in Poland, and analyzes the literature on available forms of divestment of a family business owner. Moreover, the article presents the roots of search funds creation and their characteristics, which reveals these investment vehicles as theoretically perfect for family businesses without successors. The empirical part presents a study into the sale of a Polish family business to a search fund, which was the first and only search fund deal in Poland until the end of 2020. Findings: The study revealed that the sale of a family business to a search fund should be included in the catalog of possible forms of divestment of a family business owner facing the lack of successors. Originality: The article fills a gap in the literature on family entrepreneurship in the context of selling a business to a search fund in Poland, which has not yet been indicated as one of the methods for owners to exit a business.

Critical success factors of implementing sustainable and responsible investment (SRI) Sukuk for economic recovery from COVID-19 pandemic

PurposeThere are three objectives of this paper. First, the study investigates the critical success factors critical success factors (CSFs) of implementing sustainable and responsible investment (SRI) Sukuk in Malaysia as perceived by stakeholders. Second, the study examines the differences between the developers and the investors in relation to the importance of the CSFs. Third, the study attempts to categorise the CSFs.Design/methodology/approachUsing a questionnaire survey, 260 completed and useable responses were received representing a 42.54% response rate. In examining the importance of CSFs, the descriptive statistical tests of mean, standard deviation and mean score ranking were used. Independent t-tests were conducted to investigate the differences in the perceptions of the importance of CSFs between the developer and the investor groups. In categorising the CSFs, exploratory factor analysis (EFA) was undertaken.FindingsOverall, the top five most important CSFs as perceived by respondents are as follows: (1) good governance framework, (2) fulfil ethical standards, (3) transparent procurement process, (4) well-defined scope and (5) viable feasibility study. On the other hand, the five factors that are ranked last are as follows: (1) defined stakeholder roles, (2) stable macro-economic conditions, (3) existing social programmes, (4) guarantor and (5) political will. The study also found that there is a significant statistical difference in how the developers and investors scored the CSFs. Moreover, there are three main categories of the CSFs that are effective feasibility study, financial and technical considerations and political willingness and agreeability.Originality/valueThe findings highlight the critical factors to consider when implementing SRI Sukuk. This can also serve as a reference and guideline for countries considering SRI Sukuk issuances for economic recovery stimulus post-coronavirus disease 2019 (COVID-19) pandemic.

Visceral emotions and Bitcoin trading

Using a new emotion-mining technique, we quantify visceral emotions among Bitcoin investors and investigate whether an empirical connection exists between micro-level visceral emotions and macro-level price dynamics in the cryptocurrency market. We find that cryptocurrency market investors carry visceral emotions. Bitcoin's intraday volatility and trading volume are associated with visceral emotions. This association is more salient for negative emotions. This form of emotional trading can cause a more behavioral group of investors to perform poorly in the cryptocurrency market.

Trading behaviours during stock market bubbles: evidence from Vietnam

ABSTRACT We study investors’ trading behaviours during bubbles on the Vietnam stock market. Vietnam offers a great setting due to its high susceptibility to bubbles and large heterogeneity among various groups of investors. We document evidence of trading explosions during two bubbles identified in our sample period, followed by reversions in the aftermath. Financial sectors make a significant contribution to this phenomenon in both episodes. We also find that foreign and sophisticated investors increase their holdings when the bubbles form and start selling well before the bursts, suggesting their superior ability to local individuals in timing the market.

A tool for evaluating and preparing a project for obtaining external financing

The article deals with the issues of a comprehensive business assessment comprehensive business assessment with the help of consultants and investors for the purpose of obtaining investment. Companies often focus mainly on financial indicators when developing investment projects and searching for an investor. However, the practice of preparing projects to receive investment shows that in order to make a particular investment decision, it is necessary to apply not only the financial evaluation of the project, but also its other components. The author has conducted in-depth interviews with a group of investors and based on the results has proposed an original framework for rapid assessment of the project in the process of its preparation for investment. The framework can serve as a methodological basis for working with investors on small and medium-sized business projects, and as a tool for determining the main directions of project and business development. The framework has been tested by the author on real projects and has proved to be fit for purpose.

Poe in Cyberspace: Web 1, 2, 3 . . .

Poe in Cyberspace: Web 1, 2, 3 . . .

How am I doing financially compared to expectations? An experimental comparison of messaging strategies in investor newsletters

PurposeThis study aims to investigate which messaging strategies employed in personalised newsletters could be used for improving the propensity of individuals to save or invest and secure their financial well-being.Design/methodology/approachThe authors conducted a field experiment with 4,782 clients at an Estonian retail bank. For three months (after measuring baseline levels for a month), the participants received personalised monthly newsletters with either a praising or a scolding message based on comparing their recent investment decisions to their past decisions.FindingsTheir results suggest that newsletters could serve as an encouragement for those who already invest significant amounts each month and a reminder for those who have stopped regular investing for a month. The newsletters robustly increased investments in securities accounts for these groups.Research limitations/implicationsThe authors contribute to the marketing literature by examining praise and scolding messaging strategies within the same channel and company, focussing on the individual's past behaviour. They raise several hypotheses to be tested in future randomised controlled trials (RCTs).Practical implicationsThe authors’ results show the importance of investor behaviour analysis as the effectiveness of the newsletter intervention largely depended on the type of customer it was served to. This highlights the importance of personalisation.Originality/valueThe results show that a given message tends to influence only specific groups of investors. Identifying these groups is valuable information for messaging strategies.

Effectiveness of an interactive method in teaching investment literacy: Factors determining the return of beginning investors’ portfolios

Introduction. The article examines how certain factors influence the efficiency of forming virtual portfolio of financial assets. The purpose of the article is to identify the factors that contribute to the investment return of beginning investors. Materials and Methods. The methodological basis of the study includes Russian and international research articles devoted to enhancing financial and investment literacy on the national level, the role of financial education in successful investments, and the factors of return estimations for various groups of investors, including young people and beginners. The research was carried out at Novosibirsk State University (the Faculty of Economics). Portfolios produced by 396 students majoring in Economics, Management, and IT Business, who completed the ‘Financial Markets and Financial Institutions’ module were analyzed. The portfolios were completed in 2020, 2021, and 2022. The dependent variable in the econometric model was an investment portfolio return. The main factors considered for this research included students' academic performance, academic year, degree programme, age, gender, and financial asset structure of each portfolio. Results. The review of the scholarly literature allowed to identify the following potential return factors: investment literacy, educational background, personal behaviour characteristics, gender, financial market shocks, and economic crises. It was found that portfolio return is determined by the following factors: economic instability influencing financial markets, students’ academic performance in finance disciplines which is closely connected to their investment literacy and personality features revealed in the portfolio structure. However, age, degree programme and gender did not show any significant influence on the project outcome. Conclusions. Identifying the factors of students’ investment portfolio return enabled the authors to determine further development of the financial course with the interactive method in teaching investing literacy. Taking into consideration economic instability factor significance, it is necessary to discuss financial assets characteristics and dynamics during economic crises. In general, investment literacy increase influences the result positively.

Impact of Post-Trade Transparency on Investors: Evidence from an Emerging Market

This study examines the effects of a post-trade transparency event on the payoff to informed and uninformed traders of large and small size firms. The evidence indicates that the event leads to a significant decrease in the payoff only to informed traders of large firms, while there is little change in the payoff to other investors. The implications are two-fold, that the event is beneficial to market fairness for large firms although it has the drawback of discouraging informed traders from producing/sharing information; and secondly, the event has no universal and equivalent impact for different groups of investors.

Recency Bias : Impact of Market News on Stocks

Sentiments run financial markets in the short term and fundamentals in the long term. News affects the market participants’ sentiments, thus impacting stock behavior. The primary focus of this research was to study the impact that news has on a stock by analyzing the price change, volume, and shareholding patterns of the different groups of investors. In our study, we have categorized news into four different groups — news relating to management and directors, news relating to government policies and regulations, news pertaining to investors, and news relating to business activities to see how different news affects stocks. We found that after a piece of news becomes public, there is a sharp movement in the stock price, and the volume rises multiple times, making the stock highly volatile. However, the stock price generally continues to move in the same direction for the next few days. From the study of the shareholding pattern, we found that when there is a significant change in holdings, the retail and institutions are on the opposite sides, showing how different groups of investors react differently to the news. Our research will help investors and traders make better decisions by giving an idea of the stock behavior after the news. The study also opens further research opportunities into investor behavior and the different patterns of stock behavior after the news.

Lead-Lag Relationship between the Price-to-Rent Ratio and the Macroeconomy: An Empirical Study of the Residential Market of Hong Kong

The price-to-rent (PtR) ratio is one of the most commonly used indicators to assess housing market conditions by policy makers and real estate practitioners. It is often employed as an economic barometer to detect whether a housing bubble exists and determine whether the property market has become unaffordable relative to historical trends. Despite a plethora of research studies on the PtR ratio in the housing literature, relatively little is known about its long-term dynamics with macroeconomic and financial determinants. By utilising time series data on the Hong Kong residential property market, this study examines the cointegration and causal relationships between a wide spectrum of macroeconomic indicators and the PtR ratios of housing segments of different tiers which comprise different socioeconomic groups of homebuyers and investors. The results point towards market compartmentalisation, in the sense that the PtR ratios of the housing submarkets respond to changes in macroeconomic fundamentals in a differential manner. For instance, the PtR ratios of housing segments with a greater proportion of owner-occupiers are statistically less y correlated with investment-related macroeconomic attributes, such as foreign direct investment and equity market performance. On the other hand, the pricing of large-sized housing units in prime locations, generally favoured by investors from mainland China, are found to be Granger-caused by the exchange rate of the Chinese Yuan to the Hong Kong dollar.

A study on stock market investors during COVID phase – prospect theory approach

At the macro-level, behavioral finance challenges classic financial theories. It shows that investor behavior in the real world is incompatible with the fundamental assumption of rationality in traditional finance, as studied by Sedaghati. While taking decisions, including financial decisions, rational thoughts are not involved, as suggested by modern theory. Additionally, these decisions are taken by them are also often inconsistent. Contrarily, human decisions are subject to several irrational principles, as in an evaluator study by Kannadhasan. These decisions are taken by considering the risks and returns involved. Prospect theory is one of the many theories derived from behavioral finance was first invented in a 1979 paper by Daniel Kahneman and Amos Tversky. It is commonly seen as the best explanation of how people evaluate risk in experimental settings, as researched by Barberis. This theory mainly includes how individuals or groups of investors decide between the alternatives under the umbrella of risk and uncertainty. This research evaluates the stock investors’ behaviors during the COVID-19 phase in India using prospect theory; many factors affect the decision of stock investors, such as loss aversion, risk aversion, certainty effect, reflective effect, etc., observed by Kahneman & Tversky. This study explores the possibility of factors of prospect theory on investors’ decisions about their investments during the COVID-19 phase. The results provide insights into how individual investors’ decisions vary during this pandemic situation.

GAMESTOP FRENZY: CONTRA-HEGEMONIC FINANCE

Purpose- The aim of this study is to evaluate the discussions on the impact of a new investor class, which has emerged with social media and is likened to the Reddit Army by some, over the short sale and short squezee at Gamestop. Gamestop is a US company that sells video games, electronic gadgets and game products. At the origin of the Gamestop event, there was an effort to break the economic power of the giant Hedge Funds, which were short in Gamestop shares, by combining the financial strength of a few hundred dollars of small and amateur investors on the social media platform Reddit. The Reddit Army has focused on hedge funds, which they consider they are engaged in controversial financial short selling practices. Hedge Funds, which thought that Gamestop shares were overvalued, made large short sales. Later, in January 2021, small individual investors organized on Reddit and started a buying movement on Gamestop shares. Small individual investors ensured that the price of the shares, which was $ 20 on January 11, rose to $ 483 in the last week of January, causing the hedge funds to lose billions of dollars. Having a market value of 1 billion dollars at the beginning of 2021, the company reached a market value of 35 billion dollars in the last week of January. Thus, this new group of investors placed huge financial burdens on the short selling hedge funds against Gamestop. Methodology- In the study, the discussion about the Gamestop frenzy in January 2021 has been tried to be put forward through the literature. The arguments in the debates are handled from a critical perspective using a comparative approach. Findings- In the financial markets, the Gamestop story has been taken as a victory for ordinary investing citizens over Wall Street giants. This story is also likened to the David-Goliath story, which tells the struggle of the weak against the strong, and it was thought that a new contra-hegemonic structure is emerging in the financial markets through the conversations in the Reddit subgroups. These small investors, who use social media very actively, came together and caused huge losses of billions of dollars, even if for a moment, against the Wall Street giants. Hedge funds holding open positions in Gamestop stocks made large purchases to close their open positions, making the wave initiated by the Reddit Army much stronger, causing the mechanism known as short squezze. This has caused share prices to rise to high values that are very difficult to bear for those who are in open positions. However, some Wall Street firms that did not have open positions in Gamestop stock bought when prices started to rise in the early January and sold before January 28, when prices peaked, gaining hundreds of millions of dollars. On the other hand, while some of this new investor class lost in Gamestop shares, some gained. Conclusion- With the emergence of low-cost or zero-cost electronic trading platforms on the one hand, and the conversations of small and amateur investors on social media platforms such as Reddit on the other hand, a new era of individual, small, amateur investors who had no power in the financial markets before, now as a new investor class has emerged. By adopting an organized attitude through the social media platform of this new investor class, it has led to an unprecedented development as experienced in the Gamestop frenzy. This development is seen as a structural dimension of the financial markets in the future, and accordingly, it is evaluated as a potential feature that will cause similar situations to the Gamestop frenzy. On the other hand, although it has been understood that small investors have the potential to create a strong wave on some stocks by organizing through social media platforms such as Reddit, it is thought that the repetition of situations similar to the Gamestop frenzy will not occur and this is an exceptional event. However, it is generally accepted that Wall Street giants cannot ignore this new class of investors. The Gamestop frenzy marks the beginning of a period in the financial markets where the attitudes and behaviors of individual small investors cannot be ignored. The adventurous attitude of the Reddit Army in Gamestop shares was seen by many of the financial market stakeholders as a case reflecting the future feature of the financial capitalist system and caused enthusiasm on a global scale. Keywords: Gamestop, short selling, social media, hedge funds, small investors JEL Codes: G11, G24, G41

Development of Optimal Stock Portfolio Selection Model in the Tehran Stock Exchange by Employing Markowitz Mean-Semivariance Model

In an increasingly complex financial market, selecting the optimal stock portfolio has become a subject of intense debate. This study aims to develop a model for optimal stock portfolio selection. We apply Markowitz's mean-semivariance approach to determine the downside risk of portfolios, which reflects investors' intuitive perception of risk. In the first stage, the combination of the Analytic Hierarchy Process (AHP) and Technique for Order of Preference by Similarity to Ideal Solution (TOPSIS) with interval data is employed to identify and rank good quality stocks according to the recommended criteria by experts. After selecting qualified stocks, in the second phase, we create portfolios, and the weight invested in each stock is determined. Then, three portfolios are created for three groups of risk-averse, neutral to risk, and risk-taker investors. The mean-semivariance optimization model is used in this phase. The proposed approach in the paper is implemented in a real case study of the Tehran stock exchange (TSE). Three portfolios for three groups of investors were evaluated and compared to the market performance using sharp criteria. All three portfolios outperformed the market portfolio both in terms of risk and return. The proposed model of this study can be utilized as a decision support tool when forming an optimal stock portfolio by considering both experts’ opinions on stock evaluation and investor risk preferences simultaneously.

Investors in environmental ventures want good money—and a clean conscience: How framing, interest rates, and the environmental impact of crowdlending projects influence funding decisions

Crowdfunding is becoming the most important source for financing new ventures. In particular, it is often used to finance environmentally oriented ventures. Still, it is largely unknown what specifically makes an environmentally oriented crowdfunding project attractive to investors and how entrepreneurs can frame their projects in a way that fosters its attractiveness to these investors. To study how different factors influence the decisions of potential investors and informed by warm glow theory, we conducted a real-choice experiment using choice-based conjoint analysis among a purposefully drawn sample of potential investors (n = 569). The results inform practitioners that with regard to framing, altruistic cues are more effective than egoistic cues, whereas with regard to the actual benefits investors receive, egoistic benefits (i.e., interest payments) are more important than altruistic benefits (i.e., environmental impact). Moreover, we found that different groups of investors exist that seek different benefits. We labeled these groups “profit-maximizers,” “receptive altruists,” and “risk-seekers aiming for the best of both worlds.”

What do we know about the idiosyncratic risk of clean energy equities?

The COVID-19 pandemic stimulated the need to invest in clean energy firms for better returns and climate risk mitigation. This study provides a detailed overview of the impact of idiosyncratic risk (IVOL) on excess returns of 95 clean energy stocks. Overall, investors in clean energy stocks are guided by the pessimist group of investors who underprice the high IVOL stocks and demand high-risk premiums to diversify the firm-specific risk. Further, during the COVID-19 period, there is no significant relationship between clean energy excess stock returns and IVOL. During this period, clean energy stocks were exposed to higher information asymmetry, limiting the arbitrage opportunities and producing a weaker return-IVOL relation indicating that clean energy stocks reflect the properties of technology stocks. IVOL has a low level of persistence which may be helpful in forecasting. This study offers valuable insights for regulators and investors from the investment decisions, asset pricing, and diversification perspective.