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Investment Behaviour
Type: Book
ISBN: 978-1-78756-280-6

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Abstract

Details

Investment Behaviour
Type: Book
ISBN: 978-1-78756-280-6

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Article
Publication date: 10 June 2020

Jyoti M. Kappal and Shailesh Rastogi

The purpose of this paper is to understand the new kind of investors – women entrepreneurs – and to find out the factors that drive their investment behaviour and…

Abstract

Purpose

The purpose of this paper is to understand the new kind of investors – women entrepreneurs – and to find out the factors that drive their investment behaviour and investment decisions.

Design/methodology/approach

The approach of qualitative enquiry was used for the research in which 18 in-depth exploratory interviews were conducted to identify the determinants of the investment behaviour shown by women entrepreneurs, a growing segment in investment. The accumulated data was analysed using open coding.

Findings

The research show that women entrepreneurs consider investment as a long-term instrument are risk averse and quite conservative. They are willing to take risks in business but not for making investment decisions. The reasons for this low-risk behaviour include lack of time to understand investments and lack of knowledge about various products. The research asserts that if they spend time to be informed about the nuances of investment instruments, they are likely to take risks for their investments as well. The interviews also reflect that women entrepreneurs often mimic the investment behaviour of their parents.

Research limitations/implications

The sample for this research was taken from only two cities in India and a broader research in other cities as well will expand the understanding of investment behaviours demonstrated by women entrepreneurs. The differences in women entrepreneurs’ investment behaviour due to culture and ethnicity of the respondent are also not considered.

Practical implications

The outcomes of the research will help the investment manager to get a better insight into the psychology of women entrepreneurs as investors. This will help them develop personalized and relevant portfolio recommendations. Second, the findings will help service providers to develop training modules for their investment advisors by sensitizing them to needs and wants of women entrepreneurs as potential investors. Third, the research will be of interest for policymakers and researchers to understand the determinants of personal investment decision-making amongst women entrepreneurs. Finally, it will help women entrepreneurs understand and mitigate their biases while taking investment decisions. It will lead them to take wiser investment decisions, thereby reducing the risk and maximizing opportunities of returns.

Social implications

The research will provide opportunities for enhancing gender equality amongst investors. This can be achieved by educating the investment advisors on the traits and preferences of women entrepreneurs as investors. Designing and delivering specific workshops on investment awareness for women entrepreneurs can also be accomplished based on the findings of this research.

Originality/value

To the researcher’s best knowledge, the investment behaviour of women entrepreneurs in India has been little investigated. This study appears to be the first qualitative research attempt in that direction. This paper will be useful in understanding the behavioural biases by women entrepreneurs in considering their personal investment decisions.

Details

Qualitative Research in Financial Markets, vol. 12 no. 4
Type: Research Article
ISSN: 1755-4179

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Article
Publication date: 15 October 2021

Umi Widyastuti, Erie Febrian, Sutisna Sutisna and Tettet Fitrijanti

This study aims to determine antecedents of market discipline. A model was constructed by extending the theory of planned behavior (TPB) to explore the cognitive…

Abstract

Purpose

This study aims to determine antecedents of market discipline. A model was constructed by extending the theory of planned behavior (TPB) to explore the cognitive, psychological and social factors that influence the market discipline in the form of withdrawal behavior.

Design/methodology/approach

This study applied a quantitative approach by surveying 181 Indonesian retail investors in Sharia mutual funds, which were represented by civil servants. The samples were collected using the purposive sampling technique. This study used the partial least square–structural equation model to analyze the data.

Findings

The results revealed that the Islamic financial literacy, the attitudes toward withdrawal, the subjective norms and the perceived behavioral control had a positive significant effect on the withdrawal intention, whereas financial risk tolerance had an insignificant impact. Then, all the exogenous variables and intention to withdraw had a significant contribution in explaining market discipline. Contrary to the proposed hypothesis, the attitude toward withdrawal had a negative impact on market discipline. The structural model indicated that the TPB could be extended by adding some exogenous variables (i.e. Islamic financial literacy and financial risk tolerance) in determining the intention to withdraw and withdrawal behavior, which indicated the market discipline in Sharia mutual funds.

Research limitations/implications

This study was limited to individual investors who work as civil servants. This study did not accommodate different demographic factors such as age and gender, which influence fund withdrawal behavior.

Practical implications

The government must focus on the inclusion of market discipline in Sharia mutual funds’ regulation to encourage the risk management disclosure, specifically that related to Sharia compliance.

Originality/value

Previous studies applied a traditional finance theory to predict market discipline, but this study contributes to filling the theoretical gap by explaining the market discipline from a behavioral finance perspective that was found in Sharia mutual funds.

Details

Journal of Islamic Accounting and Business Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1759-0817

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Article
Publication date: 1 September 2019

Shanshan Dong

To improve the government's ability to regulate the economy, perfect the performance of macro-control, and promote stable and healthy economic development, according to…

Abstract

To improve the government's ability to regulate the economy, perfect the performance of macro-control, and promote stable and healthy economic development, according to the relevant data since the reform and opening up, the deep system of investment impulsive behavior of local government in China is explored at this stage, and the idea of constructing an intergovernmental macro-control coordination mechanism is proposed. The results show that if a regional government can expand in line with the policy cycle, it can not only send a positive signal to the central government to respond to the macro-control, but also gain the upper hand in the local competition. However, if the effective demand in the region is still insufficient, the expansion plan is likely to evolve into excessive investment, and the region will face greater risks of overcapacity and local debt in the long run. Therefore, it is of great significance to study the investment behaviors of local governments in China at the present stage, analyze their characteristics and appearances, and find the causes of the investment impulse of local governments, so as to establish the macro-control coordination mechanism among Chinese governments.

Details

Open House International, vol. 44 no. 3
Type: Research Article
ISSN: 0168-2601

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Article
Publication date: 4 November 2013

Dulat Tubetov, Syster Christin Maart-Noelck and Oliver Musshoff

The purposes of the study are to compare the investment behavior of farmers in Kazakhstan as a transforming country and in Germany as a Western industrialized country as…

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Abstract

Purpose

The purposes of the study are to compare the investment behavior of farmers in Kazakhstan as a transforming country and in Germany as a Western industrialized country as well as to analyze whether the investment behavior of farmers is consistent with the normative benchmarks of the net present value approach or the real options (RO) approach.

Design/methodology/approach

The paper conducted an experiment with 100 Kazakhstani and 106 German farmers. The first part of the experiment describes an investment opportunity in an agricultural and in a non-agricultural treatment. The second part refers to a Holt and Laury lottery to determine farmers' risk attitude that could influence the investment behavior.

Findings

The results show that both approaches do not provide an exact prediction of the investment behavior of farmers. However, German farmers invest later than Kazakhstani farmers meaning that the investment behavior of German farmers is closer to the RO approach. This might imply that German farmers are more likely to take into account the value of flexibility when making investment decisions than Kazakhstani farmers.

Research limitations/implications

Since investment behavior is country-specific, it is worth investigating whether farmers from other transforming countries would show different investment behavior compared to farmers from other Western industrialized countries. Furthermore, decision-making behavior related to investments could be different from that related to disinvestments. Therefore, it may be interesting to analyze the disinvestment decisions of farmers in transforming and Western industrialized countries.

Practical implications

The results show that it is not acceptable to apply the results of experiments investigating the investment behavior of entrepreneurs in a transforming country to entrepreneurs in a Western industrialized country and vice versa. Furthermore, training for farmers is needed because there is still room for improvement in order to achieve the RO benchmark. Finally, taking into account RO effects could improve the results of policy impact analysis.

Originality/value

This is the first experimental study comparing the investment behavior of farmers from a transforming country and from a Western industrialized country.

Details

Agricultural Finance Review, vol. 73 no. 3
Type: Research Article
ISSN: 0002-1466

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Article
Publication date: 1 February 2016

Yuxian Eugene Liang and Soe-Tsyr Daphne Yuan

What makes investors tick? Largely counter-intuitive compared to the findings of most past research, this study explores the possibility that funding investors invest in…

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2693

Abstract

Purpose

What makes investors tick? Largely counter-intuitive compared to the findings of most past research, this study explores the possibility that funding investors invest in companies based on social relationships, which could be positive or negative, similar or dissimilar. The purpose of this paper is to build a social network graph using data from CrunchBase, the largest public database with profiles about companies. The authors combine social network analysis with the study of investing behavior in order to explore how similarity between investors and companies affects investing behavior through social network analysis.

Design/methodology/approach

This study crawls and analyzes data from CrunchBase and builds a social network graph which includes people, companies, social links and funding investment links. The problem is then formalized as a link (or relationship) prediction task in a social network to model and predict (across various machine learning methods and evaluation metrics) whether an investor will create a link to a company in the social network. Various link prediction techniques such as common neighbors, shortest path, Jaccard Coefficient and others are integrated to provide a holistic view of a social network and provide useful insights as to how a pair of nodes may be related (i.e., whether the investor will invest in the particular company at a time) within the social network.

Findings

This study finds that funding investors are more likely to invest in a particular company if they have a stronger social relationship in terms of closeness, be it direct or indirect. At the same time, if investors and companies share too many common neighbors, investors are less likely to invest in such companies.

Originality/value

The author’s study is among the first to use data from the largest public company profile database of CrunchBase as a social network for research purposes. The author ' s also identify certain social relationship factors that can help prescribe the investor funding behavior. Authors prediction strategy based on these factors and modeling it as a link prediction problem generally works well across the most prominent learning algorithms and perform well in terms of aggregate performance as well as individual industries. In other words, this study would like to encourage companies to focus on social relationship factors in addition to other factors when seeking external funding investments.

Details

Internet Research, vol. 26 no. 1
Type: Research Article
ISSN: 1066-2243

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Article
Publication date: 7 November 2019

Longwen Zhang and Minghai Wei

Corporate investment behavior increases the uncertainty of a company’s operation and performance. The purpose of this paper is to investigate how analyst recommendations…

Abstract

Purpose

Corporate investment behavior increases the uncertainty of a company’s operation and performance. The purpose of this paper is to investigate how analyst recommendations respond to corporate uncertainty caused by investment behavior and what motivates analysts to react as they do.

Design/methodology/approach

The authors test two motivation hypotheses: the hypothesis that analysts are currying favor with management to obtain private information and the hypothesis that analysts have conflicts of interest due to connections. Using Chinese analyst-level data from 2007 to 2015, the authors find that overall investment levels, R&D investment and M&A events are significantly positively correlated with analyst recommendations, suggesting that analysts tend to react optimistically to corporate investment behavior.

Findings

Analysts are only optimistic about companies with low information transparency, suggesting that analysts may be trying to curry favor with management to gain access to private information. The authors find that analysts with stronger recommendations have more private information and analysts with more private information publish more accurate earnings forecasts, which supports the hypothesis that analysts curry favor with management through optimistic recommendations to obtain more private information. This is consistent with the logic that the difficulty of earnings forecasting increases under uncertain conditions, increasing the demand for private information. The authors then group the analysts according to their underwriting connections, securities company’s proprietary connections and fund connections, and find that the positive correlation between corporate investment behavior and analyst recommendations exists only in the unconnected groups. This is evidence against the hypothesis that analysts have conflicts of interest due to their connections.

Originality/value

First, the authors link the optimism of analysts with the uncertainty of analysts’ information inputs to partially unpack the black box of analysts’ analyses. Second, the authors test the two hypotheses mentioned. There is a lack of comparative studies on the influence of different motivations on the behavior of analysts.

Details

China Finance Review International, vol. 10 no. 3
Type: Research Article
ISSN: 2044-1398

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Article
Publication date: 6 October 2021

Rupali Misra, Puneeta Goel and Sumita Srivastava

Even after appreciating multi-faceted merits of retail participation in stock markets and extensive efforts by policymakers and financial service industry to increase it…

Abstract

Purpose

Even after appreciating multi-faceted merits of retail participation in stock markets and extensive efforts by policymakers and financial service industry to increase it, the present low retail participation in Indian stock markets is cause of grave concern. The purpose of this paper is to identify plausible drivers and deterrents of prospective and current household individuals through a multi-stage qualitative enquiry.

Design/methodology/approach

Two qualitative studies are conducted. In Study 1, scholarship of stakeholders is engaged through participative diamond model to propose behavioural classification of retail investors based on two-parameter framework. In Study 2, behavioural substructures of retail investors that drive or deter investment intentions and actions are identified through in-depth interviews.

Findings

Financial self-efficacy, past experience (own or peer group), financial eco-system, operational literacy, higher charges by financial experts and low liquidity in the hands of the investors are some key factors that influence investment intension and action of individual investors. Though digital platforms have helped to overcome hurdles faced by an investor but its availability, awareness and ease of use still remain a concern.

Practical implications

The inductive findings of this study uncover some important take-aways for the financial service industry – improve operational literacy, digital awareness, ease of use and incorporate risk assessments in client portfolios – and for the policymakers – improve investment eco-system through digital availability, financial literacy workshops focussed on operations.

Originality/value

To the best of the authors’ knowledge, this study is one of the initial attempts to adopt a multi-stage qualitative enquiry to propose behavioural classification of retail investors and uncover reasons that drive or deter individual investors’ intentions and actions in the context of Indian stock market. Moreover, this study provides necessary impetus to analyse and improve operational literacy (instead of financial literacy) and financial eco-system for higher retail participation.

Details

Qualitative Research in Financial Markets, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1755-4179

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Article
Publication date: 1 October 2005

Robert Falkner and Jon Gerty

To introduce and summarize the key features of market‐misconduct‐related offenses in the UK with a particular focus on insider dealing.

Abstract

Purpose

To introduce and summarize the key features of market‐misconduct‐related offenses in the UK with a particular focus on insider dealing.

Design/methodology/approach

Provides a detailed overview of: the market abuse regime of the UK's financial regulator, the Financial Services Authority (FSA),which implements the EC Market Abuse Directive; other regulatory powers used by the FSA in cases of market misconduct; and relevant criminal law offenses.

Findings

The FSA is given a broad range of powers that enable it to bring criminal or regulatory proceedings in the UK for market misconduct. The FSA's powers have thus far been used primarily within the regulatory framework, but the FSA has said that it will be prepared to pursue certain cases through the criminal courts where behavior justifies criminal rather than regulatory action. Although the two regimes are similar, there are some differences and both regimes must therefore be considered when analyzing compliance requirements or whether market misconduct has occurred.

Originality/value

This paper is an important reference for publicly traded issuers, those who recommend investments or investment strategies, and their advisors where any investment activity is carried on with the UK or involves UK markets.

Details

Journal of Investment Compliance, vol. 6 no. 4
Type: Research Article
ISSN: 1528-5812

Keywords

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