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1 – 10 of over 16000Mohammad Tariqul Islam Khan, Siow-Hooi Tan and Lee-Lee Chong
– This paper aims to study gender differences in preferences for firm characteristics across various groups of investors in Malaysia.
Abstract
Purpose
This paper aims to study gender differences in preferences for firm characteristics across various groups of investors in Malaysia.
Design/methodology/approach
Self-declared preferences are elicited through a survey of 520 investors comprising retail, financial professionals and institutional investors in the Malaysian stock market. Non-parametric (Mann-Whitney and Kruskal-Wallis) tests are computed to achieve the stated objective.
Findings
Results reveal that female investors display higher preferences for the liquidity of a firm, dividend payments, trading volume of a firm, stock price and firm’s age than male investors across investor’s groups.
Research limitations/implications
Findings imply that the gender gap in investing behaviour can be partly attributed to gender differences in preferences for firm characteristics.
Practical/implications
The findings suggest that the gender gap can be mitigated by giving more priority to the choices of female investors with respect to firm characteristics. In turn, this may reduce a part of the gender gap in investing. Moreover, the findings would assist companies to understand and know how their shareholder’s preferences vary with respect to gender and investor’s groups.
Originality/value
This paper provides evidence concerning the gender gap in investor’s self-declared preferences for firm characteristics across retail, financial professionals and institutional investors in Malaysia, which complements previous studies that used equity holdings data and only two groups of investors.
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Although prior research documents that analysts sometimes herd their forecasts, very few studies investigate how investors’ judgments are influenced by their perceptions of the…
Abstract
Although prior research documents that analysts sometimes herd their forecasts, very few studies investigate how investors’ judgments are influenced by their perceptions of the likelihood of analyst herding. I conduct an experimental study to investigate the conditions under which investors’ assessments of uncertainty about future earnings are influenced by their perceptions of the likelihood of analyst herding. As expected, and consistent with motivated reasoning, the results show that the temporal order of analyst forecasts influences investors’ estimates of the likelihood of analyst herding and investors’ uncertainty judgments when analyst forecasts are preference-inconsistent but not when analyst forecasts are preference-consistent. This study provides a potential explanation for the mixed findings of prior research in regard to investors’ reactions to the likelihood of analyst herding. In addition, this study extends research on investors’ credulity by providing evidence that motivated reasoning and skepticism may serve as a mechanism that contributes to that credulity.
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Sangeeta Arora and Kanika Marwaha
The paper, an exploratory attempt, aims to analyze the perception of individual investors of stock market of Punjab towards investing in stocks vis-à-vis fixed deposits. For the…
Abstract
Purpose
The paper, an exploratory attempt, aims to analyze the perception of individual investors of stock market of Punjab towards investing in stocks vis-à-vis fixed deposits. For the purpose, the most and least influencing variables affecting the decisions of individual stock investors to invest in stocks and fixed deposits were gauged and the comparison for such variables influencing their preferences was conducted.
Design/methodology/approach
A pre-tested, well-structured questionnaire which was administered personally and the responses of 241 respondents were analyzed. The responses have been analyzed with the help of weighted average scores method used to identify the most and least influencing variables and paired sample t-test is applied to the data to identify if there exists any significant difference in the variables influencing the investment preferences for stocks (high-risk investment) vis-à-vis fixed deposits (low- and medium-risk investment).
Findings
High returns was found as the most important variable while investing in stocks and stability of income as the most important variable while investing in fixed deposits. Religious reason is the only variable found as the least influencing variable for individual investors in Punjab while investing in both avenues, i.e. stocks and fixed deposits. Statistically significant difference exists in perception of individual investors for 22 variables towards the preference for stocks vis-à-vis fixed deposits.
Practical implications
The current research will be helpful for financial service providers in understanding the investment preferences of the individual stock investors on the basis of variables influencing such preferences and suggest them investment options as per their perceptions and needs.
Originality/value
This paper is a first of its kind to empirically compare the variables influencing the preferences for high-risk investments vis-à-vis low-risk investments of individual investors of Punjab, India and contributes to the understanding of the investor behaviour.
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Mohammad Tariqul Islam Khan, Siow-Hooi Tan and Lee-Lee Chong
The purpose of this paper is to test the competing explanations of stated preferences for firm characteristics, optimism and overconfidence for trading activities in a single…
Abstract
Purpose
The purpose of this paper is to test the competing explanations of stated preferences for firm characteristics, optimism and overconfidence for trading activities in a single framework.
Design/methodology/approach
A survey methodology is followed to collect the data among retail investors in Malaysia using simple random sampling.
Findings
The findings show simultaneous identification of stated preferences for firm characteristics, optimism and overconfidence as determinants of trading activities. Preferences for firm’s profitability characteristics, management and product-related attributes and risky characteristics are likely to decrease investors’ trading activities. On the other hand, preferences for firm’s liquidity and trading volume characteristics with relative financial-domain optimism, personal investment optimism and better-than-average aspect of overconfidence are likely to increase investors’ trading activities.
Practical implications
This finding implies that investors should be careful not only in assessing firm’s characteristics but also need to understand the effects of optimism and overconfidence in trading decisions.
Originality/value
The study considers various aspects of optimism and overconfidence, and the stated preferences for firm characteristics, unlike one aspect of these behavioral biases and indirect observation of preferences for firm characteristics. Furthermore, the study considers trading frequency, annual portfolio turnover and trading intention, whereas earlier studies considered only one or two of these trading decisions.
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This study aims to examine the relationship between investor gambling preferences and stock returns, using data for all firms listed in Shanghai A-share market during 2016 and…
Abstract
Purpose
This study aims to examine the relationship between investor gambling preferences and stock returns, using data for all firms listed in Shanghai A-share market during 2016 and 2021.
Design/methodology/approach
This study employs price and trading volume data to capture the behavioral characteristics and gambling preferences of investors. Using the Fama-French three-factor and five-factor models to estimate benchmark returns, this study investigates whether investing in gambling stocks can yield positive excess returns.
Findings
The study reveals that stocks identified as gambling stocks generate high returns in the month they are identified as such but subsequently experience a significant drop in excess returns compared to non-gambling stocks over the following one to six months. These results are found to be consistent across different methods used to classify gambling stocks and across various industry sectors.
Research limitations/implications
This research provides insights into the risk-return tradeoff of different stock types and the factors that fuel irrational investment behavior. This research underscores the importance of considering the behavioral elements of investment, particularly in emerging markets where individual investors have a significant impact.
Practical implications
This study advises investors to avoid adopting a gambler or speculative mindset and instead make well-informed and calculated investment decisions that are in line with investors financial objectives and risk appetite. This approach can help create a more stable and sustainable financial market.
Originality/value
This study provides new evidence on the relationship between gambling preferences and future stock returns in financial markets and sheds new light on the important role of irrational factors in investment decisions.
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The purpose of this paper is to study the individual investors’ preferences towards stock selection in social media environments. The study is conducted to understand the…
Abstract
Purpose
The purpose of this paper is to study the individual investors’ preferences towards stock selection in social media environments. The study is conducted to understand the implications and conceptual directions for the corporates and financial advisors to understand the choices of individual investors applied in financial markets. Further, this study aims to examine the selection of the most preferred social media platform and behavioral intentions of investors towards selection of investment portfolios in Indian stock markets.
Design/methodology/approach
A questionnaire was designed based on the technique of conjoint analysis and was responded by 428 respondents belonging to the Northern region of India. The estimation of preference functions in Conjoint Analysis was designed by using orthogonal arrays and was calculated using the ordinary least square regression technique.
Findings
This study reveals that while making selection of desired investment portfolios, the investors give highest preference to social media platforms in terms of highest utility value and range followed by their preference for behavioral intentions to invest. Among different social media platforms, the investors preferred Twitter the most, followed by Facebook and the primary interest of investors was observed towards Intra-day trading purposes and balanced portfolio investments in financial markets. The major reason behind opting the social media platforms was selection of speculative stocks.
Research limitations/implications
The actual individual investment behavior cannot be observed through the survey, which limits the external validity of the study.
Practical implications
The paper presents a very important practical tool that can help financial advisors, opinion leaders and corporates in defining their target audience more sharply for investment-related advice. The findings revealed by the study will put them in a better position to understand how investors differ behaviorally and they will get acquainted with their choices and preferences while making investment decisions in the backdrop of social media environments. The preferences of the investors based on social media usage discovered by the study will not only enable the individual investors understand their own preferences, but those of the other investors as well in terms of planned investment decisions and choices.
Originality/value
The paper is a first of its kind to empirically identify the individual investors and their preferences and choices by applying conjoint analysis in the new social media environment. The study thus integrates the gap between marketing theories and emerging theories of behavioral finance to understand the investor behavior in a better way.
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Bhaskar Chhimwal, Varadraj Bapat and Sarthak Gaurav
The authors examine the industrywise investment preferences of foreign portfolio investors (FPIs), domestic institutional investors (DIIs) and retail investors in the Indian…
Abstract
Purpose
The authors examine the industrywise investment preferences of foreign portfolio investors (FPIs), domestic institutional investors (DIIs) and retail investors in the Indian context. They also investigate the factors influencing their preferences.
Design/methodology/approach
Using the quarterly shareholdings and returns data of the Indian market from March 31, 2009 to March 31, 2018, the authors employ analysis of variance to study investors' preferences and a random effect panel data model to examine the factors that influence these preferences.
Findings
FPIs hold proportionally more stocks in service-oriented industries and large-cap firms, DIIs hold proportionally large numbers of shares in paper industries and retail investors hold proportionally more shares in chemicals and textiles. FPIs prefer stocks with a high export-to-sales ratio and firms registered on a foreign stock market. Domestic investors, especially retail investors, prefer small-cap stocks and firms whose operations require local knowledge. In addition, industry heterogeneity determines investment decisions. Firm-specific and macroeconomic factors that influence investment decisions differ across industries. Finally, government policies and reforms also play a key role in attracting investors.
Practical implications
Policymakers can identify the key variables that influence investment, which can help direct and regulate investment in India and similar emerging markets.
Originality/value
This study fills a research gap by addressing how industry-level heterogeneity affects investors' preferences in terms of the industrywise preferences of different types of investors and the factors that influence their preferences.
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The popularity of wealth management in Taiwan has unleashed tense competition among financial advisors. Consumers are now more conscious of their financial services purchasing…
Abstract
Purpose
The popularity of wealth management in Taiwan has unleashed tense competition among financial advisors. Consumers are now more conscious of their financial services purchasing behavior. This paper aims to provide insights into local-specific investors’ characteristics and consumers’ financial product preferences and to introduce a different concept to identify localization-suitable products.
Design/methodology/approach
To understand customers’ preferred products, the paper examines consumers’ financial behavior by analyzing preference characteristics using data collected from Taiwanese investors. The study entailed a questionnaire designed for consumers using the stated preferences method and the multinomial and nested logit models to develop preference models for consumers’ financial products. A statistical test using the t-value, likelihood and ρ2 to observe investor preference product reactions was also used.
Findings
The study finds that investors are sensitive to the rate of return on investments and performance changes in foreign currency, stock and mutual funds. An elasticity analysis and prediction of the market share among interactive products show that stock and mutual funds are strongly related and the rate of return on stock undoubtedly influences the market.
Originality/value
The stated preference method and inclusion of risk appetite improve our understanding of consumer choice and investors’ financial product preferences and characteristics. The results provide suitable localization product suggestions for financial institutions to help them understand their customers’ behaviors better. This paper’s results are also useful in the context of smart financial services such as financial robot technology.
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Abstract
Purpose
The purpose of this paper is to examine preferences of Chinese individual and institutional investors to cash dividends and stock dividends. Using categorized daily holding information from the TOPVIEW database, the authors test how percentage holdings of individuals and institutional investors change, respectively, around annual report dates and registration dates.
Design/methodology/approach
The results show that individuals and institutional investors often express heterogeneous preferences to dividends. After controlling for firm size and market performance, the authors find that the higher the ratio of stock dividend is, the more likely institutional investors will increase their overall holdings of the stock-dividend-paying firm in the week after annual report date, but they do not prefer to do so around registration dates. Meanwhile, the higher the ratio of stock dividend is, the more likely individual investors will increase their overall holdings of the stock-dividend-paying firm in the week before registration date, but do not prefer to do so after annual report dates. Such patterns do not exist for cash-dividend-paying firms.
Findings
The results imply that different types of investors chase high stock-dividend-paying firms at different stages of dividend events. The findings are consistent with the hypothesis of “price illusion,” but do not lend support to the signaling hypothesis of stock dividends.
Originality/value
This paper uses categorized data of daily share holdings to test how different types of minority shareholders respond to stock dividends and cash dividends for the first time. It sheds lights on the on-going academic debate about the “stock dividend puzzle” in China.
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Xiaoling Wu, Yichen Peng, Xiaofeng Liu and Jing Zhou
The purpose of this paper is to analyze the effects of private investor's fair preference on the governmental compensation mechanism based on the uncertainty of income for the…
Abstract
Purpose
The purpose of this paper is to analyze the effects of private investor's fair preference on the governmental compensation mechanism based on the uncertainty of income for the public-private-partnership (PPP) project.
Design/methodology/approach
Based on the governmental dilemma for the compensation of PPP project, a generalized compensation contract is designed by the combination of compensation before the event and compensation after the event. Then the private investor's claimed concession profit is taken as its fair reference point according to the idea of the BO model, and its fair utility function is established by improving the FS model. Thus the master-slave counter measure game is applied to conduct the behavior modeling for the governmental compensation contract design.
Findings
By analyzing the model given in this paper, some conclusions are obtained. First, the governmental optimal compensation contract is fair incentive for the private investor. Second, the private fair preference is not intuitively positive or negative related to the social efficiency of compensation. Only under some given conditions, the correlation will show the consistent effect. Third, the private fair behavior’s impact on the efficiency of compensation will become lower and lower as the social cost of compensation reduces. Fourth, the governmental effective compensation scheme should be carried out based on the different comparison scene of the private claimed portfolio profit and the expected revenue for the project.
Originality/value
This study analyzes the effects of private investor's fair preference on the validity of governmental generalized compensation contract of the PPP project for the first time; and the governmental generalized compensation contract designed in this study is a pioneering and exploratory attempt.
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