Are Investors Reluctant to Realize Their Losses

In this paper, the theory of planned behavior is used as a conception lens to explore the impact of factors influencing individuals’ investment behavioral intention in the Vietnamese stock market together with a decomposed approach to the theory of planned behavior to investigate the level of impact each factor influences individuals’ behavioral intention. A structured questionnaire is used to collect data from individual investors in the Vietnamese stock market. The structural equation modeling is employed with support from AMOS 20.0 software in data analysis. Results found in this research have identified the impact level of the given factors on individuals’ behavioral intention, which support the hypotheses that an individual investor’s investment intention is significantly affected by his attitude towards investment, subjective norm and perceived behavioral control. The study has also provided strong evidences for the existence of psychological factors which supports the hypothesis that four psychological factors (overconfidence, excessive optimism, psychology of risk and herd behavior) do have significant impact on the individuals’ attitude towards investment. Concurrently the study has found the supporting evidence for the argument that gender has a strong interference in the relations between the psychological factors and the attitude towards investment, between the attitude towards investment and behavioral intention, between subjective norms and behavioral intention as well as between perceived behavioral control and behavioral intention of the Vietnamese individual investors. Keywords: Individual investors, psychological factors, behavioral intention, attitude, subjective norm, perceived behavioral control

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Factors Influencing Individual Investors’ Behavior: An Empirical Study of the Vietnamese Stock Market

The purpose of this paper is to understand investment intention of prospective individual investors in a developing country (i.e. India) by using the “Theory of Planned Behaviour” (TPB) (where perceived behavioural control has been replaced with financial self-efficacy, FSE) and two additional constructs, i.e. financial knowledge and personality traits (i.e. risk-taking propensity and preference for innovation) have been introduced.,The study uses quantitative and cross-sectional approach wherein questionnaire based survey was done to collect responses from prospective individual investors (920 usable responses). AMOS and SPSS have been used to establish the hypothesised relationship between the constructs.,The results of the study suggested that attitude was responsible for partial mediation between the relationship of financial knowledge and investment intention, whereas financial self-efficacy was exerting a dual role on the relationship between personality traits and investment intention. Subjective norms, on the other hand, exerted a weak positive effect on investment intention.,This study is limited to measure the investment intention in financial markets in case of prospective individual investors; it does not incorporate the actual investment behaviour, the study also fails to include demographic factors which play a vital role in investment decision making. Furthermore, the study has only considered objective dimension of financial knowledge.,The findings will be useful for financial service providers who need to enhance the FSE and financial knowledge and design a “behavioural portfolio” according the personality traits of their clients.,The up-liftment of financial confidence among individuals in order to motivate them to participate in financial markets and enjoy “short-cuts” towards financial success.,This study is one of the initial attempts in the context of the Indian Stock Market to introduce FSE as a dual (both mediating and moderating) construct between personality traits and investment intention using TPB, moreover, this study also provides the necessary impetus to analyse the relationship between financial knowledge and investment intention with attitude as the mediating variable.

Predictors of investment intention in Indian stock markets: Extending the theory of planned behaviour

This study aims to explore the importance of past behaviour and financial literacy in the investment decision-making of individual investors and examines the validity of the theory of planned behaviour in this context.,The study used a self-administered questionnaire and adopted the convenience sampling technique followed by a snowball sampling method for the survey to collect data from the individual investors covering the four distinct states of India. Collected data were analysed on AMOS 20.0 using two-step structural equation modelling (SEM).,Results indicated a significant effect of all the predictive variables. Past behaviour showed no significant direct impact on investor's intention; however, it had an indirect significant relationship while mediated by the attitude of investors. The multiple squared correlation (R2) showed that the final model could explain 36% of the variance in investors' intention towards stock investment which signified a successful implementation of the TPB model along with external variables added to it. Moreover, Indian investors were found to be highly influenced, primarily, by social pressure which could be curbed through financial literacy.,A significant importance of subjective norms was found on stock market participation which could be a strategic theme for the government and the policymakers to educate investors through their opinion leaders for increasing their participation. Moreover, by doing so investors could control their behaviour and take rational decisions.,This study extended the understandings of investor's decision-making behaviour using TPB by incorporating the two external variables viz., Financial literacy and past behaviour. The addition of past behaviour is perhaps the novelty of this article since such examination has not been conducted empirically especially in the case of developing countries like India.

Past behaviour, financial literacy and investment decision-making process of individual investors

Manuscript type: Research paper.
Research aims: This paper aims to investigate the applicability of  the Theory of Planned Behaviour (TPB) in examining individuals’ behavioural intention to invest in the capital market. This study ex- tends on the TPB model by considering the role of past behavioural biases (PBB) as a factor in influencing the individuals’ behavioural investment intentions.
Design/ Methodology/ Approach: This paper employs a hypothesis deductive approach. The research model is tested through structural equation modelling (SEM). Data were collected from 396 individuals in Eastern India through a survey and then analysed.
Research findings: The results of this study demonstrate the applicability of the TPB in predicting the individuals’ behavioural intention to invest  in  the  capital  market.  This  study  indicates  that attitude toward behaviour, subjective norms and perceived behavioural control are significantly associated with behavioural intentions. The findings signify that the inclusion of past PBB can improve the predictive power of the model.
Theoretical contributions/ Originality: This study expands on the well-established TPB model by incorporating PBB in examining behavioural intentions. It also extends the applicability of the TPB in the area of investment decision making.
Practitioner/ Policy implications: The findings of this study reveal that behavioural biases are inseparable from normal human beings’ decision making. The reason is because behavioural biases can distort the individuals’ fundamental valuation of stocks. Therefore,  it is imperative that fund managers incorporate this dimension as part of their risk modelling to enhance investment analysis and strategies. The outcome of this study can be used as a guideline for understanding the factors and programmes that need to be instilled to increase online stock trading among current and future investors. Research limitation: This study is limited to non-financial sectors due to measurement limitations.
 
Keywords: Theory of Planned Behaviour, Past Behavioural Biases, Investment Decision Making.
JEL Classification: G11, G02, C91

https://ajba.um.edu.my/article/download/12159/7932

Extending the Theory of Planned Behaviour: Impact of Past Behavioural Biases on the Investment Decision of Indian Investors

Employing Theory of Planned Behavior (TPB), this study aims to explore factors influencing investment behavior made by individual investors in Vietnamese stock market. A qualitative approach is thoroughly applied through in-depth interviewing individual investors who have experienced Vietnamese stock market. The analysis and generalization of data collected from interviews with 20 key informants show supporting evidence for the existence of four psychological factors - overconfidence; excessive optimism; psychology of risk and herd- behavior. The study, based on TPB, proposes a suitable conceptual framework to be applied in further research to explain investors’ behavior in Vietnamese stock market.

Cuong Khoa Phan

Papers

Vietnamese individual investors’ behavior in the stock market: an exploratory study