Identifying the Effective Factors on Investors' Behavior and Developing a Measurement Model

Subject Areas : Risk Management

Eslam Shafeie noghlebari ¹ ( Department of Management and Accounting, Rasht Branch, Islamic Azad University, Rasht, Iran )
Seyed mozaffar Mirbargkar ² ( Department of Management and Accounting, Rasht Branch, Islamic Azad University, Rasht, Iran )
Ebrahim Chirani ³ ( Department of Management and Accounting, Rasht Branch, Islamic Azad University, Rasht, Iran )
mohamad Reza vatanparast ⁴ ( Department of Management and Accounting, Rasht Branch, Islamic Azad University, Rasht, Iran )

Received: 2021-11-01 Accepted : 2021-12-25 Published : 2023-12-01

Keywords: financial literacy, investment, first and second order confirmatory factor analysis, Investors' behavior,

Abstract :

Objective: To identify the components affecting the behavior of investors and to develop a measurement model using a confirmatory factor analysis approach.Method: This is a correlational paper to identifythe dimensions and structures affecting investor behavior first using TOPSIS technique and then with first-order confirmatory factor analysis and second-order factor analysis. The statistical population includes people who have been active in the Tehran Stock Exchange for at least two years with asample of 327. The sampling method is convenience nonprobability sampling. The data was collected through a researcher-made questionnaire. The expert approval and Cronbach's alpha coefficient were used to assess the content validity. Findings: the current paperidentified seven factors as effective factors on investor behavior according to the theoretical literature and research background using TOPSIS technique. In the next stage, the research findings using the confirmatory factor analysis approach indicate that the two factors of investor financial literacy and investor personality traits have the most effective role in investor behavior. Also, the factors of higher expected returns, rules and regulations, security, profitability, position and location of investment are the next effective priorities on the behavior of investors.

References:

References

[1] Abbasi, E., Tamoradi, A., The Effect of Investors Myopic on Earnings Management and Companies Investment, Journal of Accounting and Auditing Review, 2020; 27(3): 410-428. (in persion). doi: 10.22059 acctgrev. 2020.297535.1008355

[2] Abdollahi, M., Majdzadeh Tabatabai, S., The Effect of Personality Traits on Financial Risk-Taking with Respect to the Moderating Role of Financial Literacy, 3rd International Conference on Dynamic Management, Accounting and Auditing, 2018, Tehran. (in persion).

 

[3] Badavar Nahandi, Y., Babaei, G., The Relationship between Comparability of Financial Statements and the Risk of Stock Price Falls with Emphasis on the Role of Information Asymmetry, Journal of Applied Research in Financial Reporting, 2019; 8(14): 173-206. (in persion).

 

[4] Bahar Moghadam, M., Jokar, H., Study of the Effect of Quality of Accounting Information and Information Uncertainty on the Tendencies of Investors, Journal of Accounting and Auditing Reviews, 2018; 25(1): 21-50. (in persion). doi: 10.22059/ACCTGREV.2018.237351. 1007647

 

[5] Bahar Moghadam, M., Jokar, H., Mechanisms of Investor Tendencies and Accounting Information on Stock Market Prices, Journal of Applied Research in Financial Reporting, 2018, 7(12), P. 202-171. (in persion).

 

[6] Bai, X., Dong, Y., Hu, N., Financial report readability and stock return synchronicity, Journal of Applied Economics, 2019; 51(4): 346-363. doi:10.1080/00036846.2018.1495824.

 

[7] Bellofatto, A., D’Hondt, C., De Winne, R., Subjective financial literacy and retail investors behavior, Journal of Banking and Finance, 2018; 92(1): 168-181. doi:10.1016 /j.j bankfin.2018.05.004.

 

[8] Callen, J.L., Fang, X., Short interest and stock price crash risk, Journal of Banking & Finance, 2015; 60: 181-194. doi: 10.1016/j.jbankfin.2015.08009.

 

[9] CAO, M.M., Nguyen, N.T., Tran, T.T., Behavioral factors on individual investors' decision making and investment performance:a survey from the vietnam stock market, Journal of Asian finance,Economics and Business, 2021; 8(3): 845-853. doi: 10.13106/jafeb.2021.vol8.no3.0845.

 

[10] Cornell, B., Landsman, W., Stubben, S., Accounting information, investor sentiment and market pricing, Journal of Law, Finance, and Accounting, 2017; 2(2): 325-345. doi:10.1561/108. 00000017.

 

[11] Deng, X., Gao, L., Kim, e-B., Short-sale Constraints and Stock Price Crash Risk: Causal Evidence from a Natural Experiment, Journal of Corporate Finance, Available online 20 August 2019. doi:10.1016 /j.jcorpfin. 2019101498.

 

[12] Doaei, m., Mirzaei, S.A., Rafigh, M., Hybrid Multilayer Perceptron Neural Network with Grey Wolf Optimization for Predicting Stock Market Index, Advances in Mathematical Finance and Application, 2021; 6(4): 883-894. doi:10.22034/AMFA.2021.1903474.1452.

 

[13] Docherty, P., Hurst, G.C., Investor Myopia and the Momentum Premium across International Equity Markets, Journal of Financial and Quantitative Analysis, 2018; 53(6): 2465- 2490. doi:10.1017/ S002210901800041.

 

[14] Ebrahimi Sarwolia, M.H., Babajani, J., Hanafizadeh, P., Ebadpour, B., Determinants of the behavior of minority shareholders in the Tehran Stock Exchange based on structural equation modeling, Quarterly Journal of Investment Knowledge, 2017; 6(22): 131-145. (in persion).

 

[15] Gao, H. L., Li, J. C., Guo, W., Mei, D. C., The synchronicity between the stock and the stock index via information in market, Journal of Physica A: Statistical Mechanics and its Applications, 2017; 492: 1382-1388. doi: 10.1016/j.physa.2017.11.065.

 

[16] Garg, Soniya., A study of factors influencing investor behaviour towards gold as an investment avenue with factor analysis, Journal of Materials Today: Proceedings, 2021; 37(2): 2587-2590. doi: 10.1016 / j. matpr.2020.08.503.

 

[17] Goethner, M., Luettig, Se., Regner, T., Crowdinvesting in entrepreneurial projects:disentangling patterns of investor behavior, Journal of Small Business Economics, 2021; 57: 905-926. doi:10.1007. /s11187-020-00332-0.

 

[18] Grewal, J., Hauptmann, C., Serafeim, G., Stock Price Synchronicity and Material Sustainability Information, Journal of Harvard Business School Working paper, 2017:17-98. doi:10.2139/ssrn.2966144.

 

[19] Gurbaxani, A., Gupte, R., A study on the impact of COVID-19 on investor behaviour of individuals in a small town in the state of Madhya Pradesh,India, Australasian Accounting, Business and Finance Journal, 2021; 15(1): 70-92. doi:10.14453/aabfj. v15i1.6.

 

[20] Jank, S., Roling, C., Smajlbegovic, E., Flying under the radar:The effects of short-sale disclosure rules on investor behavior and stock prices, Journal of Financial Economics, 2021; 139(1): 209-233. doi:10.1016/ j.jfineco.2021.07.010.

 

[21] Jebelli, N., Dadashi, I., Zare Behnmiri, M.J., presenting a New Bankruptcy Prediction Model Based on Adjusted Financial Ratios According to the General Price Index, Journal of Advances in Mathematical Finance and Application, 2021; 6(4): 717-732, doi :10.22034/AMFA. 2020.1884838. 1339.

 

[22] Kannadas, S., Investment behavior of short-term versus long-term individual investors of PAN India- An empirical study, Journal of Investment Management and Financial Innovations, 2021; 18(2): 223-233. doi:10.21511/imfi.18(2).2021.18.

 

[23] Khademi Gerashi, M., Ghazizadeh, M., Study of Factors Affecting the Decision of Shareholders in the Tehran Stock Exchange based on the Structural Equation Model, Daneshvar Bi-Monthly Scientific Research Quarterly, Fourteenth Year, 23, July 2007;1-12. (in persion).

 

[24] Khaksarian, F., Azadi, K., Mirberg Kar, S. M, Identifying and Ranking the Effective Factors on Shareholders' Decision to Invest in the Iranian Stock Market, Quarterly Journal of Financial Engineering and Portfolio Management, 2020: 45. (in persion).

[25] Lin, C.T., Chen, C.B., Ting, Y.C., An ERP model for supplier selection in electronics industry, Journal of Expert Systems with Applications, 2011; 38: 1760-1765. doi:10. 1016/j.eswa.2010. 07.102

 

[26] Lotfi, M., Delshad, A., Information Content of Price and Synchronization of Stock Returns: Evidence from Information Theory and Noise, Journal of Applied Research in Financial Reporting, 2020; 9(17):155-190.

(in persion).

 

[27] Nareswari, N., Balqista, A.S., Negoro, N.P., The impact of behavioral aspects on investment decision making, Journal of Manajemen dan Keuangan, 2021; 10(1): P.15-27. doi:10.33059/jmk. v10i1. 3125.

 

[28} Naseem, S., Mohsin, M.,Hui, W.,Liyan, G.,Penglai, K., The investor psychology and stock market behavior during the initial era of COVID-19: a study of China,Japan and the United States, journal of Frontiers in Psychology, 2021; 12: 1-12. doi:10.3389/fpsyg.2021.626934.

 

[29] Orji,Ifeyinwa Juliet.,Examining barriers to organizational change for sustainability and drivers of sustainable performance in the metal manufacturing industry, Journal of Resources,Conservation & Recycling, 2019; 140: 102-114. doi: 10.1016/j.resconrec.2018. 08.005.

 

[30] Paisarn, w., Chancharat, N., Chancharat,S., Factors Influencing Retail Investors' Trading Behaviour in the Thai Stock Market, Australasian Accounting, Business and Finance Journal, 2021; 15(2): 26-37. doi:10.14453/aabfj. v15i2.3.

 

[31] Panicker, V.S., Mitra, S., Upadhyayul,RS., Institutional investors and international investments in emerging economy firms:A behavioral risk prespective, Journal of World Business, 2019; 54(2): 322–334. doi: 10.1016/j.jwb.2018.12.002.

 

[32] Rostami, E., Talebi, R., Short-Term Sales Restrictions and the Risk of Falling Stock Prices with an Emphasis on Investment Efficiency, Quarterly Journal of Accounting and Management, 2020; 3(27): 134-145. (in persion).

[33] Azadi, M., Izadikhah, M., Ramezani, F., Hussain, F.K., A mixed ideal and anti-ideal DEA model: an application to evaluate cloud service providers, IMA Journal of Management Mathematics, 2000; 31(20): 233-256, doi: 10.1093/imaman/dpz012

[34] Izadikhah, M., A Fuzzy Goal Programming Based Procedure for Machine Tool Selection, 2015; 28(1): 361-372, doi: 10.3233/IFS-141311

[35] Zamani, S., Zanjirdar, M., Lalbar, A. The effect of information disclosure on market reaction with meta-analysis approach. Advances in Mathematical Finance and Applications, 2022; 7(3): 629-644. doi: 10.22034/amfa.2021.1937478.1625

[36] Shim, G.Y., Lee, S.H., Kim, Y.M., How investor behavioral factors influence investment satisfaction, trust in investment company, and reinvestment intention, Journal of Business Research, 2008; 61(1): 47–55. doi:10. 1016/j.jbusres.2006.5.008.

 

[37] Taherinia, Masoud., The Impact of Investment Inefficiency and Cashholding on CEO Turnover, Journal of Advances in Mathematical Finance and Application, 2020; 5(4): 469-478. doi:10.22034 /AMFA .2020. 1897946.1412.

 

[38] Talebnia, G., Metanat, M., The Investigation of Information Asymmetry’s Moderating Effect on the Relationship between Dividend Payments and Future Stock Price Crash Risk of Firms Listed on the Tehran Stock Exchange, Journal of Accounting and Auditing Review, 2018; 25(4): 537-554. (in persion).

 

[39] Tian, E., Voluntary disclosures and the stock price synchronicity-evidence from New Zealand, Thesis of the degree of Master of Business, School of Accounting and Finance, Auckland University of Technology, 2014, permanent link:http://hdl.handel.net/10292/7856.

 

[40] Vakilifard, H., Foroughnejad, H., Khoshnood, M., Evaluation of Investor Behavior in Tehran Stock Exchange by Network Analysis Process Method, Quarterly Journal of Asset Management and Financing, 2013; 1(2):19-34. (in persion). doi: 20.1001.1.23831170.1392.1.2.3.1

 

[38] Yao, W., Zhang, L., Hu, J., Does having a semimandatory dividend policy enhance investor confidence? Research on dividend-financing behavior, Journal of Economic Systems, 2020; 44(4): 100812. doi: 10.1016/ j.ecosys. 2020.100812.

 

[39] Zhou, L., Huang, J., Investor trading behaviour and stock price crash risk, International Journal of Finance and Economics, 2018; 24(1): 1–14. doi: 10.1002/ijfe.1659.

 

[40] Zhu, B., Niu, F., Investor sentiment, accounting information and stock price: Evidence from China, Pacific-Basin Finance Journal, 2016; 38(3): 125-134. doi: 10.1016/j.pacfin.2016.03.010.

[41] Zanjirdar, M., Overview of Portfolio Optimization Models. Advances in Mathematical Finance and Applications, 2020; 5(4): 419-435. doi: 10.22034/amfa.2020.674941.

[42] Zanjirdar, M., Kasbi, P., Madahi, Z., Investigating the effect of adjusted DuPont ratio and its components
on investor & quot; s decisions in short and long term, Management Science Letters, 2014; 4(3): 591-596.
doi: 10.5267/j.msl.2014.1.003