A Factor Analysis of Investment Behaviour for Small Investors in the Hong Kong Stock Market

Tai-Yuen HON

Abstract


Hon (2012) found that small investors were overconfident and bought more stock during the buoyant market in the Hong Kong stock market. Small investors also exhibited herd behaviour. In this paper we extend his paper to identify and analyse the important factors that capture the behaviour of small investors in the Hong Kong stock market,especially during the financial crisis.Exploratory factor analysis is employed to analyse the data, we found that monitor investments is the second important factor and reference group is the most important factor..

Keywords. Factor analysis, Small investors, Stock market, Hong Kong.

JEL. E22, G02, G10.


Full Text:


References


Bagozzi, R. P., Yi, Y., & Phillips, L.W. (1991). Assessing construct validity in organizational research. Administrative Science Quarterly, 36, 421-458. doi:10.2307/2393203

Bruton, A., Conway, J. H. & Holgate, S.T. (2000). Reliability: what is it, and how is it measured? Physiotherapy, 86, 94-99, doi:10.1016/s0031-9406(05)61211-4

Carmines, E. G., & Zeller, R.A. (1987). Reliability and validity assessment (Sage University Papers Series: Quantitative Applications in the Social Sciences): Sage

Cattell, R. B. (1966). The Meaning and Strategic Use of Factor Analysis. Handbook of Multivariate Experimental Psychology, Chicago: Rand-McNally.

Cronbach, L. J. (1947). Test “reliability”: its meaning and determination. Psychometrika, 12, 1-16. doi:10.1007/bf02289289

Cronbach, L. J., & Shavelson, R. J. (2004). My current thoughts on coefficient alpha and successor procedures.Educational and Psychological Measurement, 64, 391-418. doi:10.1177/0013164404266386

Durand, R.B., Newby, R. & Sanghani, J. (2008). An intimate portrait of the individual investor. The Journal of Behavioral Finance, 9, 193-208. doi:10.2139/ssrn.887441

Graham, J.R., Harvey,C.R. & Huang, H. (2009). Investor competence, tradingfrequency and home bias. Management Science, 55, 1094–1106. doi:10.3386/w11426

Hallahan, T.A., Faff, R.W. & McKenzie, M.D. (2004). An empirical investigation of personal financial risk tolerance. Financial Services Review, 13, 57-78.

Hoffmann, A.O.I., & Broekhuizen, T.L.J. (2009). Susceptibility to and impact ofinterpersonal influence in an investment context.Journal of the Academy of Marketing Science, 37, 488-503. doi:10.1007/s11747-008-0128-7

Hoffmann, A.O.I., & Post, T. (2012). What makes investors optimistic? What makes them afraid? Working paper, Maastricht University and Netspar, The Netherlands, 1-40. doi:10.2139/ssrn.1970284

Hoffmann, A.O.I., Post, T. & Pennings, J.M.E. (2011). Individual investors and the financial crisis: how perceptions change, drive behavior, and impact performance. Working paper, Maastricht University and Netspar, 1-50. doi:10.2139/ssrn.1717984

Hon T.Y. (2012). The behaviour of small investor in the Hong Kong stock Market.Asian Profile, 40, 225-236. doi:10.3390/jrfm5010059

Jackson, D.N., Hourany, L., & Vidmar, N.J. (1972). A four dimensional interpretation of risk-taking. Journal of Personality, 40, 483-505. doi:10.1111/j.1467-6494.1972.tb00075.x

Kannadhasan, M. (2006). Role of behavioural finance in investment Decisions. Working paper, Bharathidasan Institute of Management.

Korniotis, G. M. & Kumar,A. (2011). Do older investors make beter investment decision? The Review of Economics and Statistics, 93, 244-265. doi:10.1162/rest_a_00053

Law, M.K.H. (2010). Behaviouralrisk disclosure and retail investor protection: reflections on the Lehman Brothers minibonds crisis. Working paper, The Institute of Law, Economics and Politics, 15-42.

Nunnally, J. C. (1978). Psychometric Theory. (2nded.). New York:McGraw-Hill.

Sewell, M. (2010). Behavioural finance. Working paper, University of Cambridge, 1-13.

Shefrin, H. (2000). Beyond greed and fear- understanding behavioural finance and the psychology of investing.Financial Management Association Survey and Synthesis Series, Harvard Business School Press, 13-32. doi:10.2469/faj.v56.n6.2407

Singh, S. (2012). Investor irrationality and self-defeating behavior: insights frombehavioral finance. The Journal of Global Business Management, 8, 116-122.

Straub, D. W. (1989). Validating instruments in MIS research.MIS Quarterly, 13, 147-170. doi:10.2307/248922

Tversky, A., & Kahneman, D. (1971). Belief in the law of small numbers. Psychological Bulletin, 2, 105-110. doi:10.1037/h0031322

Tversky, A., & Kahneman, D. (1974). Judgment under uncertainty: heuristics and biases. Science, 185, 1124-1131. doi:10.1126/science.185.4157.1124

Wang, A. (2009). Interplay of investors' financial knowledge and risk taking. The Journal of Behavioral Finance, 10, 204-213. doi:10.1080/15427560903369292

Wang, H., & Hanna, S. (1997). Does risk tolerance decrease with age? Financial Counselling and Planning, 8, 27-30. doi:10.2139/ssrn.95489

Woobock, G., & Kim,Y. G. (2002). Breaking the myths of rewards: an exploratory study of attitudes about knowledge sharing. Informational Resource Management Journal, 15, 14-21. doi:10.4018/irmj.2002040102




DOI: http://dx.doi.org/10.1453/jel.v2i2.258

Refbacks

  • There are currently no refbacks.


.......................................................................................................................................................................................................................................................................................................................................

Journal of Economics Library - J. Econ. Lib. - JEL - www.kspjournals.org

ISSN: 2149-2379

Editor: [email protected] Secretarial: [email protected]   Istanbul - Turkey.

Copyright © KSP Library