Normality Test

Statistical Treatment

The study analyzed the collected data via Statistical Package for the Social Sciences (SPSS V.17) to achieve the objectives of this study:

  • Frequencies and percentages: to describe the demographic features for the study sample of respondents.
  • Arithmetic average and standard deviation: to detect the response of the study sample on the variables.
  • Cronbach Alpha reliability coefficient and factor analysis to verify the reliability and validity of the research tool.
  • Multi-colleniority test and normality test to verify the model fitting.• Simple regression method: to measure the impact of the relationship between each independent variable on the dependent variable.
  • Multiple regression method: to measure the impact of the relationship between more than one independent variable and the dependent variable.
  • Hierarchal regression analysis: to measure the impact of behavioral finance factors on stock investment decision-making attributed to demographic variables.

In order to achieve the desired objectives of this study, the researcher adopted and developed a questionnaire distributed to individual investors at ASE to measure the impact of behavioral finance on stock investment decision. The researcher used means standard deviations and relative importance to describe the respondents of question. The researcher gathered all variable items each variable separately.

Table 7 (Item No.11-15) indicates that the general average of loss aversion was (3.385) with standard deviation (0.612) and moderate relative importance. The item "When it comes to investment, no loss of capital (invested money) is more important than returns (profits)" was first with mean (4.040), and high relative importance, while item "I avoid selling shares that have decreased in value and readily sell shares that have increased in value". was last with mean (2.940) and moderate relative importance.

Table 7: Behavioral Finance Factors
Item No . Item Mean Standard Deviation Relative Important Rank
1 I am more concerned about a large loss in my stock than missing a substantial gain (profits). 3.240 1.202 Moderate 3
2 I feel nervous when large price drops have in my invested stocks. 3.100 1.151 Moderate 4
3 I will not increase my investment when the market performance is poor. 3.607 0.955 Moderate 2
4 When it comes to investment, no loss of capital (invested money) is more important than returns (profits). 4.040 0.940 High 1
5 I avoid selling shares that have decreased in value and readily sell shares that have increased in value. 2.940 1.094 Moderate 5
General average for loss aversion 3.385 0.612 Moderate
6 I think that I am an experienced investor. 3.787 1.053 High 1
7 I feel more confident in my own investment opinions over opinions of my colleagues or friends 3.313 0.837 Moderate 5
8 I don't consult others (family, friends or colleagues) before making stock investment decisions 3.460 0.800 Moderate 2
9 I believe that my skills and knowledge of stock market can help me to outperform the market. 3.340 1.009 Moderate 4
10 I am successful entrepreneur in an environment where many businesses fail 3.347 0.777 Moderate 3
General average for overconfidence 3.449 0.471 Moderate
11 Other investors' decisions of choosing stock types have impact on my investment decisions. 3.120 0.843 Moderate 1
12 Other investors' decisions of the stock volume don't have impact on my investment decisions. 3.000 0.955 Moderate 2
13 Other investors' decisions of buying and selling stocks have impact on my investment decisions. 2.747 0.943 Moderate 4
14 I usually react quickly to the changes of other investors' decisions and follow their reactions to the stock market. 2.940 0.936 Moderate 3
General average for herding 2.952 0.556 Moderate
Item No . Item Mean Standard Deviation Relative Important Rank
11 Other investors' decisions of choosing stock types have impact on my investment decisions. 3.120 0.843 Moderate 1
12 Other investors' decisions of the stock volume don't have impact on my investment decisions. 3.000 0.955 Moderate 2
13 Other investors' decisions of buying and selling stocks have impact on my investment decisions. 2.747 0.943 Moderate 4
14 I usually react quickly to the changes of other investors' decisions and follow their reactions to the stock market. 2.940 0.936 Moderate 3
General average for herding 2.952 0.556 Moderate
Item No . Item Mean Standard Deviation Relative Important Rank
15 I usually don't have a fear to invest in stocks that have a sure gain. 2.920 0.959 Moderate 5
16 I am cautious about stocks which show sudden changes in price or trading activity. 2.887 1.053 Moderate 6
17 I usually have worry investing in stocks that have had a past negative performance in trading 3.720 0.984 High 1
18 I don't feel that the idea of participating in a buy/sell on the stock market is appealing 3.567 1.019 Moderate 2
19 My investment in stocks is largely based on investment knowledge, experiences, and education. 2.527 1.060 Moderate 3
20 I am hopeful when undertaking investment in stocks that have exhibited a sure loss. 3.513 0.841 Moderate 4
General average for risk perception 3.189 0.534 Moderate

Table 7 (Item No.6-10) indicates that the general average of overconfidence was (3.449) with standard deviation (0.471) and moderate relative importance. The item "I think that I am an experienced investor" was first with mean (3.787), and high relative importance, while item "I feel more confident in my own investment opinions over opinions of my colleagues or friends" was last with mean (3.313) and moderate relative importance.

Table 7 (Item No.11-15) indicates that the general average of herding was (2.952) with standard deviation (0.556) and moderate relative importance. The item "Other investors' decisions of choosing stock types have impact on my investment decisions" was first with mean (3.120), and moderate relative importance, while item "Other investors' decisions of buying and selling stocks have impact on my investment decisions" was last with mean (2.747) and moderate relative importance. This means that the sample relies on their own personal opinions or the information necessary to take investment decisions with no denials being affected by investment decisions resulting of other investors.

Table 7 (Item 15-20) indicates that the general average of risk perception was (3.189) with a standard deviation (0.534) and moderate relative importance. The item "I usually have worry investing in stocks that have had a past negative performance in trading" was first with mean (3.720), and high relative importance, while item "I am cautious about stocks which show sudden changes in price or trading activity" was last with mean (2.887) and moderate relative importance. And this referring to the interest of the sample on the risks arising of investment in the financial market and at the same time is this realization impediment the investment operations.

Table 8 indicates that the general average of behavioral finance factors was (3.244) with standard deviation (0.307) and moderate relative importance. The factor "Overconfidence" was first with a mean of (3.449) with standard deviation (0.471), and moderate relative importance, while factor "Herding" was last with mean (2.952) with standard deviation (0.556) and moderate relative importance.

Table 8: Means, Standard Deviation And Relative Importance For Behavioral Variables
No . Factor Mean Standard Deviation Relative Important Rank
1 Loss Aversion 3.385 0.612 Moderate 2
2 Overconfidence 3.449 0.471 Moderate 1
3 Herding 2.952 0.556 Moderate 4
4 Risk Perception 3.189 0.534 Moderate 3
General average for behavioral finance factors 3.244 0.307 Moderate

It also shows that the behavioral finance factors of investors' at ASE were generally moderate without the presence of a particular factor in the behavior of investors in general, and this may be due to the nature of ASE, which is characterized by weak efficiency and also indicates that many investors rely on brokerage firms consultations.

This study agrees with a study titled "Do Behavioral Finance Factors Influence Stock Investment Decisions of Individual Investors?" The main objective of this study was exploring the behavioral finance factors influencing the stock investment decision of individual investors at Saudi Stock Market (SSM) as one of the vital emerging markets in the Middle East. To conduct the study, a questionnaire has been built to measure the effect of behavioral finance factors on stock investment decision. (140) questionnaires have been distributed to the participants on randomly basis. Cronbach's Alpha was used to test the validity of the tool.