Are Malaysian Investors Rational?

Lai, Ming-Ming; Low, Karen; Lai, Ming Ling

doi:10.1207/s15327760jpfm0204_5

Cited by 30 publications

(23 citation statements)

References 6 publications

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“…Waweru et al, (2008) identifies the factors of the market that have an impact on investors' decision making: Price changes, market information, past trends of stocks, customer preference, over-reaction to price changes, and fundamentals of underlying stocks.Normally, changes in market information, fundamentals of the underlying stock and stock price can cause over/under-reaction to the price change. Researchers believe that over-reaction (DeBondt & Thaler, 1985) or underreaction (Lai, 2001) to news may result in different trading strategies by investors and hence influence their investment decisions. Moreover, Barber and Odean (2000) emphasize that investors are impacted by events in the stock market which grab their attention, even when they do not know if these events can result in good future investment performance.…”

Section: Market Factorsmentioning

confidence: 99%

The Impact of Behavioural Factors on Investment Decision Making and Performance of CSE Investors in Eastern Province of Sri Lanka

Rajeshwaran

2020

Sri Lanka Jnl Econ. Res.

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Objectives of the study are twofold; first, to identify behaviour of CSE investors in Eastern province of Sri Lanka; second, to examine how behavioural factors impact on investment performance of CSE investors in the province. The research was conducted from positivism perspective and deductive reasoning was used as research approach. Survey strategy was applied to collect data and time horizon was cross sectional. Proportionate stratified random sampling technique was applied to choose the sample from the districts. Data were collected via questionnaires from 374 investors of CSE in the province. Mean, standard deviation, correlation and multiple regression were applied. Results show that all four behavioural factors and investment performance have fallen to moderate levels. According to Heuristic variables, investors rely on their skill, knowledge and previous experience. The investors mostly avoid loss and regret in investment on stocks as per the Prospect variables. Out of Market variables, the investors carefully consider the price changes of stocks while moderately analyse the companies' customer preference. In line with Herding variable, the investors also follow others' decision to invest. Heuristic variables are positively related with investment performance while other variables namely prospect variables, market variables and Herding variables are negatively related with investment performance. Recommendations are given to current and potential investors as well as executives in the stock market for promoting investment in stock exchange

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Section: Market Factorsmentioning

confidence: 99%

The Impact of Behavioural Factors on Investment Decision Making and Performance of CSE Investors in Eastern Province of Sri Lanka

Rajeshwaran

2020

Sri Lanka Jnl Econ. Res.

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“…Most retail investors speculate in a bullish market but revert toward fundamental analysis in a bearish market. However, an updated study by Lai, Low, & Lai (2001) found Malaysian retail investors to exhibit stable rational behaviour.…”

Section: Literature Reviewmentioning

confidence: 99%

The Relationship between Risk Propensity, Risk Perception and Risk-Taking Behaviour in an Emerging Market

Hamid

Rangel

Taib

et al. 2013

International Journal of Banking and Finance

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This paper reports evidence to support a relationship between risk propensity, risk perception, and risk-taking behaviour of investors in an emerging market. Primary data were gathered using a validated structured questionnaire, which was self-administered by respondents: there were 162 investors from 8 stockbroking companies. A multiple regression was used to test the direct and indirect effects of the identified behavioural characteristics on investment decision. Risk propensity was found to be positively related to risk-taking behaviour whereas risk perception was negatively related to risk-taking behaviour. It was further found that risk perception partially mediates the effect of propensity to take risk. This suggests that the perceptual framing of a situational context in the investors’ thought processes reduces but it does not totally overwhelm the innate personality traits with respect to either the investor’s risk-seeking or risk-averseness. The tendency to engage in risky behaviour is more psychological in nature. The implications of the research are further explored.

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“…Hence, the study of individual investors in Malaysia merits closer attention owing to their significance in terms of numbers. Interestingly, despite being in an apparently disadvantageous position, researchers report that Malaysian individual investors are largely rational decision-makers who rely on financial statements analysis (Jamal, Ramlan, Pazim, & Budin, 2014;Lai, Low, & Lai, 2001;Lai, Tan & Chong, 2013;Nik Muhammad & Abdullah, 2009). This suggests that their financial statement usage is high, albeit another study suggests the contrary (Jaiyeoba & Haron, 2016).…”

Section: Introductionmentioning

confidence: 99%

Malaysian Individual Investors: What Are the Factors That Influence Their Financial Statement Usage?

Kishan

Alfan²

2019

AJAP

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Research aim: This study seeks to examine the knowledge and attitudinal factors that influence financial statement usage among Malaysian individual investors. Design/ Methodology/Approach: A survey was conducted on a sample of 399 Malaysian individual investors using self-administered questionnaires. Research finding: The findings reveal that financial statement usage is positively associated with subjective norm, financial statement knowledge, attitude towards financial statement usage, and perceived behavioural control. However, it is negatively associated with trading frequency attitude. Theoretical contribution/Originality: This study seeks to contribute to the very limited research on the factors that influence individual investors' financial statement usage. Additionally, it enriches the literature on financial statement usage among individual investors in Malaysia by showing the extent to which the three main financial statements are utilised by them. Furthermore, this research extends financial literacy research on stock investing to the realm of financial statement usage by highlighting the influence of financial statement knowledge on this behaviour. Thus, the study seeks to bridge the gap between financial reporting and financial literacy. Practitioner/Policy implication: The findings provide useful insights for the providers of investor education programmes in developing more holistic programmes. Research limitation/Implication: Non-random sampling was employed in this study, albeit such an approach is consistent with the literature. Also, respondents comprised individual investors who are proficient in English because the researchers seek to complement Malaysian studies on the readability of English language financial statement narratives.

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Are Malaysian Investors Rational?

Cited by 30 publications

References 6 publications

The Impact of Behavioural Factors on Investment Decision Making and Performance of CSE Investors in Eastern Province of Sri Lanka

The Impact of Behavioural Factors on Investment Decision Making and Performance of CSE Investors in Eastern Province of Sri Lanka

The Relationship between Risk Propensity, Risk Perception and Risk-Taking Behaviour in an Emerging Market

Malaysian Individual Investors: What Are the Factors That Influence Their Financial Statement Usage?

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