Journal of Legal, Ethical and Regulatory Issues (Print ISSN: 1544-0036; Online ISSN: 1544-0044)


Factors Affecting Investment Decision Making: Evidence from Investment Firms, Group of Investors, Non-Profit Organizations and Individual Investors in Pakistan

Author(s): Naveed Jan, Xiyu Liu, Fakhr Ullah, Waleed

 Traditional finance theories presume that investors act rationally in the stock market but investors in behavioural finance behave irrational when making their investment choices. Behavioural finance clarifies the effect of investor psychology on their investment decision making. The research aims to examine the behavioural variables such as mental accounting, overconfidence, organizational structure and management or leadership styles on investment decision making. This study uses to collect primary data from Pakistan's stock exchanges from individuals, investment companies, a community of investors, and nonprofit organization through a questionnaire technique. The study collected 120 questionnaires from individuals, investment companies, investor community, non-profit organizations, to accomplish the objective the study use correlation analysis and regression analysis techniques. The results of the study determines that mental accounting, over-confidence, organizational structure and management or types of leadership have a positive and important effect on investment decisions.. The findings of the study can be used by stock exchanges and other regulatory authorities to explain shareholders about behavioural elements in stock market. The findings of the study are useful to enhance shareholder confidence in stock market.

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