issn: 2278-6236 small investor's behaviour on stock ... - Garph.co.uk

International Journal of Advanced Research in
Management and Social Sciences ISSN: <strong>2278</strong>-<strong>6236</strong>
regard return on equity (ROE) as their fourth priority. Further, FASB (2008) emphasized key
role of corporate financial statement reports in choosing different stocks. To extend the
FASB work, evidence of Al-Ajmi (2009) revealed that financial reporting should provide
useful information for the potential investors, creditors and other users in making rational
investment. Also, more evidence indicated that investors pay attention to several factors in
choosing shares. These factors are involving historical profits, expectation of a higher price
of the stock, increase in the distribution of cash dividends, newspaper and rumors from the
market. Kabra et al. (2010) studied the factors effecting investment <strong>behaviour</strong> and
concluded that investor’s age and gender are the main factors which decide the risk taking
capacity of investors. Bennet and Selvam (2011) found out that SPERTEL risks had influenced
the value of equity shares in the market. The market factors had influenced the stock
selection decision of <strong>small</strong> investors in India. Bennet et al. (2011) carried out a study and
found that most of the investors expect the stock prices to go up to a degree greater than
most of their investments. If the market has gone down, they think it would rebound. If the
market is up, they think it would go further. In either case, they make investment decision
on account of the assumption that the stock market would give better returns.
In addition, many other studies have identified several factors that have different levels of
influencing investors’ decisions to buy and sell stocks. These factors which are classified by
profitability variables, government policies, past stock price (return), firms’ public
information, and consultative information are involving current and future profitability,
dividends policy, government subsidies and support, stock price and future growth,
members of the boards, line of business, and friends’ recommendations (Abdelsalam, 1990;
Al-Razeen and Karbhari, 2004, 2007; Al-Attar and Al-Khater, 2007). To make investment
decisions in the firms’ stock, investors expect the firms to disclose a set of information
about their financial position, sources of financial, management forecasts, investment
programs, and financial policies. Meantime, investors obtain other types of information
from different sources. Generally, the literature evidence follows two areas of researches;
some researches concentrate empirically on institutions’ purchasing <strong>behaviour</strong> along with
their influential determinants on stock selection, while other studies have generally focused
upon individual <strong>behaviour</strong> in choosing different shares beside identification of their
influencing factors. The literature evidence identify numerous influential factors which are
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