(Luận văn) heuristics influencing investment decision making and investment performance, evidence from individual investors in vietnam

t to Master Thesis ng hi ep w n lo Heuristics influencing decision making ad y th ju and performance: evidence from yi pl individual investors in Vietnam n ua al n va ll fu oi m Nguyen Thi Thanh Thuy at nh Mbus 3.2 z z jm ht vb Supervisor: Dr Tran Phuong Thao k om l.c gm n a Lu n va y te re th t to DECLARATION ng hi ep I hereby declare that this thesis, to the best of my knowledge and belief, is my own w n work and effort and that is has not been submitted, either in part or whole, anywhere for lo ad any award y th Information and ideas taken from other sources as cited as such This work has not ju yi been published pl n ua al n va ll fu oi m at nh z z k jm ht vb om l.c gm n a Lu n va y te re th t to ACKNOWLEDGE ng This research would not have been possible without the valuable contribution hi ep of many people We would like to take this chance to express my great gratitude for their understanding, encouragement, and supports w n lo ad Firstly, I would like to my deepest appreciation to my thesis supervisor, Dr ju y th Tran Phuong Thao, for numerous valuable comments and suggestions I am very lucky to have her supervision as her continuous encouragement has motivated me and made me yi pl confident to finish this research al ua Then, I would like to thank the faculty of International School of Business (ISB) – n University of Economic Ho Chi Minh City I would also like to show my gratitude to va n Professor Nguyen Dinh Tho for his patient in listening, discussing, and giving me fu ll precious recommendations I am especially indebted to him for his indispensable m oi guidelines with regard to statistical analysis techniques nh A special appreciation to my friends and colleagues for giving me the sound at z comments on my questionnaire as well as instant support regardless day or night This z ht vb helps me a lot in improving the quality of the research jm Furthermore, we want to express our gratefulness to my friends working at the Ho k Chi Minh Stock Exchange and securities companies, who help me to arrange interviews gm and distribute questionnaires I am also thankful to beneficiary customers who participated om l.c in and the survey Finally, it would be impossible to say enough about my dear parents, my a Lu respectable teachers at University of Economics Ho Chi Minh City and my loved friends n n difficult time to complete this research in time va All their understanding, encouragement, and advices help me to overcome the most y te re Ho Chi Minh City, June 6th, 2015 th Nguyen Thi Thanh Thuy t to LIST OF FIGURES ng Figure 2.1 Research model 17 hi ep Figure 3.1 Research process 20 w Figure 3.2 New research model (revised) 27 n lo LIST OF TABLES ad ju y th Table 3.1 Types of measurement for heuristic variables influencing investment decision making 22 yi Table 3.2 Types of measurement for individual investors’ decision making 23 pl al Table 3.3 Types of measurement for individual investors’ performance 24 n ua Table 4.1 Descriptive statistic of respondent’s characteristics 31 n va Table 4.2 Reliability analysis for each factor 35 ll fu Table 4.3 Key dimensions, items 37 oi m Table 4.4 Correlation among factors 38 at nh Table 4.5 Regression analysis - Model summary 39 z Table 4.6 ANOVA 40 z ht vb Table 4.7 Regression analysis of variables 41 jm Table 4.8 Correlation 42 k Table 4.9 Regression analysis – Model summary 43 gm Table 4.10 ANOVA 44 l.c Table 4.11 Regression analysis of variables 44 om Table 5.1 Conclusion 49 n a Lu n va y te re th t to ABSTRACT ng The main objective of this study is to investigate the heuristic factors influencing hi ep individual investors’ decisions and investment performance at the Ho Chi Minh Stock Exchange As there are limited studies about behavioral finance in Vietnam, this w n study is expected to contribute significantly to the development of this field in Vietnam lo ad y th The study begins with the existing theories in behavioral finance, based on ju yi which, hypotheses are proposed Then, these hypotheses are tested through the pl questionnaires distributed to individual investors at the Ho Chi Minh Stock Exchange n ua al va The result shows that there is only overconfidence bias affecting the investment n decisions of individual investors at the Ho Chi Minh Stock Exchange among three fu ll factors of heuristic (including available bias, representativeness bias and overconfidence m oi bias) Moreover, this study also found out the relationship between decision making nh of individual investors and investment performance at z investor, decision making, investment k jm ht performance, Vietnam individual vb Heuristic, z Keywords: om l.c gm n a Lu n va y te re th CHATER 1: INTRODUCTION t to ng hi 1.1 Background ep In the financial markets, investment decisions are commonly made by individual w investors and fund managers Their investment decisions are often supported by decision n lo tools such as fundamental analysis, technical analysis and judgment It is assumed that ad information structure and behavioral factors in the market systematically influence y th ju individuals’ investment decisions as well as market outcomes (Mutswenje, 2014) yi However, in reality, investor behaviors are often derived from psychological principles pl ua al of decision making to explain why people buy or sell stocks These factors that are n normally known as behavioral factors focused upon how investors interpret and act on n va information to make investment decisions ll fu Much of the economic and financial theories presume that individuals act rationally oi m in the process of decision making, by taking into account all available information But at nh there is evidence to show repeated patterns of irrationality in the way humans arrive at decisions and choices when faced with uncertainty (Bernstein, 1996) Behavioral finance, z z a study of market that draws on psychology, throws light on why people buy or sell stock vb jm ht and why sometimes not buy or sell at all The most crucial challenge faced by the investors is in the area of investment decisions The profit made, or losses incurred by an k gm investor can be attributed mainly to his decision-making abilities The fact that even the l.c most prominent and well-educated investors were affected by the collapse of the om speculative bubble in the 2008 subprime crisis proved that something was fundamentally a Lu missing in the traditional models of rational market behavior (Subash, 2012) n In the behavioral finance discipline, heuristics can be defined as the use of th complex tasks of assessing probabilities and predicting values to simpler judgmental y heuristics or rules of thumb to subjectively assess risks of alternatives, which reduces the te re 2001) Raines & Leathers (2011) argue that when faced with uncertainty, people rely on n va experience and practical efforts to answer questions or to improve performance (Fromlet, operations t to It could be seeing that, heuristics are quite useful in investment decision making ng (Waweru et al., 2008, p.27), however they may lead to biases (Kahneman & Tversky, 1974, hi ep p.1124; Ritter, 2003, p.431) For instance, Kahneman & Tversky (1974, page 1124) introduce three factors belongs to heuristics namely representativeness, availability bias, w and anchoring, while Waweru et al (2008) also list two factors named Gambler’s fallacy n lo ad and Overconfidence of heuristic y th There are several studies in the literature investigating the relationship between ju heuristics and decision making and performance of individual investor as well Tversky & yi pl Kahneman (1974) conduct the research of judgment under uncertainty, heuristics and ua al biases Hassan et al (2013) study impacts of affect heuristics, fear and anger on the n decision making of individual investor in a conceptual study In addition, another study va n examines investment behavior and performance of various investor types in Finland’s fu ll stock market done by Grinblatt & Keloharju, 2000 oi m at nh 1.2 Research problem z In the literature, many papers show that investment decision of investors may be z ht vb affected by behavioral finance Thus, many researchers attempt to investigate jm psychological and sociological factors such as heuristics that may influence investment k decisions making process of individual (Subrahmanyam 2007, Le & Doan 2011, gm Kengatharan 2014) om l.c In Vietnam, the first official stock exchange, namely the Ho Chi Minh Stock Exchange (known as HOSE) has been launched since mid-2000 and five years later, the a Lu Ha Noi Stock Exchange, (known as HNX) was established Both the markets have recently n insufficient legal foundation, simple trading system, very few security companies and y te re still strange and vague to most of local people due to several its limitations such as n va significantly developed At the time of establishment, the Vietnamese stock market was experienced significant development with regards to the market size and market th limited types of securities (HOSE, 2010, p.7) Recently, the Vietnamese stock market has capitalization As of November 2014, there were 345 companies listed on HOSE, with the t to listed value of almost 339,000 billion VND and 367 companies listed on HNX, with the ng listed value of almost 92,422 billion VND, reach over VND 145,000 billion of the total hi ep market value However, in comparison to foreign stock markets, Vietnam stock market appears to be much smaller in terms of market size and market capitalization (Le & Doan, w n 2011) lo ad Among the two exchanges, the Ho Chi Minh stock exchange has been developing ju y th significantly in both a number of listed stocks and trading values; however, its aggregate market index (VN-Index) movement seems to fluctuate unpredictably over different yi pl periods As such, several studies shown that investment decision making of investors, al ua particularly individual investors, in the market is influenced by many factors including n behavioral factors such as herding effect, heuristic and market factors (Waweru, 2008, n va Hassan et al, 2013) fu ll Several studies in the literature show that individual investors have difficulties m oi making investment decisions due to lack of financial sophistication (Winchester et al 2011) nh Individual investors often have embraced heuristics or rule of thumb in their investment at z decision making (Shikuku, 2010) This issue may raise a concern that whether investment z ht vb decision making of individual investors in the Vietnamese stock market is influenced by heuristic? Hence, this research attempts to investigate the influence of heuristic factors on jm k influencing individual investors’ decision-making and performance in the context of the om 1.3 Research objective and research questions l.c gm Vietnamese stock market a Lu The objective of the study is to investigate impacts of heuristic factors on individual n va investors’ decision-making and their investment performance More specifically, two n questions are given as follows: y te re  Question 1: Do heuristic factors influence individual investors’ decisions in the th Vietnamese stock market?  Question 2: Does a strong tendency of investment decision making have a positive influence on the investment performance? t to ng 1.4 Scope of the research hi ep There are several heuristic factors influencing behaviors of investors in stock markets In this study, three heuristic factors are taken into account, namely w n representativeness, availability and overconfidence There are factors that mentioned in lo ad several studies such as the research on overconfidence bias (Glaser and Weber, 2012), the ju y th study on representativeness bias (Taffler, 2012) and analysis regarding to the effects of behavioral factors on investment decision making by unit companies in Kenya (Shikuku, yi pl 2010) and so on al ua In this thesis, individual investors are concerned because according to the report of n the Wall Street Securities (2014) this group of investors account for over 60 percentages va n of investors trading in the Vietnamese stock market fu ll In addition, due to the time constraint, the research focuses only on the heuristic m oi behaviors of individual investors studying or working at the Ho Chi Minh City only The at nh Ho Chi Minh City is chosen because it is often considered as the biggest economic center z of Vietnam and the biggest Vietnamese stock exchange, namely the Ho Chi Minh Stock z jm ht vb Exchange, is located there 1.5 Structure of the thesis k gm This thesis is organizes in five chapters as follow: om l.c Chapter is an introduction chapter This chapter describes an overview of research background, research problem, and objective Besides, the scope of research, n a Lu implications, and structure of thesis are also present related to theoretical foundation regarding to explain prospect theory and heuristics y te re theory as well Besides, heuristics of individual investors also is presented in detail in the n va Chapter is about presenting previous research done on the stream of studies individual investors is clearly explored as well This chapter is to concentrate on th research More importantly, investment decision making and investment performance of explaining each variable in the model, and reasons for choosing them to be included in t to the research model ng Chapter is research methodology chapter Firstly, research process is presented hi ep in general Then, research design and sampling are also mentioned regarding to qualitative method and quantitative method as well After that, the measurement scales w n apply for the research factors will be determined clearly and suitably This chapter also lo ad defines how to collect data and analyze the data collected to test the research hypotheses y th proposed in chapter Finally, research method is explained in detail regarding to ju Cronbach alpha, Exploratory Factor Analysis and Multiple regression analysis yi pl Chapter is the analysis and discussion chapter In detail, data background is firstly ua al mentioned and measurement reliability of each factor using Cronbach’s alpha is properly n presented as well Moreover, scale testing by using Exploratory Factor Analysis and va n multiple regression analysis is explored in detail in the session Furthermore, this part fu ll also discusses the method for collecting data used to test the hypothesis, and it analyses m oi the data received, its reliability and multiple regression as well at nh The last chapter, chapter discusses the results and research findings This chapter gives conclusion, implication, and research limitations Finally, this thesis makes z z suggestions for further research on the topic area k jm ht vb om l.c gm n a Lu n va y te re th 21 You are sure you can make correct investment decision t to III YOUR DECISION MAKING ng hi Please give your opinion about the levels of agreement for the following statements: ep w Extremely disagree n Statements lo ad Neutral Agree Extremely agree 5 ju y th 21 Your investment has a lower risk compared to the market in general Disagree yi pl n ua al 22 Your investment in stocks has high degree of safety n va 23 Your investment has the ability to meet interest payments ll fu m YOUR INVESTMENT PERFORMANCE oi IV nh at Please give your opinions about the levels of agreement for the following statements: Disagree z Neutral Agree Extremely agree ht vb Extremely disagree z Factors 25 The return rate of your recent stock investment meets your expectation 26 Your investment in stocks has demonstrated increased revenue growth in last year k jm 24 You feel satisfied with your investment decisions in the last year (including selling, buying, choosing stocks and deciding stock volume) om l.c gm n a Lu n va y te re th BẢNG CÂU HỎI (Vietnamese version) t to ng Kính gửi: Ơng/Bà hi ep Tơi sinh viên cao học ngành quản trị tài trường ĐH Kinh Tế TPHCM Tôi trình làm luận văn tốt nghiệp đề tài “Nghiên cứu nhân tố đoán tác động đến định kết đầu tư chứng khoán nhà đầu tư cá nhân Việt Nam” Chính vậy, tơi mong Ơng/Bà, với tư cách nhà đầu tư cá nhân, đưa quan điểm thơng qua bảng câu đính kèm w n lo ad ju y th Tơi kính mong Ơng/Bà dành 5-10 phút để giúp tơi hồn tất bảng câu hỏi Kết thu từ bảng khảo sát giúp chúng tơi hồn thành tốt luận văn mà cịn giúp nhà đầu tư có thơng tin bổ ích cho định đầu tư Tất số liệu thu thập giữ kín trình bày báo cáo tổng hợp, đảm bảo thông tin cá nhân không bị tiết lộ yi pl n ua al n va Tôi biết ơn giúp đỡ quý Ông/Bà chúc Ông/Bà nhà đầu tư thành công sàn chứng khốn Việt Nam Nếu Ơng/Bà có nhu cầu, chúng tơi sẵn sàng cung cấp báo cáo tổng hợp khảo sát để ông bà tham khảo ll fu m oi Mọi chi tiết xin liên hệ: nh at Nguyễn Thị Thanh Thúy, Email: thuy.nguyentt90@gmail.com z om Đại học va th Số năm kinh nghiệm làm việc Dưới năm 5-10 năm y Khác te re Tiến sĩ n chuyên nghiệp Thạc sĩ n Cao đẳng trung học a Lu Trình độ học vấn Cấp trở xuống Divorced l.c Married Over 55 gm Tình trạng hôn nhân: Single 46-55 k 36-45 jm ht 26-35 vb 18-25 Nữ z I THÔNG TIN CÁ NHÂN Giới tính Nam Tuổi Trên 10 năm Xin vui lịng cho biết thu nhập bình qn tháng ông/bà Dưới triệu Từ 6-12 triệu 12-20 triệu t to ng Trên 20 triệu hi ep Ông/bà tham gia vào thị trường chứng khoán bao lâu? Dưới năm 1-3 năm 3-5 năm w n 10 năm lo 5-10 năm ad y th Ông/bà vui lịng cho biết tài khoản đầu tư ơng/bà mở công ty nào? ju Công Ty CP Chứng Cơng Ty TNHH Khốn TP.HCM Chứng Khốn ACB Cơng Ty CP Chứng Công Ty CP yi Công Ty CP Chứng pl Khốn Sài Gịn n ua al Cơng Ty CP Chứng va Khốn VNDirect Chứng Khốn MB Cơng Ty CP Chứng Cơng ty TNHH Chứng khốn Ngân hàng TMCP Ngoại thương Việt Nam Cơng Ty CP Chứng n Khốn Bản Việt ll fu m Khoán Maybank Kim Eng oi Khốn FPT nh Cơng Ty CP Chứng Khốn BIDV Khốn Rồng Việt Công Ty CP Chứng at Công Ty CP Chứng z z Khoán Sao Việt vb k jm ht Ơng/bà tham gia khóa đào tạo đầu tư chứng khốn chưa? Có Chưa om 10 Khóa học đầu tư chứng khốn mà ơng/bà tham gia bao lâu? tháng tháng tháng l.c gm Nếu “Có”, vui lịng trả lời câu hỏi 10, “Chưa” vui lòng chuyển sang câu hỏi 11 a Lu n 11 Ơng/bà vui lịng cho biết tổng số tiền đầu tư ông/bà sàn Hồ Chí Minh từ tham gia vào thị trường chứng khoán Trên tỷ y 12 Tổng số tiền ơng/bà đầu tư vào sàn Hồ Chí Minh năm vừa qua te re Từ 200 triệu đến tỷ n va Dưới 200 triệu th Dưới 200 triệu II Từ 200 triệu đến tỷ Trên tỷ CÁC YẾU TỐ PHỎNG ĐOÁN ẢNH HƯỞNG ĐẾN QUYẾT ĐỊNH ĐẦU TƯ Xin ơng/bà vui lịng đánh giá mức độ đồng tình ơng/bà phát biểu sau: t to ng hi ep Trung lập Địng ý Hồn toàn đồng ý 5 5 5 Hồn tồn Khơng khơng đồng ý đồng ý Các yếu tố 13 Ông/bà mua loại chứng khốn “nóng” tránh mua loại chứng khốn sinh lợi năm gần w n lo ad ju y th 14 Ông/bà dựa giá để dự đoán thay đổi giá tương lai yi pl 15 Ông/bà phân tích xu hướng vài cổ phiếu đại diện để định đầu tư cho cổ phiếu khác? n ua al n va oi m at nh z z jm ht vb 17 Ông/bà ưu tiên đầu tư vào cổ phiếu nước cổ phiếu nước ngồi thơng tin cổ phiếu nước đầy đủ ll fu 16 Ông/bà định đầu tư dựa vào kinh nghiệm thân? 19 Ông/bà tin kỹ kiến thức ơng/bà giúp ông/bà đạt mức sinh lợi cao mức trung bình ca thị trường 20 Ông/bà tin định đầu tư đắn k 18 Theo ông/bà, thông tin từ người thân bạn bè nguồn tin đáng tin cậy cho trình định đầu tư om l.c gm n a Lu n va y te re th QUYẾT ĐỊNH ĐẦU TƯ CỦA ƠNG/BÀ III t to Xin ơng/bà vui lịng lựa chọn mức độ đồng tình ơng/bà phát biểu sau đây: ng hi Các nhận định ep Hồn tồn khơng đồng ý w n lo ad 21 Nhìn chung, rủi ro việc đầu tư ơng/bà thấp thị trường Trung lập Địng ý Hoàn toàn đồng ý 5 ju y th Không đồng ý yi pl 22 Quyết định đầu tư ơng/bà an tồn ua al n 23 Quyết định đầu tư ơng/bà có khả đáp ứng khoản toán lãi suất n va ll fu m KẾT QUẢ ĐẦU TƯ CỦA ÔNG/BÀ oi IV nh at Xin ơng/bà vui lịng lựa chọn mức độ đồng tình ơng/bà phát biểu sau đây: z z Trung lập Đòng ý k jm Không đồng ý ht 25 Tỷ suất sinh lời việc đầu tư chứng khoán đáp ứng mong đợi ơng/bà Hồn tồn đồng ý om l.c 24 Ơng/bà cảm thấy hài lịng với định đầu tư ông/bà năm vừa qua (bao gồm định chọn, mua, bán số lượng cổ phiếu lựa chọn, mua bán) gm Hồn tồn khơng đồng ý vb Các nhận định n a Lu n va y te re th 26 Ông/bà đạt mức tăng trưởng thu nhập năm qua t to ng hi ep w n lo ad ju y th yi pl n ua al n va ll fu oi m at nh z z k jm ht vb om l.c gm n a Lu n va y te re th APPENDIX t to APPENDIX – PILOT STUDY Case Processing Summary ng hi ep N % w Cases Valid 100.0 0 94 100.0 n 94 lo Excludeda ad ju y th Total yi a Listwise deletion based on all variables in the procedure pl n ua al Reliability analysis for each factor Corrected Scale Mean if Scale Variance Item-Total Item Deleted if Item Deleted Correlation RE1 5.63 3.806 0.522 RE2 5.60 3.663 0.682 RE3 5.69 4.603 0.487 Representativeness bias Cronbach's Alpha: 0.735 AVA1 6.36 2.599 0.471 AVA2 6.30 2.491 0.365 AVA3 6.21 3.202 0.304 Availability bias Cronbach's Alpha: 0.566 OVER1 3.52 0.962 0.519 OVER2 3.53 0.983 0.519 Overconfidence bias Cronbach's Alpha: 0.683 DEC1 6.80 2.701 0.656 DEC2 6.43 2.871 0.659 DEC3 6.33 2.912 0.628 Investment decision making Cronbach's 0.802 Alpha: PER1 7.18 3.419 0.679 PER2 6.93 3.059 0.773 PER3 6.89 3.515 0.696 Invetsment performance Cronbach's Alpha: 0.847 n va ll fu oi m Cronbach's Alpha if Item Deleted 0.700 0.496 0.727 nh at 0.316 0.491 0.565 z z vb k jm ht a a gm om l.c 0.721 0.718 0.749 a Lu n 0.821 0.728 0.805 n va y te re th KMO and Bartlett's Test t to Kaiser-Meyer-Olkin Measure of Sampling Adequacy ng hi Approx Chi-Square ep Bartlett's Test of Sphericity 804 510.314 df 91 w Sig .000 n lo ad Rotated Component Matrixa y th Component ju yi pl RE2 844 RE3 755 AVA1 762 AVA2 508 n 700 ua al RE1 n va ll fu oi m at nh 404 z z 777 ht vb AVA3 OVER1 k jm 646 OVER2 DEC3 741 745 th PER3 y 840 te re PER2 n 795 va PER1 n 804 a Lu DEC2 om 863 l.c DEC1 gm 720 Extraction Method: Principal Component Analysis Rotation Method: Varimax with Kaiser Normalization t to ng a Rotation converged in iterations hi ep APPENDIX LIST OF SECURITIES FIRM SELECTED w No Name of securities company n Saigon Securities Incorporation lo ad Hochiminh City Securities Corporation ACB Securities Company Ltd Viet Capital Securities Joint Stock Company VNDirect Securities Corporation MB Securities Joint Stock Company FPT Securities Joint Stock Company Vietcombank Securities Company Ltd Maybank Kim Eng Securities Joint Stock Company 10 BIDV Securities Joint Stock Company 11 Rong Viet Security Joint Stock Company 12 Sao Viet Securities Joint Stock Company ju y th yi pl n ua al n va ll fu oi m at nh z z k jm ht vb om l.c gm n a Lu n va y te re th APPENDIX t to KMO and Bartlett's Test ng Kaiser-Meyer-Olkin Measure of Sampling Adequacy hi Bartlett's Test of Sphericity 764 Approx Chi-Square 949.809 ep Df 91 Sig .000 w n lo ad APPENDIX y th Rotated Factor Matrix a ju Factor yi pl PER1 700 n va 759 n PER3 ua 797 al PER2 645 AVA1 636 AVA2 427 z RE3 at 667 nh RE1 oi 771 m RE2 ll fu AVA3 z DEC3 558 k 649 jm DEC2 ht 871 vb DEC1 OVER2 579 a Rotation converged in iterations n a Lu Rotation Method: Varimax with Kaiser Normalization om Extraction Method: Principal Axis Factoring l.c 752 gm OVER1 n va y te re th APPENDIX t to KMO and Bartlett's Test ng Kaiser-Meyer-Olkin Measure of Sampling Adequacy hi Bartlett's Test of Sphericity 753 Approx Chi-Square 832.674 ep Df 66 Sig .000 w n lo ad APPENDIX ju y th yi Rotated Factor Matrix a pl ua al Factor 709 ll PER1 fu 740 n PER3 va 836 n PER2 650 AVA1 590 z RE3 at 690 nh RE1 oi 784 m RE2 z DEC3 564 k 654 jm DEC2 ht 864 vb DEC1 802 OVER2 547 n a Lu a Rotation converged in iterations om Rotation Method: Varimax with Kaiser Normalization l.c Extraction Method: Principal Axis Factoring gm OVER1 n va y te re th APPENDIX t to ng hi ep w n lo ad ju y th yi pl n ua al n va ll fu oi m at nh z z k jm ht vb om l.c gm n a Lu n va y te re th APPENDIX t to ng hi ep w n lo ad ju y th yi pl n ua al n va ll fu oi m at nh z z k jm ht vb om l.c gm n a Lu n va y te re th TABLE OF CONTENTS CHATER 1: INTRODUCTION t to 1.1 Background ng hi 1.2 Research problem ep 1.3 Research objective and research questions 1.4 Scope of the research w n 1.5 Structure of the thesis lo ad CHAPTER 2: LITERATURE REVIEW, HYPOTHESIS AND RESEARCH MODEL y th 2.1 Theoritical foundation ju yi 2.1.1 Prospect theory pl 2.1.2 Heuristics theory al n ua 2.2 Heuristic of individual investors va 2.2.1 Definition of heuristics n 2.2.2 Classification of heuristics fu ll 2.3 Decision making and performance of individual investor 11 m oi 2.3.1 Decision making 11 nh 2.3.2 Investment performance 12 at z 2.4 Hypothesis Development 13 z vb 2.4.1 Representativeness and investors’ decision making 13 jm ht 2.4.2 Availability bias and investors’ decision-making 15 k 2.4.3 Overconfidence and investors’ decision making 15 gm 2.4.4 Investment decision making and investment performance 16 om l.c 2.5 Conceptual model 17 2.6 Chapter summary 18 a Lu CHAPTER 3: RESEARCH METHODOLOGY 19 n 3.1 Research process 19 3.3 Pilot test 25 th 3.2.3 Measure of investment performance 24 y 3.2.2 Measure of investors’ decision making 23 te re 3.2.1 Measure of heuristic factors 22 n va 3.2 Research design 21 3.4 Main survey 27 3.4.1 Sampling 27 t to 3.4.2 The research method 28 ng hi 3.5 Chapter summary 30 ep CHAPTER 4: FINDINGS AND DISCUSSIONS 31 4.1 Data background 31 w n 4.2 Measurement Reliability using Cronbach’s Alpha 34 lo ad 4.3 Scale testing by using Exploratory Factor Analysis (EFA) 36 y th 4.4 Test hypotheses by multiple regressions 37 ju yi 4.4.1 Regression analysis of variables representativeness, overconfidence and investment decision making (Model 1) 38 pl n ua al 4.4.2 Regression analysis of variables investors’ decision making and investors’ performance (Model 2) 42 va 4.5 Chapter summary 45 n ll fu CHAPTER 5: CONCLUSION AND RECOMMENDATION 46 oi m 5.1 Conclusions 46 nh 5.2 Implication of the study 49 at 5.3 Limitation and direction for further research 49 z z k jm ht vb om l.c gm n a Lu n va y te re th