Identifying behavioral dimensions of individual investors in Ho Chi Minh City
Abstract
The realistic observation of stock markets has shown that individual investors do not always behave “rationally” when facing uncertainty. This is contradicting to the traditional or also called standard, finance theories, which presume that since all available information are taken into account, investors should always act rationally (EMH theories). In order to interpret those behaviors, behavior finance was developed and used as a new approach for justifying people’s behavior in the investment decision-making process.
This research aims to identify the behavioral factors that have impact on the behavior of individual investor at Ho Chi Minh City.
The research follows quantitative method. The primary data will be collected through a questionnaire survey, which is distributed directly to individual investors currently investing in the stock exchange trading floor in Ho Chi Minh City (Ho Chi Minh Stock Exchange).
The final results show that out of four factors of behavioral finance, Prospect factor plays the dominant role on investors ‘behavior . Meanwhile, Market factor have relatively lower impact. The study, based on the theory of behavioral finance, proposes a new approach to conduct research in the future for emerging markets like Vietnam.