Factors influencing investor behavior: an empirical study of Saudi Stock Market

Muhammad Junaid Khawaja and Zainab Nasser Alharbi

International Journal of Social Economics, 2021, vol. 48, issue 4, 587-601

Abstract: Purpose - The objective of the study is to determine the factors influencing the behavior of investor in Saudi Stock Market. Design/methodology/approach - The paper uses correlation analysis, factor analysis, reliability and multiple regression analysis on the primary data collected from 125 investors in Saudi Stock Market through a questionnaire distributed randomly. Findings - The results indicate that the factors like past performance of the stocks, financial statements, firm status in industry, the reputation of the firm, and expected corporate earnings have significant influence on the behavior of investors. The factor of the image that a certain company has built for itself over the years on the basis of its financial practices is a large influencer of investor decisions as compared to advocate recommendation factors. The investment behavior is not significantly influenced by gender or age; however, it is significantly influenced by educational qualification, professional experience and investment volume. Research limitations/implications - This paper limits itself to study the factors that influence the behavior of investors. However, it does not address the issue of investor overconfidence and its implications for Saudi Stock Market. Practical implications - This research provides a road map for the investors interested in making their investment decisions by understanding the most influencing factors. Social implications - This research has social implications for government agencies to delineate the required legislation to regulate the investors and also to increase market efficiency. The results show that investors are strongly affected by signals from the government. Originality/value - This research is an original contribution toward the behavioral finance field in Saudi Arabia and can be used as a reference material for investors, companies and government policymakers in Saudi Arabia. This study incorporates investors' individual characteristics and explores factors that influence investor behavior unlike some previous studies using Saudi data.

Keywords: Behavioral finance; Investor behavior; Factors influencing investment decision; Saudi stock market (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:ijsepp:ijse-07-2020-0496

DOI: 10.1108/IJSE-07-2020-0496

Access Statistics for this article

International Journal of Social Economics is currently edited by Professor Terence Garrett

More articles in International Journal of Social Economics from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().