The rationality of individual investors' investment decisions on the Polish stock market (Racjonalnosc decyzji inwestycyjnych inwestorow indywidualnych na polskim rynku akcji)

Marcin Kalinowski () and Grzegorz Krzykowski
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Marcin Kalinowski: Wyzsza Szkola Bankowa w Gdansku
Grzegorz Krzykowski: Wyzsza Szkola Bankowa w Gdansku

Problemy Zarzadzania, 2012, vol. 10, issue 39, 169-177

Abstract: Commonly known financial theories presuppose the rational behavior of market participants. The following article pertains to the stock market and individual investors’ behavior on it. The aim of this work is to analyze individual investors’ behavior modes on the capital markets. The study is also aimed at evaluating the rationality of their behaviors. Additionally, the article strives to provide adequate answers to the following dilemmas: Do individual investors always take rational investment decisions on the stock market? Does the proportion of their participation on the market determine the type of investment decisions taken by other market players? The authors of this study pose the following research thesis: Individual investors do not behave in a fully rational manner while undertaking investment decisions. This has a considerable impact upon investment decisions of other stock market participants. The research hinges on the following data derived from the capital market: investors’ structure, WIG index value, the Polish stock market’s turnover value and the flow in and flow out of investments funds. The data originates from the 2002-2009 period. The outcome of the research carried out is not uniform as regards the evaluation of the rationality of individual investors’ investment decisions. Some research results may be viewed as evidence of the irrationality of individual investors’ investment decisions.

Date: 2012
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