Measuring factors affecting stock investment decisions of individual investors at asia commercial joint stock bank securities limited company, 2018

MINISTRY OF EDUCATION AND TRAINING THE STATE BANK OF VIET NAM

BANKING UNIVERSITY OF HO CHI MINH CITY

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TRAN HOANG DANG

MEASURING FACTORS AFFECTING STOCK

INVESTMENT DECISIONS OF INDIVIDUAL

INVESTORS AT ASIA COMMERCIAL JOINT STOCK

BANK SECURITIES LIMITED COMPANY

BACHELOR THESIS

MAJOR: FINANCE – BANKING

CODE: 7340201

HO CHI MINH CITY, 2018

MINISTRY OF EDUCATION AND TRAINING THE STATE BANK OF VIET NAM

BANKING UNIVERSITY OF HO CHI MINH CITY

--------------------

TRAN HOANG DANG

MEASURING FACTORS AFFECTING STOCK

INVESTMENT DECISIONS OF INDIVIDUAL

INVESTORS AT ASIA COMMERCIAL JOINT STOCK

BANK SECURITIES LIMITED COMPANY

BACHELOR THESIS

MAJOR: FINANCE – BANKING

CODE: 7340201

INSTRUCTOR

MA. NGO SY NAM

HO CHI MINH CITY, 2018

i

ABSTRACT

The structure of the stock market consists of the stock market, bond market

and derivative market, in which the stock market share is much larger than the other

two markets (Vu Bang, 2010). The advantages of a stock market are simple, low

capital and flexible for beginners to invest in. Investors at that time were mostly

individual investors who did not have a lot of experience, they just chose stocks

following among the crowd, were vulnerable to external factors and they gradually

lost money in the market stock. So, measuring the factors that influence the decision

to choose stocks in order to know what factors have led to the wrong choice, and

therefore propose recommendations to overcome them.

The objective of this study is to measure the factors affecting stock

investment decisions and recommend solutions to increase efficiency in making

decision stock for.individual.investors.at Asia Commercial joint stock Bank

Securities limited company (ACBS). Method of data collection by online and paper

sheets survey questionnaire to individual investors at ACBS. Preliminary qualitative

research methodology is used in the construction phase and adjustment of the scale.

A quantitative research methodology was used in the formal study. After

conducting a preliminary study and obtaining an official scale, I conducted a

questionnaire design and sent surveys to investors. Person to gather information.

From there, process information using SPSS software and perform tests to measure

and evaluate the impact of factors on the decision to choose stocks.

Apart from the introduction, conclusions, list of acronyms, list of figures, list

of tables, list of pictures, references and list of appendices, the thesis is composed of

five main chapters:

Chapter 1: The overview of the research.

Chapter.2:.Theoretical background on stock investment decisions of

individual investors and an overview of securities trading activities at Asia

Commercial joint stock Bank Securities limited company (ACBS).

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Chapter.3:.Surveying the impact of factors according to stock investment

decisions of individual investors at Asia Commercial joint stock Bank Securities

limited company (ACBS).

Chapter 4: Research results.

Chapter.5:.Conclusions.and.recommendations.for.improving.stock

investment decisions of individual investors at Asia Commercial joint stock Bank

Securities limited company (ACBS).

The research result is to measure the impact of factors on stock investment

decisions of individual investors at ACBS, enabling research and practical

application. Serving in advising and recommending to investors of brokerage

division at ACBS to help individual investors improve their investment efficiency.

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DECLARATION

This thesis presents work carried out by myself and does not incorporate

without acknowledgement any material previously submitted for a degree or

diploma in any university. To the best of my knowledge it does not contain any

materials previously published or written by another person except where due

reference is made in the text; and all substantive contributions by others to the work

presented, including jointly authored publications, are clearly acknowledged.

HCM City, October - 2018

Author

Tran Hoang Dang

iv

ACKNOWLEDGEMENT

During the period of writing this thesis, I have received the support of many

people. I wish to express my sincere gratitude to them.

I am deeply grateful to MA. Ngo Sy Nam, my supervisor, for his valuable

suggestion and comments on my work. He has been a very responsible and

dedicated supervisor. I am also grateful to other teachers in faculty, especially in

finance – banking faculty for their helpful and critical comments on my writings.

Without them it would have been impossible for me to produce the thesis and to

complete my bachelor program.

I am deeply thankful for my parents and older brother for their support,

encouragement and understanding during my study. They are the best things in my

life.

Last but not least, I thank my instructor Ngo Sy Nam, for his unconditional

instruction and support during the difficult times.

HCM City, October - 2018

Author

Tran Hoang Dang

v

TABLE OF CONTENTS

ABSTRACT.....................................................................................................................i

DECLARATION...........................................................................................................iii

ACKNOWLEDGEMENT.............................................................................................iv

LIST OF ABBREVIATIONS .......................................................................................ix

LIST OF TABLES..........................................................................................................x

LIST OF PICTURES ....................................................................................................xi

CHAPTER 1: THE OVERVIEW OF THE RESEARCH............................................1

1.1. REASONS OF SELECTING TOPIC OF THESIS ....................................................1

1.2. BACKGROUND TO THE RESEARCH ...................................................................2

1.3. OBJECTIVES OF THE RESEARCH........................................................................6

1.4. SUBJECTS AND SCOPE OF THE RESEARCH......................................................6

1.5. METHODOLOGY ....................................................................................................7

1.6. THE PRACTICAL SIGNIFICANCE OF THE RESEARCH.....................................8

1.7. STRUCTURE OF DISSERTATION .........................................................................8

SUMMARY OF CHAPTER 1..........................................................................................9

CHAPTER 2: THEORETICAL BACKGROUND ON STOCK INVESTMENT

DECISIONS OF INDIVIDUAL INVESTORS AND AN OVERVIEW OF

SECURITIES TRADING ACTIVITIES AT ASIA COMMERCIAL JOINT

STOCK BANK SECURITIES LIMITED COMPANY (ACBS)................................ 10

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2.1. THEORETICAL BACKGROUND ON STOCK AND STOCK INVESTMENT

DECISIONS................................................................................................................... 10

2.1.1. A summary of stock and stock investment......................................................... 10

2.1.1.1. Stock definition .......................................................................................... 10

2.1.1.2. Purpose of stock investment........................................................................ 11

2.1.1.3. Characteristics of stock investment ............................................................. 12

2.1.2. Theory of investment making decisions and stock investment ........................... 13

2.1.2.1. Fundamental analysis.................................................................................. 13

2.1.2.2. Technical analysis....................................................................................... 14

2.1.3. Behavioural finance theory................................................................................ 14

2.1.3.1. The prospect theory .................................................................................... 19

2.1.3.2. Loss aversion.............................................................................................. 20

2.1.3.3. Regret......................................................................................................... 21

2.1.3.4. Heuristics.................................................................................................... 22

2.1.3.5. Overconfidence and Underreaction ............................................................. 27

2.1.3.6. Herd behaviour........................................................................................... 29

2.2. AN OVERVIEW OF SECURITIES TRADING ACTIVITIES AT ASIA

COMMERCIAL JOINT STOCK BANK SECURITIES LIMITED COMPANY

(ACBS) .......................................................................................................................... 31

2.2.1. THE ESTABLISHMENT AND DEVELOPMENT OF THE COMPANY ........... 31

2.2.2. The structure and organization of the company ................................................. 33

2.2.3. Security trading activities of the company ......................................................... 33

SUMMARY OF CHAPTER 2........................................................................................ 35

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CHAPTER 3: SURVEYING THE IMPACT OF FACTORS ACCORDING TO

STOCK INVESTMENT DECISIONS OF INDIVIDUAL INVESTORS AT

ASIA COMMERCIAL JOINT STOCK BANK SECURITIES LIMITED

COMPANY (ACBS)..................................................................................................... 36

3.1. SURVEY MODEL.................................................................................................. 36

3.2. THE PROCESS OF SURVEY................................................................................. 36

SUMMARY OF CHAPTER 3........................................................................................ 41

CHAPTER 4: RESEARCH RESULTS....................................................................... 42

4.1. DESCRIPTIVE STATISTICS ABOUT INVESTOR INFORMATION................... 42

4.1.1. Time of participation in the stock market of investors ....................................... 42

4.1.2. Investment capital in the stock market............................................................... 43

4.1.3. Investment strategy ........................................................................................... 44

4.1.4. The influence of psychological factors on making decision of investment......... 45

4.1.5. Analysis describes the behavioural factors that influence the decision￾making process of individual investors at ACBS......................................................... 47

4.2. ASSESSMENT OF SCALE RELIABILITY ........................................................... 47

4.2.1. Assessing the reliability of the scale of variables observing the behavioural

factors......................................................................................................................... 48

4.2.2. Assess the reliability of investment decision scale............................................. 49

4.3. EXPLORATORY FACTOR ANALYSIS (EFA)..................................................... 50

4.3.1. An independent factor analysis.......................................................................... 51

4.3.2. Analysis of dependent variable factor (Y) ......................................................... 54

4.3.3. Adjustment study model.................................................................................... 56

4.4. REGRESSION ANALYSIS .................................................................................... 56

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4.4.1. Matrix correlation coefficient............................................................................ 56

4.4.2. Linear regression analysis ................................................................................. 57

4.4.3. Check for breach of regression model ............................................................... 61

SUMMARY OF CHAPTER 4........................................................................................ 63

CHAPTER 5: CONCLUSIONS AND RECOMMENDATIONS FOR

IMPROVING STOCK INVESTMENT DECISIONS OF INDIVIDUAL

INVESTORS AT ASIA COMMERCIAL JOINT STOCK BANK

SECURITIES LIMITED COMPANY (ACBS) .......................................................... 64

5.1. CONCLUSIONS ..................................................................................................... 64

5.2..RECOMMENDATIONS FOR IMPROVING STOCK INVESTMENT

DECISIONS OF INDIVIDUAL INVESTORS AT ACBS ............................................. 65

5.3. CONTRIBUTIONS OF THE TOPIC ...................................................................... 67

5.4. LIMITATIONS OF THE TOPIC............................................................................. 67

5.5. SUGGESTIONS FOR FUTHER RESEARCH ........................................................ 68

SUMMARY OF CHAPTER 5........................................................................................ 69

REFERENCES

1

st APPENDIX: THE QUESTIONNAIRE OF SURVEY FORM

2

nd APPENDIX: THE QUESTIONNAIRE OF SURVEY FORM

3

rd APPENDIX: SPSS ANALYSIS RESULTS 16.0