INFLUENCE OF INVESTOR SENTIMENT, CHARACTERISTICS, AND INFORMATION SEQUENCE ON STOCK INVESTMENT DECISION: EVIDENCE FROM THE TAIWANESE MARKET

Authors

  • Li Lun Lui
  • Zhi Bo Zhong
  • John Francis Diaz
  • Fei Hsuing Fan

Abstract

This research investigates the influence of sentiment, personal characteristics, and information sequence on the investing behaviour of non-professional investors’ in the Taiwanese stock market. Utilising ANOVA and T-test methods on questionnaires, empirical results suggest that investor sentiment on picking stocks is affected by economic and financial market forecasts. Also, investors tend to overreact on both positive and negative information resulting in over- and under-valuation in stock prices, respectively. Regarding personal characteristics, optimistic investors are inclined to overreact to positive information, which is affected by their personal attitude and available economic forecasts. In considering the sequence of information presented to non-professional investors, this study supports the “recency effect†phenomenon, where the latest economic and financial market information affect their stock buying and selling behaviour. In general, this study observes that when information is encountered in different forms and order, investor sentiment, personal characteristics and recall cause significant discrepancies in investing decisions. This research suggests that investors should be aware of their subjective behavioural biases, and that objective and careful decisions have to be exercised in picking stocks to maximise gains and minimise losses.

Published

2018-11-30

Issue

Section

Articles