Factors Influencing Individual Investor Behavior: An Empirical study of Saudi Stock Market

Abstract

While the traditional theory of finance assumes the rationality of an individual investor, the emerging field of behavioral finance explores the psychological and sociological factors and biases that influence the investment decision-making process of investors. This study investigates the behavior of Individual Investor in Saudi Stock Market by taking 31 variables fall under 5 factors, moreover the demographic variables. The primary data has been collected from 125 respondents through a questionnaire distributed randomly. These data were analyzed by descriptive analysis, correlation analysis, factor analysis, reliability and multiple regression analysis. The results indicate that the factors of 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 investors, therefore, the factors 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. These factors were not significantly influenced by gender or age, however, were significantly influenced by Educational qualification, professional experience and investment volume