Perceived Behavioral Factors and Individual Investor Stock Market Investment Decision: Multigroup Analysis and Major Stock Markets Perspectives

Abstract

The study aims to examine the impact of various behavioral biases such are overconfidence, representativeness, availability, anchoring and herding, and their effects on individual investment decisions in the case-developed country context of China. To achieve this, data was meticulously gathered from 362 participants active in the Shanghai stock market. Employing advanced analytical tools, particularly the Smart PLS 3.3.2 software and structural equation modelling (SEM), this study rigorously scrutinized the intricate relationships between behavioral biases and investment decisions. The findings of this study notably reveal that all examined behavioral biases exert a significant positive impact on investment decisions within the Anxin, Haitong, Shanxi, and China Galaxy stock markets. Remarkably, no substantial disparities in the effects of these biases on stock market trading were observed among these markets. Importantly, these findings bear exceptional significance within the context of a developed country like China. The implications extend to a wide spectrum of stakeholders, including government entities, regulatory bodies, practitioners, the academic community, industry professionals, and researchers. Regulatory authorities can leverage these insights to refine their strategies, practitioners can fine-tune their investment advisory approaches, and academia and researchers can build upon these findings to deepen the understanding of behavioral finance in the realm of stock market investments.