Evaluating short- and long-term investment strategies: development and validation of the investment strategies scale (ISS)

Abstract

Abstract Purpose In response to the growing importance of understanding individual investment strategies, the present study aimed to develop a new scale for measuring both the short- and long-term investment strategies of individuals. Design/methodology/approach The study assessed the psychometric properties of the investment strategies scale (ISS) using data collected from 1428 individual investors. In the initial study, an exploratory factor analysis (EFA) was conducted to investigate the factor structure of the proposed scale (N = 700). The EFA results yielded a two-factor structure, and Cronbach’s alpha values for short- and long-term investment strategies were 0.90 and 0.88, respectively. A confirmatory factor analysis was performed to validate the factor structure of the scale in the second study (N = 728). Findings The results demonstrated that the two-factor model fit the data well. In the third study, the correlation between Hofstede’s long-term orientation and the two dimensions of the scale was investigated. The results indicated that long-term investment strategies significantly predict long-term orientation, thus confirming the concurrent validity of the scale. Research implications These findings demonstrate that the proposed ISS is a reliable and valid instrument for measuring individuals’ short- and long-term investment strategies, contributing to a deeper understanding of investment decision-making processes. Originality/value This study introduces a novel measurement tool—ISS—specifically designed to comprehensively assess both short- and long-term investment strategies among individual investors.

Keywords

• Financial literacy
• Investment strategies
• Individual investors
• Investment strategies scale