Final Project

Business Research

Topic:

Factors affecting individual investment behavior

Submitted to:

MAM NOREEN FATIMA

Submitted by:

AGHA EHTISHAM 13-ARID-2531

MUKARAM RAUF 13-ARID-2620

ZAIN ABBAS 13-ARID-2671

IQRA TARIQ 13-ARID-3071

MUDASSIR QASIM 13-ARID-2594

SUNIL PARVAIZ 13-ARID-2654

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Table of Contents
Chapter 1: Introduction .............................................................................................................. 4

1.1 Background: ..................................................................................................................... 4

1.2 Introduction to topic: Behavioral Finance ....................................................................... 6

1.3 Problem identification:..................................................................................................... 6

1.3 Problem Statement: .......................................................................................................... 7

1.4 Research Question: .......................................................................................................... 7

1.5 Objectives: ....................................................................................................................... 8

1.6 Significance of the study:................................................................................................. 8

1.7 Scope of the Study: .......................................................................................................... 8

Chapter 2: Literature Review ..................................................................................................... 9

2.1 Introductory Literature: .................................................................................................... 9

2.2 Empirical literature: ....................................................................................................... 10

2.3 Summary of the literature: ............................................................................................. 12

2.4 Hypothesis Statement: ................................................................................................... 13

2.5 Theoretical Framework .................................................................................................. 13

Chapter: 3 ................................................................................................................................. 14

Methodology ............................................................................................................................ 14

3.1 Research design: ............................................................................................................ 14

3.2 Population of the study: ................................................................................................. 15

3.3 Sampling techniques: ..................................................................................................... 16

3.4 Sample size: ................................................................................................................... 16

3.5 Instrument and Measures: .............................................................................................. 16

3.6 Collection of Data: ......................................................................................................... 17

3.7 Data Analysis: ................................................................................................................ 17

3.7.1 Pilot Testing: ........................................................................................................... 18

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 Chapter 1: Introduction

1.1 Background:

Finance is a field in which we apply different techniques to manage money as well as

asset and liabilities to clearly see the current picture of financial position. Finance
carries the concept of time value of money. In which it incorporate the effect of interest
rate and the effect of interest rate on purchasing power on different time. In finance we
value the assets on the basis of their returns. In finance we systematically deals with the
fund. We classify in three sub categories.

 Corporate finance
 Public finance
 Personal finance

All the above categories help us to deals such activities like to get sound investment,
getting low credit cost, allocations of fund to meet liabilities and to deal with banking.

Corporate finance:

It is a study of generating of funds to deals of financial needs of corporation maximizes

the value of firm as well as shareholders wealth by using different tools and techniques.
Corporation allocates resources to get the best out of it. The study of corporate finance
helps to solve the financial problem of firm. It helps management to choose between
the projects according to cost VS benefit analysis. The techniques of corporate finance
suggest us to choose the better source of finance, either to issue bonds, shares, funds
etc. or acquire debts. In the dividend policy one of the major areas of finance is in which
management decide to pay dividends or further invest the profit. Corporate finance also
deals on the broader scope of stock investing or investment management. An
investment might be purchasing or acquired of assets with the hope that will increase
the higher rate of return while paying dividend. Investment management tells us to
what, how, when and where to invest. To do this corporate must identify its relevant
objectives, appropriate strategies and a need to extent of portfolio performance. To do
better investment it increases its shareholders wealth and profits by efficiently doing in
its operations. So to do better investment the company value increased day by day and
gives tough competition to competitors. The primary goal of corporate finance is to

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increase the shareholder wealth. By doing this management must balance in investment
and also in long term profitability and also pay more dividends to its shareholder.

Public finance:

Public finance views the finance from the perspective of country economy. It belongs
to family of finance. In public finance we study the government effects and the
allocation of recourses, distribution of salary on the macroeconomic level. In order to
take benefit from desirable affects and eliminating the risk of undesirable ones.

Personal finance:

Personal finance is need to individual and family to save the resources and to spend
resources over time considering diff financial risk and life events. In the personal
planning process individual would consider his/her need relative to banking products
including checking, saving accounts, credit cards and consumer loans, investment ,
stock bond and mutual funds and insurance life insurance, and other retirement plans.
Key components of personal planning process include. Assessment of personal assets
and liabilities, incomes, and expenses. Goal setting include short and long term for
example retirement plan is a long term goal and saving for computer in next is short
term goal. Creating plan to accomplish the goals which include reducing unnecessary
expenses increasing income or investment. Execution of financial plan may be with the
help of assistance of financials such as accountants and financial planner monitoring
and assessment of financial plans. A key area of the personal planning includes;

Financial position which is concerned with the availability of personal resources.

Personal resources and household cash flows which include the expected sources of
income and expanses of a year.

Adequate protection which taking risk such as liability, debt disability, property under
consideration while planning.

Basically the income tax is the largest expense for household but it is not a big thing
that how you pay income tax but the question is how the government gives you
incentive in the form of credit of in any other form to reduce life time tax burden.

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Investment and accumulation goals include to how gathering enough money from
purchases and events. The reason behind this is to purchase house, car or property to
start any kind of business.

Retirement planning includes that how much of its cost of live at retirement stage and
coming with plan to distribute to meet any income shortfall.

1.2 Introduction to topic: Behavioral Finance

Behavioral finance is the study of people’s behavior towards investment and also the
factors (psychological, cognitive and emotion) which affect the people’s investment.
OR behavioral finance is the new emerge field of combined behavior and cognitive
psychological theories in which we find and explain why people takes unreasonable
financial decision.

1.3 Problem identification:

In Pakistan people generally do not go toward investment in stock market. Pakistan’s

financial system is bank based system. In which banks are observed as major player of
financial intimidator and most of the financial needs are full filled through these
banks. Although market based financial system also exists but have no significant
impact on financial system. Very common examples are Japan and Germany. Where
companies full fill their needs through bank loans. In Pakistan, only less than 1000
companies listed in stock exchange on the other hand we have more than 62000 firms
registered. That’s clearly defines the Pakistan’s financial system is bank based. Karachi
stock exchange (KSE), Lahore Stock Exchange (LSE) and Islamabad Stock Exchange
(ISE) are the three stock markets with very limited number of companies listed as
mentioned above. Most of these companies are owned by some of business giants and
they have controlled over market as well as bank based system. Typical psychological
mind set of these giants doesn’t allow new investors to come and compete them. In
2007-09 great economic recessions: almost all of the market based financial systems
were collapse but on other hand economies based on based financial system survive.
Question may come than what happened with KSE 100 index which was on peek
(15000 points) and suddenly drop to 2000 points and locked for fifteen days? An
economic bubble creates this entire situation that time and again in 2015 KSE 100 index
again on its peek with 33530 points approximately. These index points are the true

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representatives of a country economic. Again Pakistani industry day by day on
declining mood due to some political and energy crisis. But on other hand KSE index
day by day achieving its record breaking points just because of bubbles. According to
Asian Development bank, Pakistan states at number five in list of growing number of
middle class during 1990-2008(Chun 2010). Countries economy depend how
effectively middle class is working. Recent study and survey indicates nearly 40%
population in Pakistan. Bannerjee and Duflo (2008) suggest Middle class as having any
secure job and earning between $2-$12 per day income. Government of Pakistan set
Ordinary share price at rupee 10/share and maximum quantity limit is only 500. Less
than 1000 listed companies indicates 5-10 percent of 62000 registered companies under
stocks exchanges in Pakistan that’s clearly describes the Investor behavior toward
capital investment. United States of America with GDP of 16 trillion having 167 out of
500 Multinational firms in the world with most scattered investors. About 80 percent
of American population holds stocks of any company. US government reduces tax on
capital gains up to 15% to increase investment. On other hand only few giants and high
upper class families deals in stocks and capital market. This study focuses on the factors
that affecting Middle class investor behavior in investment in capital market.

1.3 Problem Statement:

One of survey indicates nearly 40 percent population in Pakistan belongs to Middle

class. Middle class peoples in Pakistan who are the potential investor in stock market
avoid investment in stock market due to which the shareholders of stock market are
very limited in numbers and the demand for the share is not as it should be. And the
other problem is that about 5-10 percent companies are registered on stock exchange
although the listed companies are 62000 in number. Availability of the fund to the
companies and the potential companies is limited for the expansion.

1.4 Research Question:

The question arising from the current situation are;

What are the main factors that attract the investor to invest in the stock market?

The factors which attract the investor are affected by socioeconomic characteristics or
not?

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What are the major psychological factors which effect the individual investment
decision either positively or negatively?

1.5 Objectives:

To find out the most affective factor in attracting investor towards capital market and
influence of those factors on decision of investors and the relationship of each factor
with the socioeconomic characteristics and common psychological factors.
Socioeconomic factors include age, gender, marital status, educational qualification and
monthly income. On other hand major psychological factors are fear, anger, and
heuristics.

1.6 Significance of the study:

By finding the most influential factor influencing the individual investor behavior we
can increase the investment in stock market which increase the funds for the businesses
expansion. Through which the country economy increases and also the purchasing
power of individual increases. And also because of country economy the GDP of the
country increases which helps to better life standard of people. As we discussed earlier
that middle class people whose earning is $2-$12 per day are the potential investor of
Pakistan. So by doing investment in stock market they will get the major benefit in term
of wealth because their wealth increases as their investment increases and because of
their investment the other people of the country also got benefit from it as from
investment GDP also increases.

1.7 Scope of the Study:

This study is only applicable in Pakistan because all the samples under study are taken
from Pakistan. The socioeconomic characteristic and psychological factors has
different impact on different situation, vary from country to country and person to
person. The factors influencing investor behavior are also vary from country to country
and person to person.

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 Chapter 2: Literature Review

2.1 Introductory Literature:

Selden (1912) in his book Psychology of the Stock Market where he discussed that the
movement of stock prices is very much related to the mental attitude of the investor.
Loeo festinger (1956) derived the concept of cognitive dissonance. Pratt (1964) said
that utility, Risk Aversion are also a proportion of total assets. Amos Tversky and
Daniel Kahneman (1974) discussed that heuristics are employed in uncertainty when
making judgments. The psychologists Daniel Kahneman and Amos Tversky are
considered the fathers of behavioral economics/finance. Since the first collaboration in
the late 1960s, the duo has about 200 works, most of which are related to psychological
concepts to the behavioral effects of Finance published.In 2002, Kahneman, Sweden
Bank Economic Empire Award for his contribution to the study of the logic of the
economy. Kahneman and Tversky many studies have focused on heuristics and
cognitive biases (approx. Approaches to solve the problem), people can participate in
an unexpected irrational behavior is concentrated. The most popular and excellent in
prospect theory and loss a version exts-issues that will explore later. Kahneman and
Tversky, as planned, the first psychological theories that form the basis of behavioral
finance, this area is not developed, if there was no economist Richard Thaler. During
the study, Thaler always be aware of the weaknesses in conventional economic theories
that influence human behavior. After reading a work project Kahneman and Tversky's
prospect theory, Thaler found that, contrary to standard economic theory, psychological
theory be good for the absurd behavior. Thaler and continue working with Kahneman
and Tversky, combine the psychology of business and finance concepts such as mental
accounting effect of the body and there are other prejudices.
Critics:

Although behavioral finance has been gaining support in recent years, it is not without
its critics. Some proponents of the efficient market theory, for example, critics of
behavioral finance.
The efficient market hypothesis is one of the foundations of modern economic theory.
Nevertheless, this case not taken into account, the absurd, because it believes that the
market price of the guarantee reflects the influence of all relevant information as it is
released.

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The main critics of behavioral finance, Eugene Fama, the founder of the theory of
market efficiency. Professor Fama shows that, although there are some abnormalities
that cannot be explained by modern financial theory, market efficiency must not be
totally abandoned to the Behavioral Finance. In fact, he notes that many of the
conventional theories of random events identified deficiencies can eventually be
corrected regarded by the time like the present. In an article in 1998 entitled "Market
efficiency, long-term profitability and Behavioral Finance" Fama argues that many of
the findings of behavioral finance seems mutual, and that seems in general, behavioral
finance itself contradicts a collection of abnormalities by the market efficiency
explains.

2.2 Empirical literature:

Dasgupta (2014) Find out in his study, the stock market sentimental Drivers are nature
of the stock markets, Index/ stock returns, Investors’ friendly stock market
environment, primary market activities, information uncertainty, trading volume and
momentum, Market technical, and institutional investors’ investment activities. Al-
Tamimi (2005) studied that expected corporate earnings, get rich quick, stock
marketability, past performance, government holding, and creation of the organized
financial markets were the most influencing factor to individual investor behavior of
UAE financial market. The least influencing factors were expected losses in other local
investments, minimizing risk, expected losses in international financial markets, family
members opinions, gut feeling on the economy. The religious beliefs is unexpectedly
least influencing factor. Obamuyi (2013) find out the five most influencing factor in
individual investment decisions of investors in Nigeria are past performance of the
company’s stock, expected stock split, capital increases, bonus, dividend policy,
expected corporate earnings and get-rich-quick. Also, the five least influencing factors
include religions, rumors, loyalty to the company’s products/services, opinions of
members of the family and expected losses in other investments. Azam (2011) find out
in his study that earnings per share (EPS),foreign direct investment (FDI) and GDP
growth positively correlated and had significant impact on stock prices. This shows that
many investors were conventional awareness of factors if they Investing in the stock
market. They were also more prone to shares, growth-oriented. Iqbal and Usmani
(2009) find out in his study that investment decisions process includes economic
outlook the relationship between lifestyle and demographic variables were obtained

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Behavioral disorders. With that study analyzed the behavior Variables and utility
maximize action taken together to complete the study. The results show that the
individual opinion was buying criteria of wealth maximization in their actions. Kanthi
and Kumar (2013) find out in his study that the behavior of the company direction of
the individual investor, the NSC / NSS, the bank sets deposit, cheat money fund policy,
return policy, Rural postal insurance, a variety of funds focused on growth funds,
balanced funds and responsibilities independently and Other methods depend on the
type of investment personality individual investors. Although a few events Financial
market of private investors prefer investments with low risk such as small deposits and
insurance savings and to avoid investing in high-risk investments, such as mutual
foundations and corporate securities. Adam and Tweneboah (2008) find out that result
was recommended that potential investors were paying more attention towards inflation
and exchange rate, and then foreign direct investment rather than interest. However, in
the long-term goal of the interest rate and inflation should be. Hassan, Shahzeb,
Shaheen, Abbas, and Hameed (2013) conduct a study to measure the validity of
determinants of individual investor decision making. They found the real impact of
heuristic, fear and anger affect the decision making of investor in Islamabad stock
exchange. Sultana et al (2012) identify 40 attributes that affect the individual behaviors
and ranked them on bases of high frequency given by the investors. After applying
factors analysis these 40 attributes were reduced to 10 factors known as: Individual
Eccentric, Financial Expectation, Risk Minimization, Brand Perception, Economic
Expectation, Wealth Maximization, Accounting information, Government & Media,
Social Responsibility, and Advocate recommendation factors. Merikas (2014) found
the certain degree of correlation between the factors identified by the theory of finance
and previous empirical evidence that were identified as factors affect the individual
investor in the Athens Stock Exchange (ASE). Furthermore Merikas suggested two
more future directions should be attempted. First was decision variable and economics
decision variables and second was Homogeneous cluster variables in stock investment
decisions.

Independent variables:

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Psychological factors:

Some psychological factors also affect the individual behavior in investment decision
making. The primarily focus of this study is on major and most common psychological
factors. Jureviciene and Jermakova (2012) finds that cognitive and emotional are the
two type of psychological factors that mostly influence the individuals. Some faulty
reasoning (cognitive) and intuitions, feelings and fear of losing money (emotional
biases) defined as factors. Gambetti and Giusberti study shows the effect of anger on
investment decisions. According to them anger play a very positive role in investment
decision making. Angry people take risky decisions. Previous study by Lerner and
Keltner told the effects of fear and anger on risk perception. Fear of losing wealth make
individual a risk averse person. A great legendary Hockey player Wayne Gretzky define
himself as most risk averse person and stat that “you miss one-hundred percent of the
shots you don’t take”. Effect of anger make individual opposite. Anger makes more
risk optimist and that cause more hope of high return. Hassan et.al work on three
psychological factors Heuristics, fear, and anger tell the negative and positive relation
and effects on investment. Heuristics play a negative role on individual investment
decision making.
Socio-economic factors:
Previous studies by Kaleem et al. (2009), Geetha and Ramesh (2012), and Jain and
Mandot (2012) indicates that socio-economic factors like (age, gender, sex and
education) had a significant impact on individual decision making. Obamuyi (2013)
conduct similar research in Nigeria and found similar result that socio-economic factors
had a significant impact on investment decision of Nigerian investor. Kesavan,
Chidambaram, and Ramachandran (2012) study in Indian environment indicates
that the person with age 30 are most potential investor rather than age above 60. Women
are more saving minded than the men and had a great potential to invest.

2.3 Summary of the literature:

To increase investment is stock market by middle class people we must first know the
factors which influence individual investor behavior then we are able to take measures
to increase investment. So our study of factors influencing investor behavior in Pakistan
is conducted primarily on the bases of two studies. Al Tamimi and Tomola Marshal
Obamuyi conducted this research in UAE and Nigeria respectively and found most

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influencing and least influencing factors which effect individual investment behavior
in stock market. So our study is very much related to these two studies in finding the
most and the least influencing factors. Dream

2.4 Hypothesis Statement:

Following hypothesis are derived from the research objectives and questions.

Null Hypothesis

1) Socio-economic characteristics of investors significantly affect their investment

decisions.
2) Factors influencing investment decisions of investors differ significantly according
to age, gender, marital status, educational qualification and monthly income.
3) Psychological factors has significant impact on investment decisions.

Alternative hypothesis

1) Socio-economic characteristics of investors do not affect their investment

decisions.
2) Factors influencing investment decisions of investors never differ according to
age, gender, marital status, educational qualification and monthly income.
3) Psychological factors has insignificant impact on investment decisions.

2.5 Theoretical Framework

Socio-economic
Characteristics
Individual investor
Behavior
Psychological
Factors

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 Chapter: 3

Methodology

3.1 Research design:

Research design is a model for the detection, measurement and analysis of data based
on the question of the study. For a detailed explanation of how the investigation will
take place. A research design is usually collected as data, what tools will be used as the
instruments are used, and the means for analyzing the collected data.

Current study is descriptive based study that provides description of each variable
identified above. The major purpose of the study is to identify different factor which
affect individual investing behavior towards capital market. Testing of Different
variable that our study suggest. Hypothesis testing is the major part of purpose of study.
Hypothesis in this study is

H1: Socio-economic characteristics of investors significant affect their investment

decisions.

H : Psychological factors (anger, heuristics, and fear) affects individual behavior in

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investment decisions.

Correlation is run to investigate the relationship between the two variables that affects
the individual behavior toward investment decision making in current study. Change in
any one independent variable leads to a change in other dependent variable. Correlation
between dependent variable (Individual Behavior) and independent variable (such as
anger) tell if any change in independent variable leads a change in dependent variable.
This correlation can be positive or can be negative.

Current study is conduct under contrived study setting. This study is going to see the
effect of Independent variable (Socio-economic and psychological factors) on
Dependent variable (Individual Behavior).

As this study mentioned above dependent variable (individual Behavior) in this study
clearly states that unit of analysis are individuals person.

This study is based on longitudinal time horizon. In which data will be collected two
times one before and second after research.

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Dr. Syed Tabassum Sultana, Dr S Pardhasaradhi conducted a research on empirical
analysis of factors influencing individual equity investor decision making and behavior
by using factor analysis techniques. And also used Cronbach’s-alpha test (to check
reliability) and Scaling Technique to measure the investor decision specially making
decision in investing in equities because it involves high risk. Muhammad Azam and
Duresh Kumar conducted a research on individual investing behavior and stock price
variation by using earning per share, FDI and GDP growth rate and it will the small
investor by investing decision in stock market because they don’t have sufficient capital
to bear the great slump in stock market. Dr. Ranjan Dasgupta, Sandip Chattopadhyay
conducted a research on stock market driven factors. From that they find out the factors
influencing investor sentiment. Anna A. Merikas, Andreas G. Merikas conducted a
research on Economic Factors and Individual Investor Behavior to find out the effect
of which greatly affect the individual stock investor which not only include the factors
which is investigated by previous studies but also some additional factors which is
generated by personal interviews to find factors influencing the individual stock
investors. Sania usmani conducted a research on factor influencing individual investor
behavior convince based sampling technique was used and for reliability Cronbach’s-
alpha test is used. This study conclude that wealth maximization and stock performance
criteria were important for investor. Anokye M. Adam and George Tweneboah
conducted a research on Macroeconomic Factors and Stock Market Movement. They
examined the both long run and short run relationship between stock market index and
economic variable (inflation, exchange rate, interest rate, FDI). They used vector error
correlation model for it. Mrs.K.Parimala Kanthi, Dr.M.Ashok Kumar conduced a
research on Holding Behavior of Individual Investors. They used the socioeconomic
variables that socioeconomic variables of a country is very important for investment.
Convincing sampling was applied and the study objective was the personality type of
the individual investor and the holding behavior of and individual investor.
3.2 Population of the study:

As the study mention above middle class of any population in any country play a vital
role in any economy. They are the potential investors and GDP of country totally
depend on this class. According to facts and figures of Asian development bank
Pakistan at number five in rank of most rapidly growing middle class consumption.
Nearly 40 percent of Pakistan population is belong to middle class. Whose earning is

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between 2-12 us dollar per day and have a great potential for investment in market to
meet the demand of industry. So this study focus on middle class as population.

3.3 Sampling techniques:

Sampling technique state that which technique we used to select the sample from our
population. Sampling technique includes: Probability and Non-probability technique.

In our research, we used probability technique and in probability technique, we used

unrestricted probability sampling. We did not impose any condition regarding data
collection. We collect data from the investor in the Islamabad stock exchange of
Pakistan.

3.4 Sample size:

In statistics and quantitative research methodology, a data sample is a set of data

collected and/or selected from a statistical population by a defined procedure.

Typically, the population is very large, making a census or a complete enumeration of

all the values in the population impractical or impossible. The sample usually represents
a subset of manageable size. Samples are collected and statistics are calculated from
the samples so that one can make inferences or extrapolations from the sample to the
population. This process of collecting information from a sample is referred to as
sampling. The data sample may be drawn from a population without replacement, in
which case it is a subset of a population; or with replacement, in which case it is a
multisubset.

In our research we choose the sample size of 100 investor from Islamabad stock
exchange of Pakistan.

3.5 Instrument and Measures:

The aim of our project is to increase the investment in the stock market of Pakistan. Our
research instrument is to fill the questionnaires and conducting interviews from the
existing investors in Islamabad stock exchange of Pakistan. We used six variables in
our research namely;

1. Information asymmetry
2. Accounting information

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 3. Personal values
4. Investment satisfaction
5. Investment decision
6. Financial literacy

The questionnaire which we use to analyze the investor in Pakistan are adopt from
previous research. And there are 4-7 questions in each variable and for analysis we used
SPSS and AMOS software.

Variables Items Nos. Cronbach Alpha

Information Asymmetry 05 0.538
Accounting Information 05 0.816
Personal values 07 0.653
Investment satisfaction 04 0.701
Investment decision 03 0.647
Financial literacy 03 0.755
Total 27 0.854

The reliability of each dimension set in questionnaire is measured by Cronbach alpha

values. The financial literacy with having 03 items and having the reliability 0.755 or
75%. Investment decision with 03 items having the reliability of 0.647 or 65%. Other
dimension reliabilities of investment satisfaction, personal values, accounting
information, and information asymmetry are 70%, 65%, 82% and 54% respectively.
Finally the overall reliability index of 27 items in 6 variables is 85%.

3.6 Collection of Data:

We gather data from the Islamabad stock exchange of Pakistan to evaluate their
investment decision and decision toward riskiness. The procedure of our data collection
is to fill the questionnaire and conduct the interviews. The main purpose of our data
collection is how we increase investment in the stock market of Pakistan.

3.7 Data Analysis:

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We use pilot testing in our research to analyze the data of research. It helps us to
evaluate the actual or most accurate results of our research.

3.7.1 Pilot Testing:

A pilot study can be defined as a ‘small study to test research protocols, data collection
instruments, sample recruitment strategies, and other research techniques in preparation
for a larger study. A pilot study is one of the important stages in a research project and
is conducted to identify potential problem areas and deficiencies in the research
instruments and protocol prior to implementation during the full study. It can also help
members of the research team become familiar with the procedures in the protocol, and
can help them decide between two competing study methods, such as using interviews
rather than a questionnaire.

3.7.1.1 Exploratory factor analysis:

When the new instrument is introduced to measure any concept, it should be checked
through EFA. Followings are the criteria’s to validate the instrument:

1. Extraction Value/Load Factor

2. Kaiser-Meyer-Olkin (KMO) Measure and Bartlett test
3. Total Variance Explained
4. Scree plot

3.7.1.1.1 Extraction value/Load factor:

According to Habing (2003) an item/statement/question having the factor loadings

above or equal to 0.40 considered as practically significant construct.

We calculate Load Factor in order to check the validity of each item/statement in our
questionnaire. Table 3.1 shows the result of load factor of our research:

Table 3.1: Load Factors

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 Communalities
Initial Extraction
IA1 1.000 .117
IA2 1.000 .225
IA3 1.000 .550
IA4 1.000 .645
IA5 1.000 .298

3.7.1.1.2 Kaiser-Meyer-Olkin (KMO) Measure and Bartlett test:

The instrument/construct will be statistically valid if the KMO value is greater than
0.50 and According to Kaiser (1974) if value of KMO lies between 0.8 to 0.9 shows
the greatness and sample is adequate. Bartlett's Test p-value should be significant
(<0.05).

KMO and Bartlett test results are examined in order to determine if the results support
factor analysis. Results for KMO and Bartlett test are given in Table 3.2.

Table 3.2: KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .609

Approx. Chi-Square 41.790

Bartlett's Test of Sphericity df 10

Sig. .000

Results of KMO is 0.609 and this is greater than 0.5, which means factor analysis is
recommended. P-value is also significant (p<0.05).

3.7.1.1.3 Total variance explained:

Total variance explained is considered by taking the eigenvalues into account. The
factors having eigenvalue greater than one will be considered much important. Results
of Total Value Explained are given in Table 3.3.

Table 3.3: Total Variance Explained

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 Total Variance Explained
Component Initial Eigenvalues Extraction Sums of Squared Loadings
Total % of Variance Cumulative % Total % of Variance Cumulative %
1 1.836 36.726 36.726 1.836 36.726 36.726

2 .978 19.567 56.293

3 .898 17.963 74.256

4 .810 16.203 90.459

5 .477 9.541 100.000

3.7.1.1.4 Scree plot:

Scree plot is another technique to ascertain the number of factors to be incorporated in final
solution. This plot shows the eigenvalues and related component numbers. The point where this
plot starts to descend, next coming factors describe less variance. Scree Plot is given in Figure
3.1. As in the graph it starts to descend from the component no.3.

Table 3.3: Scree Plot

3.7.1.2 Confirmatory factor analysis:

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Confirmatory factor analysis (CFA) is another process of measurement model that tests
the variables, research model, and the observed variables. CFA is carried out to check
the overall model fitness and to disclose the measurement errors in the model.
According to Steen amp and Baumgartner (2000) CFA is the best method to understand
that the indicators of latent variables either have strong interest or not. The tests required
to know the fitness of model under confirmatory test analysis are stated. Fitness of a
model tells either it is close to acceptance or not but it does not tell an ideal model.
There are different parameters to check the fitness of model.
Model fitness was judged by using different fit indices including chi-square, Normed
Fit Index (NFI), Comparative Fit Index (CFI), Goodness-of-fit Index (GFI), and Root
Mean Square Error of Approximation (RMSEA).

3.7.1.2.1 Model fit statistic:

Construct Df CMIN/df CFI NFI GFI AGFI RMESA

Information 5 0.535 1.000 0.938 0.989 0.966 0.000

asymmetry

Accounting 5 1.103 0.996 0.962 0.976 0.929 0.034

Information
Personal 7 3.751 0.686 0.634 0.850 0.700 0.174
values
Investment 4 4.567 0.896 0.878 0.951 0.755 0.198
satisfaction

Investment 3 15.849 1.000 1.000 1.000 0.497 0.404

decision
Financial 3 22.285 1.000 1.000 1.000 0.311 0.484
literacy

3.7.1.2.2 Validity:

21
In order to check the validity of the instrument, following are taken into account:
1. Convergent Validity.
2. Discriminant Validity.
3. Nomological Validity.
3.7.1.2.2.1 Convergent Validity:

For examining the convergent validity, following are calculated;

1. Factor Loading:

The factors loadings are examined first to determine convergent validity. All factor
loadings should be statistically significant (p<0.05), and all loadings should be above
0.5 and some scholars suggest that it should be greater than 0.40. The value nearest to
1 the better will the construct. According to Cua et al. (2001) if the load factor is greater
or equal to 0.40 than it will be included as well. All the Factor Loadings are given in
Table 3.5.
Table 3.5: Factor Loadings:
Construct items Factor Decision
loading
Information IA1 0.151 Exclude
asymmetry
IA2 0.304 Exclude
IA3 0.573 Include
IA4 0.827 Include
IA5 0.361 Exclude
Accounting AI1 0.698 Include
information
AI2 0.599 Include
AI3 0.687 Include
AI4 0.695 Include
AI5 0.758 Include
Personal values PV1 0.742 Include
PV2 0.813 Include
PV3 0.451 Exclude
PV4 0.517 Include

22
 PV5 0.005 Exclude
PV6 0.087 Exclude
PV7 0.406 Exclude
Investment IS1 0.641 Include
satisfaction
IS2 0.741 Include
IS3 0.673 Include
IS4 0.433 Exclude
Investment ID1 0.510 Include
decision
ID2 1.019 Include
ID3 0.426 Exclude
Financial FL1 0.708 Include
literacy
FL2 0.761 Include
FL3 0.678 Include

2. Average Variance Extracted (AVE)

After finding the factor loadings in acceptable range, Average Variance Extracted
(AVE) is calculated next. Since AVE cannot be computed in AMOS, it is calculated in
MS Excel by using the following formula:

Where,
λ is the standardized factor loadings.
n is the number of items.
AVE is therefore calculated by the sum of the square of all factor loadings relating to
one construct divided by the number of items. A good rule of thumb is an AVE of .5
or higher indicates adequate convergent validity. For example, AVE for Financial
literacy is calculated as:
AVE= [(0.708)2+ (0.761)2+ (0.678)2]/3
AVE=0.5133

23
In this way AVE is calculated for the remaining variables. All the results of AVE are
shown in Table 3.6.
Table 3.6: Average Variance Extracted (AVE)
Construct AVE Decision

Information asymmetry 0.5061 Good fit

Accounting Information 0.5117 Good fit

Personal values 0.4929 Poor fit

Investment satisfaction 0.470 Poor fit

Investment decision 0.649 Good fit

Financial literacy 0.5133 Good fit

3. Construct Reliability (CR):

Construct reliabilities are another way to measure construct validity. Construct
reliabilities are not computable in AMOS; therefore, it is also computed in MS Excel
by using the following formula:

Where,
λi is the factor loadings.
δi is the error variances (δ=1- Item Reliability).
Item Reliability= squared each factor loading
Construct reliabilities are calculated by using the sum of squared factor loadings and
the sum of error variances for the constructs in the above formula.
The rule of thumb for a construct reliability estimate is that 0.7 or higher suggests good
reliability. Reliability between 0.6 and 0.7 may be acceptable provided that other
indicators of a model’s construct validity are good.
For example, the Construct Reliability for Financial Literacy is calculated as:
(∑λi)2 = (0.708+0.761+0.678)2 = 4.6096

24
(∑δi) = {1-(0.708)2} + {1-(0.761)2 }+ {1-(0.678)2 }
(∑δi) = {1-0.501} + {1-0.579} + {1-0.459}
(∑δi) = 0.499+0.421+0.541
(∑δi) = 1.461

(∑ƛi)2
𝐶𝑅 =
(∑ƛi)2 + (∑δi)

CR=4.6096/(4.6096+1.461)
CR=0.7593
In In the similar way construct reliability of remaining constructs are calculated.
Table 3.7 shows all the results of Construct Reliability.
Table 3.7: Construct Reliability (CR)
Construct CR Decision

Information asymmetry 0.6649 Good fit

Accounting information 0.8182 Excellent fit

Personal Values 0.7383 Excellent fit

Investment Satisfaction 0.7268 Excellent fit

Investment Decision 0.7691 Excellent fit

Financial Literacy 0.7594 Excellent fit

25
3.7.1.2.3 Discriminant Validity:

Discriminant validity is used to check the degree to which one construct is different
from others. In order to check out the discriminant validity the value of AVE (Average
Variance Extracted) is compared with respective squared inter-construct correlation
estimates (SIC).
SIC = Square of the IC
If the value of AVE exceeds, this shows discriminant validity is there.
Table 3.8: Discriminant Validity
Correlation AVE IC SIC Decision
IA<-->AI 0.5061 0.556 0.3091 Supported
0.5117

IA<-->PV 0.5061 -0.039 0.001521 Supported

0.4929

IA<-->IS 0.5061 -0.143 0.02044 Supported

0.470

IA<-->ID 0.5061 0.176 0.0309 Supported

0.649

IA<-->FL 0.5061 0.001 0.000001 Supported

0.5133

AI<-->PV 0.5117 0.195 0.0380 Supported

0.4929

AI<-->IS 0.5117 0.283 0.6889 Not Supported

0.470

AI<-->ID 0.5117 0.289 0.0835 Supported

0.649

AI<-->FL 0.5117 0.160 0.0256 Supported

0.5133

PV<-->IS 0.4929 0.686 0.4705 Not Supported

0.470

PV<-->ID 0.4929 0.431 0.1857 Supported

0.649

PV<-->FL 0.4929 0.787 0.6193 Not Supported

0.5133

IS<-->ID 0.470 0.617 0.3806 Supported

26
 0.649

IS<-->FL 0.470 0.731 0.5343 Not Supported

0.5133

ID<-->FL 0.649 0.757 0.5730 Not Supported

0.5133

27
3.7.1.2.4 Nomological Validity:

In order to assess the nomological validity the inter-construct correlations (IC) in the
measurement models are taken into consideration. Inter-construct correlations (IC) in
the measurement models should be positive and significant (<0.05); thus, indicating
nomological validity.
Table 3.9: Nomological Validity
Correlation IC Decision
IA<-->AI 0.038 Significant

IA<-->PV -.003 Insignificant

IA<-->IS -.007 Insignificant

IA<-->ID 0.009 Significant

IA<-->FL 0.000 Significant

AI<-->PV 0.091 Significant

AI<-->IS 0.107 Insignificant

AI<-->ID 0.110 Insignificant

AI<-->FL 0.087 Significant

PV<-->IS 0.243 Insignificant

PV<-->ID 0.154 Insignificant

PV<-->FL 0.400 Insignificant

IS<-->ID 0.178 Insignificant

IS<-->FL 0.299 Insignificant

ID<-->FL 0.314 Insignificant

28
 Chapter: 4
RESULTS AND DISCUSSION

4.1 Results:
In the study the critical factor affecting the stock market investment in Pakistan. In
Pakistan it has been analyzed through collected data by questionnaire and by
conducting interviews. Frequency test has been applied to all demographic variables
and the results were summarized. There is variation in the data we collected or in the
selected variables by respondents and descriptive statistic has also been applied for
analyze purpose and data are presented in the tabular form.
4.1.1 Descriptive statics:
Now we find the frequency distribution and descriptive statistic of demographic
variable one by one.
Table 4.1 shows frequency distribution W.R.T gender

Gender Frequency Percent

male 69 75.0
female 23 25.0
Total 92 100.0

As it is clear from the table 4.1 that most respondents are male which is 75% (65) and
female is only 25% (23). The reason for less number of female in that is the investment
in the stock market which is maximum done by male and male are more risky than
female this is another reason.
Table 4.2 shows frequency distribution W.R.T age

Age group Frequency Percent

18-31 63 68.5
32-44 25 27.2
45-57 1 1.1
58-70 3 3.3
Total 92 100.0

29
Table 4.2 shows that the people with the age group is in between 18-31 are the potential
investor on stock market but you look toward the trend in it as the age group increases
the investor decreases.
Table 4.3 shows frequency distribution W.R.T Qualification

Qualification Frequency Percent

matric intermediate 3 3.3
Bachelors 33 35.9
masters 56 60.9
Total 92 100.0

As you see in the above table the frequency of investor increase as their qualification
increases. So we conclude from the above table that the people who have higher
education have high investment in stock market.

Table 4.4 shows frequency distribution W.R.T Experience

Experience group Frequency Percent

1-5 56 60.9
6-10 32 34.8
11-15 3 3.3
more than 16 1 1.1
Total 92 100.0

As through above table the frequency W.R.T experience decreases means that as people
experience increases the investment in stock market decreases this is may be people got
experience and after experience they have a lot of alternatives, so they can prefer that
instead of stock options.

30
 Table 4.5 Frequency Distribution and Descriptive Statistics with respect to
“Personal values”

Percentage response rate (N=140)

Items

SD D N A SA Mean St. Dev

Personal values influence investment decisions. 8 60 10 12 2 2.35 0.895

Personal values interact with financial opportunities

7 33 39 13 -- 2.63 0.822
when individuals make investment decisions.

I have a lot of intellectual curiosity. 8 13 44 24 3 3.01 0.943

I generally try to be thoughtful and considerate. 3 12 27 44 6 3.41 0.916

I never seem to be able to get organized. 8 18 25 32 9 3.17 1.125

I am not willing to take risk when choosing a stock 14 17 27 20 14 3.03 1.279

or investment.

I often feel tense and jittery. 20 22 23 20 7 2.67 1.268

The results obtained from the analysis of the collected data and it shows how many
respondents St. disagree, disagree, neutral, agree and St. agree. In table 4.5 60 out of 92
shows that personal values did not affect the investment decision in stock market while
10 of them are neutral and 12 of them are agreed that yes personal values affect
investment decision. In other item of personal values that personal values interact
financial opportunities when individual make investment decision in which 39
respondents out of 92 neutral and 33 of 92 disagree. While we ask from respondents
that they have intellectual curiosity then most of them answers are neutral. When we

31
ask from them that they are not willing to take risk so most of the respondents choose
neutral that’s mean they take risk in stock market investment decision. As the other
factor mean shows that how personal values affect investment in stock market either
positively or negatively. As in the above table the mean of personal values individual
item going to rise and again decreases which shows that the personal values affect
individual investment in the stock market. Because our mean is increase and after
reaching some point it again decreases. It means some people think that personal values
affect their investment decision in stock market but some are neutral about it. As we
look towards the standard deviation values it highly deviate from the mean of the items.

4.2 Inferential Statistics:

Inferential statistics is about prediction, forecasting. If we want to check the mean

differences, Independent sample t-test, one way anova etc. between the study and
demographic variables or association between the study variables or cause and effect
between dependent and independent variable we will go for inferential statistics.

4.2.1 Mean differences:

1. Independent sample t-test:

If the demographic variable has only two categories then we will go for
independent sample t-test. For finding of independent sample t-test we convert
the items in a variable into a single variable. It measure the significant level of
different respondents with respect to that demographic variable which has only
two categories like in gender male and female are only two categories. The
result in table 4.6 shows the significant difference in between male and female
respondents. As the mean of male is greater than female which shows that male
are more satisfied in stock market investment and other variable which asked
from them in questionnaire and when conducting interviews. As the f- value is
not greater than 3.00 which mean there is no significant difference of response
of male and female but when we look towards the P-value in some variable like
personal value and investment satisfaction it is significant because the limit of
P-value is -1.96-----+1.96. The value in between in that limit shows insignificant
impact of independent variable on dependent variable. But beyond that limit
value shows the significant impact of independent variable on dependent
variable.

32
 Table 4.6 Independent sample t-test with respect to gender

Variables Gender Std.

N Mean F-value P- value
Deviation
Information Male 69 2.7217 0.55964
asymmetry 0.001 1.456
Female 23 2.5217 0.50224
Accounting Male 69 2.8986 0.86134
information 0.370 1.168
Female 23 2.6609 0.79186
Personal Male 69 2.9834 0.58057
Values 0.085 2.452
Female 23 2.6398 0.58723
Investment Male 69 3.0362 0.74665
Satisfaction 2.725 2.211
Female 23 2.6630 0.53624
Investment Male 69 2.8599 0.75495
Decision 0.169 -0.448
Female 23 2.9320 0.78272
Financial Male 69 3.1014 0.88802
Literacy 0.399 0.832
Female 23 2.9275 0.80376

2. One way Anova:

One way anova is applied when the demographic variable having more than two
categories like age, qualification etc. One way test is applied to find the
difference of significant level among these six variables (information
asymmetry, accounting information, personal values, investment satisfaction,
investment decision, and financial literacy) with respect to age group
demographic variable. The mean value of accounting information is 3.733
which is highest for the age group of 58-70 on the other hand the mean value
for the age group 45-57 is 2.200which is lowest among all of them which shows
that the accounting information have significant impact on the people whose
age is in between 58-70. As in below table the f-values which is less than 3

33
 shows that there is no significant difference in these variables with respect to
demographic variable age. On the other hand if we look towards the sig. value
whose criteria is <0.05 but in our variables only personal values has significant
impact and the other have no significant impact. Now we apply the same
procedure for the rest of demographic variable but only to those which is
classified in more than 2 categories.

Table 4.7 One way Anova with respect to Age

N Mean Std.
F-value Sig.
Deviation

18-31 63 2.5937 .57694 2.022 0.117

32-44 25 2.9040 .55414
IAA 45-57 1 2.4000 .
58-70 3 2.4667 .11547
Total 92 2.6717 .57385
18-31 63 2.7873 .88418 1.432 0.239
32-44 25 2.8880 .69541
AII 45-57 1 2.2000 .
58-70 3 3.7333 1.02632
Total 92 2.8391 .84658
18-31 63 2.8617 .62321 0.872 0.459
32-44 25 2.9714 .53452
PVV 45-57 1 2.2857 .
58-70 3 3.2381 .57735
Total 92 2.8975 .59802
18-31 63 2.8770 .70693 4.583 0.005
32-44 25 3.0100 .61441
ISS 45-57 1 1.7500 .
58-70 3 4.1667 .38188
Total 92 2.9429 .71589

34
 18-31 63 2.8730 .77928 0.054 0.983
32-44 25 2.8933 .72470
IDD 45-57 1 2.6667 .
58-70 3 3.0000 1.00000
Total 92 2.8804 .75848
18-31 63 2.9788 .88166 0.715 0.545
32-44 25 3.1867 .82821
FLL 45-57 1 3.3333 .
58-70 3 3.5556 1.01835
Total 92 3.0580 .86671

Table 4.8 One way Anova with respect to Qualification

N Mean Std.
F-value Sig.
Deviation
matric intermediate 3 2.3333 .11547 1.368 0.260
Bachelors 33 2.5818 .58387
IAA
masters 56 2.7429 .57425
Total 92 2.6717 .57385
matric intermediate 3 2.2667 1.10151 0.743 0.478
Bachelors 33 2.8909 .87620
AII
Masters 56 2.8393 .82190
Total 92 2.8391 .84658
matric intermediate 3 2.7619 .45922 0.659 0.520
Bachelors 33 2.9913 .59755
PVV
Masters 56 2.8495 .60635
Total 92 2.8975 .59802

35
 matric intermediate 3 3.0833 .72169 2.465 0.091
Bachelors 33 3.1515 .71244
ISS
Masters 56 2.8125 .69943
Total 92 2.9429 .71589
matric intermediate 3 2.8889 .50918 1.501 0.229
Bachelors 33 3.0606 .71906
IDD
Masters 56 2.7738 .78137
Total 92 2.8804 .75848
matric intermediate 3 1.7778 .50918 7.824 0.001
Bachelors 33 3.4141 .65633
FLL
Masters 56 2.9167 .89273
Total 92 3.0580 .86671

Table 4.9 One way Anova with respect to Experience

N Mean Std.
F-value Sig.
Deviation

36
 1-5 56 2.6143 .59557 0.948 0.421
6-10 32 2.8000 .55416
IAA 11-15 3 2.4000 .00000
more than 16 1 2.6000 .
Total 92 2.6717 .57385
1-5 56 2.7929 .87881 0.188 0.904
6-10 32 2.9250 .71437
AII 11-15 3 2.8667 1.80370
more than 16 1 2.6000 .
Total 92 2.8391 .84658
1-5 56 2.9184 .64227 0.149 0.930
6-10 32 2.8839 .55082
PVV 11-15 3 2.7143 .37796
more than 16 1 2.7143 .
Total 92 2.8975 .59802
1-5 56 2.9420 .70225 1.297 0.281
6-10 32 2.8828 .72397
ISS 11-15 3 3.1667 .80364
more than 16 1 4.2500 .
Total 92 2.9429 .71589
1-5 56 2.8571 .79863 0.761 0.519
6-10 32 2.8958 .69529
IDD 11-15 3 2.7778 .69389
more than 16 1 4.0000 .
Total 92 2.8804 .75848
1-5 56 3.0774 .88988 1.989 0.121
6-10 32 3.1250 .79312
FLL 11-15 3 1.8889 .69389
more than 16 1 3.3333 .
Total 92 3.0580 .86671

37
 3. Correlation Coefficient:
Correlation is association between variables. It means how much variables are
related to each other?

Table-4.10: Correlation Matrix of information asymmetry, accounting

information, personal values, investment satisfaction, investment decision and
financial literacy.
Correlations
IAA AII PVV ISS IDD FLL
Pearson
1
Correlation
IAA
Sig. (2-tailed)
N 92

Pearson
.418** 1
Correlation
AII
Sig. (2-tailed) .000

N 92 92

Pearson
.249* .399** 1
Correlation
PVV
Sig. (2-tailed) .016 .000

N 92 92 92

Pearson
.017 .226* .507** 1
Correlation
ISS
Sig. (2-tailed) .874 .030 .000

N 92 92 92 92

Pearson
.099 .234* .436** .483** 1
Correlation
IDD
Sig. (2-tailed) .348 .025 .000 .000

N 92 92 92 92 92

Pearson
FLL .068 .129 .501** .550** .555** 1
Correlation

38
 Sig. (2-tailed) .519 .222 .000 .000 .000

N 92 92 92 92 92 92

As we look towards the values of person correlation which is o.418 it shows that the
information asymmetry has positive correlation with accounting information at 5%
level of significance. And we interpret the rest of values with the same technique.
4. Regression analysis:
It is used to check the cause and effect of independent variable on dependent
variable. Independent variable is also called repressor/ explanatory or
exogenous variable. Dependent variable is also called endogenous variable.
There are two types of regression;
i. Simple regression:
Simple regression is applied when we have only one independent
variable
ii. Multiple regression:
As the name indicate multiple when there is more than one independent
variable.
As in our project we have more than one mean four independent
variables so we go for multiple regression.

Table 4.11: Regression coefficients, standard errors in parentheses, t-values in brackets

and p-values in italic

Constant IAA AII ISS FLL R-Square F-Statistics

0.696 0.016 0.123 0.228 0.412 0.370 12.749

(1.690) (0.166) (1.277) (2.185) (4.035)

[0.412] [0.125] [0.087] [0.111] [0.089]

0.095 0.869 0.205 0.032 0.000

Object sighted in table: IAA= Information Asymmetry, AII= Accounting information,

ISS= Investment Satisfaction, FLL= financial literacy.

39
As result in this model shows that it is more significant as you see the more P-values is
less than 0.05. and R-square shows us the model fit and independent variable also has
variation of 37% from dependent variable. The involvement of more independent has
the coefficient is 0.361. The std-error provides information concerned to data.
Therefore, overall model is more significant and individual based variables are more
significant that are positive with dependent variable. The main result validate
hypothesis H4 that shows significant association among in financial literacy and
investment decision. The other variables should explain as above.

5. Structural Equation Model (SEM):

Structural Equation Model (SEM) was applied to identify the direct, indirect
and mediation relationship between the dependent (Endogenous variable),
independents (Exogenous variable) and mediators. The confidence interval for
the present study is 95 % with 5 % level of significance. The level of
significance of the variable was checked at 5 %.
There are two steps for SEM
1) Direct effect:
In direct effect we noticed the direct impact of independent variable on
dependent variable.
Variable Estimate P-value Hypothesis
Support
ID <---- IA 0.016 0.866 H1 rejected
-
ID <---- AI 0.123 0.192 H2 Rejected
-
ID <---- IS 0.228 0.025 H3 Accepted
-
ID <---- FL 0.412 **** H4 Accepted
-

2) Indirect effect:
In indirect effect we check the impact of independent variable on
dependent variable through mediating variable.

40
 When the impact of independent variable on dependent variable through
mediating variable is insignificant then we say it is full mediation and
when that impact is significant then it is said that it is partial mediation.
Theoretical frame work and Hypothesis:

IA

AI
PV ID

IS

FL

H1= Information asymmetry has significant impact on Investment Decision.

H2= Accounting information has significant impact on Investment Decision.

H3=Investment satisfaction has significant impact on Investment Decision.

H4=Financial literacy has significant impact on Investment Decision.

H5= Information asymmetry has significant impact on Personal values.

H6= Accounting information has significant impact on Personal Values.

H7= Investment satisfaction has significant impact on Personal values.

H8= Financial literacy has significant impact on Personal values.

H9= Personal value has significant impact on Investment decision.

H10= Information asymmetry has insignificant impact on Investment Decision through

mediating variable.

41
H11= Accounting information has insignificant impact on Investment Decision through
mediating variable.

H12= Investment satisfaction has insignificant impact on Investment decision through

mediating variable.

H13= Financial literacy has insignificant impact on Investment Decision through mediating
variable.

Variable Estimate P-value Hypothesis

Support
ID <----- IA 0.016 0.866 H1 rejected
ID <----- AI 0.123 0.192 H2 rejected
ID <----- IS 0.228 0.025 H3 accepted
ID <----- FL 0.412 **** H4 accepted
PV <----- IA 0.121 0.168 H5 rejected
PV <----- AI 0.245 0.007 H6 accepted
PV <----- IS 0.281 0.004 H7 accepted
PV <----- FL 0.307 0.001 H8 accepted

42
 Chapter: 5

Conclusion

5.1 Conclusion

After using different statistical tools (Questionnaires) and techniques this study find out
the socio-economic characteristics like age, gender, education, and experience of an
investors have statistically significant influence on the decisions of an investor who
lives in economy of Pakistan particularly in Islamabad. To prove hypotheses under this
study, we used statical techniques to check validity of our instruments and to check the
validity of finding of study. Confirmatory factor analysis was applied on all studied
variable by using Amos v.18 with help of Spss v.20. the items with having factor
loading less than 0.4 were excluded. Similar studies were also conducted in different
counties like India (Geetha & Ramesh, 2012), and Rajasthan (Jain & Mandot, 2012),
Nigeria (Obamuyi, 2013) confirms the importance of studied factors on investment.

Thus companies, government and Brokerage firms need to identify the factors that stop
an investor to invest. These bodies need to create a friendlier environment for the
investor where he/she can easily and openly get true help for decision making.

43