Title: Investment decision-making – a behavioural approach

Authors: V. Shanmugasundaram, V. Balakrishnan

Addresses: Annamalai University, Annamalainagar – 608 002, Tamilnadu, India. ' Anna University Coimbatore, Coimbatore – 641 047, Tamilnadu, India

Abstract: Investments are made with an avowed objective of maximising wealth. Investors need to make rational decisions for maximising their returns based on the information available by taking judgements free from emotions. Investors| behaviour is characterised by over excitement and overreaction in both rising and falling stock markets. Most of the investments and financial theories (Steinbacher, 2008) are based on the idea that everyone takes careful account of all available information before making investment decision. This research is conducted to analyse the factors influencing the behaviour of investors in capital market. Empirical evidence suggests that demographic factors influence the investors| investment decisions. This research article also investigates how investor interprets and acts on various capital market information to make informed investment decisions.

Keywords: rational behaviour; emotions; overreaction; psychology; sentiment; rationality; investments; emotional behaviour; decision making; behavioural approaches; wealth maximisation; investors; investment returns; over-excitement; stock markets; financial theories; finance; investment decisions; capital markets; Pondicherry; India; demographic factors; information; business innovation; business research; investment behaviour.

DOI: 10.1504/IJBIR.2010.035714

International Journal of Business Innovation and Research, 2010 Vol.4 No.6, pp.584 - 597

Published online: 03 Oct 2010 *

Full-text access for editors Access for subscribers Purchase this article Comment on this article