erc/metu
INTERNATIONAL CONFERENCE IN ECONOMICS  IV
September 13-16, 2000, Ankara

Determinants of Individual Investors' Risk Behavior in the Stock Purchasing Process

Suer Omur (Université Paris 1/ Sorbonne, France and Galatasaray University)

Abstract

The aim of this paper is to investigate the determinants of individual investors' risk behavior in the stock purchasing process. The empirical study includes a qualitative analysis as well as a quantitative analysis. First of all, the researcher attempted to categorise the sample (which consists of 100 Turkish individual stock investors trading in ISE) as"risk aversives" and "risk takers",through the answers to the questionnaires. Then, to determine the factors affecting stock-purchasing decisions of individual investors, qualitative and quantitative analysis are carried out consecutively. For qualitative analysis, a focus group study among the experts of the subject is conducted to determine several determinants which will be included in the questionnaire. For quantitative analysis, questionnaires are evaluated and the dimensions of stock purchasing decision process are determined through factor analysis. Finally "multiple discriminant analysis" technique is used to find the answer of the following question: "Are there any factors (dimensions) that discriminate the risk aversives from the the risk takers when making stock investment decisions?" The interpretation of the results of this study suggests several tentative conclusions: First of all; individual investor's investment analysis of common stock appears to be a multidimensional process. So; it's necessary to consider several factors while preparing customer oriented marketing plans and making forecasts about capital markets' performances. Secondly, this study provides evidence for the importance of the political news and the politicians, in general, on the stock purchasing decision process. Finally, the results of the multiple discriminant analysis illustrate that only the "accounting information factor" can discriminate the risk aversives from the risk takers. The conclusion is that the risk takers give more importance to this factor than the risk aversives.

Economic Research Center
Middle East Technical University
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e-mail: metuerc@metu.edu.tr