1. Postgraduate Degree Thesis Opening Report
Research Topic: INDIVIDUAL INVESTORS’ DECISION-MAKING BEHAVIOR: A THEORY OF PLANNED BEHAVIOR – BASED APPROACH
Postgraduate Degree Thesis Opening Report
Reporter: PHAN KHOA CUONG (潘科钢) Supervisors: ZHOU JIAN (周建）
School of Management - Shanghai University

2. Content The purpose and significance of research Literature review
The main research content
Research design and methods
The expected difficulties and solutions
The creation of research topic (innovation)
Expected results

3. RESEARCH PURPOSE
Theories of traditional finance, especially the "efficient market theory" is the foundation of basic financial theories during four or five recent decades, assuming that investors are always reason to optimize their useful expectations, similarly, their behavior do not merely imply psychological or emotional aspects. Efficient market theory bases on the belief that there always exists a mechanism to adjust efficiency market status calling “arbitrage trading mechanism”.

4. RESEARCH PURPOSE (cont.)
The theory of behavioral finance with its basis is that "the market is not always right", considering a person under the practical perspective. Individuals participating in the market are ordinary people, and they are partly or entirely governed by sentiment and emotion. Therefore, behavioral finance theory indicates that adjustment mechanism is not always possibly taken place, meaning that there will be cases when “reasonable” investors can not win "unreasonable" ones, and at that time, the market is inefficient, or "wrong" (ie, the pricing of stock or other financial products is too high or too low).

5. RESEARCH PURPOSE (cont.)
The theory of behavioral finance is relatively late developed, which has based the application of psychology on finance. Therefore, behavioral finance has been a new topic attracting more research interests by scholars in recent years. Within behavioral finance, it is assumed that information structure and the characteristics of market participants will systematically influence individuals’ investment decisions as well as market outcomes.

6. RESEARCH PURPOSE (cont.)
According to perspective of behavioral finance, investor behavior derives from psychological principles of decision making, which in turn, explains why people buy or sell the stocks. Behavioral finance focuses on know how investors interpret and act on information to make investment decisions.

7. RESEARCH PURPOSE (cont.)
To date, there have been many approaching ways to research on investors’ behavior. Theory of reasonable action (TRA) and theory of planned behavior (TPB) have witnessed a relatively good result for forecasting the difference of human behaviors (Sheppard et al., 1988). Noticeably, TBP has been considered as a widely influence theory developed from TRA (Ajzen, 1991) and applied on various behavioral research fields (Ryu, et.al 2003), assuming that a behavior can be predicted or explained by the intention to perform that behavior.

8. RESEARCH PURPOSE (cont.)
Even though the significance of its application on explaining human behavior has been widely accepted, however, far too little attention has been paid to official research on investors’ behavior both in academic and empirical study in the world as well as a specific nation for many recent years.

9. RESEARCH PURPOSE (cont.)
Vietnam's stock market together with the relevant markets have created Vietnam financial market with a quite diversified development and international integration after more than one recent decade. With the present of 105 active security companies, there are more than 1.2 million trading accounts of investors in which, individual investors are the main participation objects whose accounting for 2/3 of transactions in the whole of market.

10. RESEARCH PURPOSE (cont.)
Individual investors do not always make their decisions and actions basing on their reason, they are also affected by psychological factors (emotion and cognitive) called “behavioral biases”. It is said that psychology is a complicated and multidimensional construct, its impact on investors’ behavior always exist under many different types such as herd behavior, overconfidence, over-optimistic, overreaction or under-reaction and etc. Accordingly, research on individual investors’ behavior in Vietnam security market is very necessary and significant both in academic and practice as well.

11. RESEARCH PURPOSE (cont.)
The main purpose of the research is to determine factors affecting to investors’ decision-making behavior basing on TPB approach. More specifically, the research tends to explore determinant factors in TPB possibly affecting to investors’ decision-making behavior. Simultaneously, it measures the affection degree of those factors to investors’ decision-making behavior.

12. RESEARCH PURPOSE (cont.)
This leads to three following research questions: 1. What are the factors affecting to Vietnamese investors’ decision-making behavior in the security market? 2. How do the factors affect to Vietnamese investors’ decision- making behavior? 3. Are there existence difference of effects of the factors to investors’ decision-making behavior between different investors? (investors' knowledge level; sex; ages; less experience and experienced investors, investors' asset...).

13. RESEARCH SIGNIFICANCE
Research significance to economics
1. The results of this research will be useful science basis for policy maker, security companies to make some suitable management strategies and supporting policies to the current situation of individual investors’ in Vietnam security market. Accordingly, it helps Vietnam security market act efficiently and sustainably.

14. RESEARCH SIGNIFICANCE
Research significance to economics
2. As for investment consultancy institution, the results of this study will contribute to get a better understanding of investors’ decision-making behavior. Through a coherent understanding of how investors generally respond to market movements should help investment advisors in devising appropriate asset allocation strategies for their clients.

15. RESEARCH SIGNIFICANCE (cont.)
Research significance to academic
This study will partly contribute to clarify the application of TPB in explaining individual investors’ decision-making behavior.
This study also makes a significant contribution to the literature by indicating the determinants affecting to Vietnamese individual investors’ decision-making behavior in the security market.
Specifically, a better understanding of the determinants affecting individual investors' decision-making behavior will offer valuable insight into why individual investors make investment decision and why not?

16. RESEARCH SIGNIFICANCE (cont.)
Research significance to academic
4. This study will yield practical insights into how do individual investors make investment decisions in the security market.
5. The results of this study should make a value contribution to both researcher and practitioner community.

17. LITERATURE REVIEW
1. The Theory of Planned Behavior (TPB)
Application of psychological theory on scientific research has become increasingly popular in recent years. One of the most widely used social psychology theories about the way in which perceptions influence actions is Ajzen’s TPB (Ajzen, 1985, 1988), which is an extension of the previously widely used Theory of Reasoned Action – TRA (Fishbein and Ajzen, 1975).

18. LITERATURE REVIEW (cont.)
1. The Theory of Planned Behavior (TPB)
The theory of planned behavior has been applied to a wide range of behaviours in order to better understand which individuals behave in which way. It is one of the best-supported social psychological theories with respect to predicting human behaviour. Central premise is that behavioural decisions are the result of a reasoned process in which the behaviour is influenced by Attitudes, Subjective norms and Perceived behaviour control (Smith et al., 2007).

19. LITERATURE REVIEW (cont.)
1. The Theory of Planned Behavior (TPB)
These constructs influence the behaviour primarily through the impact on behavioural intention. The relation between intention and behaviour could be described as follows (Sheeran 2002): “People do what they intend to do and do not do what they do not intend”.

20. LITERATURE REVIEW (cont.)
1. The Theory of Planned Behavior (TPB)
Figure 1: The theory of planned behavior (Ajzen, 1985)

21. LITERATURE REVIEW (cont.)
1. The Theory of Planned Behavior (TPB)
Figure 1 is an illustration of TPB and it can be explained as follows:
The intention to perform an action is caused by three constructs:
Attitude towards the action is the valence of the action for the potential actor, i.e. whether and to which extent the action is regarded as positive or negative. Attitude is in turn determined by outcome beliefs, i.e. a person’s beliefs about the expected outcome of a given behavior.

22. LITERATURE REVIEW (cont.)
1. The Theory of Planned Behavior (TPB)
The intention to perform an action is caused by three constructs:
Subjective norm refers to how the potential actor believes relevant others will react to performing the action, i.e. positively or negatively. Subjective norm is determined by normative beliefs that the individual holds about the behavior expected by relevant referent individuals.

23. LITERATURE REVIEW (cont.)
1. The Theory of Planned Behavior (TPB)
The intention to perform an action is caused by three constructs:
Perceived behavioral control refers to a person’s ability to perform a given behavior. Perceived behavioral control is expected to have an effect on the formation of intentions, but also on the behavior itself. Factors that may influence such control include internal factors, such as personal skills, knowledge, experience, and emotions, as well as external factors, such as availability of financial resources, cooperation of others, and availability of time.

24. LITERATURE REVIEW (cont.)
1. The Theory of Planned Behavior (TPB)
The theory of planned behavior has generally found strong empirical support with hundreds of studies applying and testing the theory. The theory of planned behavior has been used to predict behavior in a wide-variety of situations, including situations as varied as the prediction of unethical behavior (Chang, 1998), entrepreneurial behavior (Kreuger and Carsrud, 1993), public service motivation (Perry et al., 2008), internet usage (Hsieh et al., 2008), knowledge sharing behavior (So and Bolloju, 2005), ethical information technology behavior (Leonard et al., 2004) and information technology adoption in small businesses (Harrison et al., 1997).

25. LITERATURE REVIEW (cont.)
1. The Theory of Planned Behavior (TPB)
Conceptual Framework
In short, the theory of planned behavior suggests “People intend to perform a behavior when they evaluate it positively, when they experience social pressure to perform it, and when they believe that they have the means and opportunities to do so” (Ajzen, 2005). This view of motivation likely accounts for the critical factors that influence the behavior of individual investor, and thus, will form the theoretical basis for examining the factors that influence investor's decision making

26. LITERATURE REVIEW (cont.)
1. The Theory of Planned Behavior (TPB)
Conceptual Framework
Hence, the conceptual framework depicted in Figure 2, which is the theory of planned behavior applied to investor's decision making, will provide the main theoretical lens for exploring the factors that influence a individual investor behavior in security market.

27. LITERATURE REVIEW (cont.)
1. The Theory of Planned Behavior (TPB)
Conceptual Framework
Attitude
Subjective Norm
Perceived Control
Intention
To decision-making
Decision making
Behavior
Figure 2: Conceptual Framework of the Determinants of individual investors’ behavior

28. THE MAIN RESEARCH CONTENT
Reviewing literature of TPB and its application to explain individual investors’ decision-making behavior in the financial market in general and the security market in practical.
This study will use mainly research on documents from the plenty of journals’ article published with an aim to synthetic literature related to find out the gap between theory and practice. Besides, this study also tends to build its conceptual framework to make the foundation for approaching to solve this research question.

29. THE MAIN RESEARCH CONTENT (cont.)
Identifying the main constructs in the theoretical framework of the research.
This research will conduct to collect qualitative data (qualitative research) supporting to identify some main constructs in research model and building scale items (indicators) to measure these constructs by using focus group interview with Vietnamese individual investors and in - depth interview with some experts involved in this research field.

30. THE MAIN RESEARCH CONTENT (cont.)
Measuring the affection degree of determinants to Vietnamese individual investors’ decision-making behavior in the security market.
Through a survey with the large scale of individual investors in Vietnam, this research will apply AMOS software to analyze data collected. By using structural equation modeling (SEM), this study will test the conceptual model and measure the affection degree of each construct in the theoretical model to individual investors’ decision-making behavior in the security market.

31. THE MAIN RESEARCH CONTENT (cont.)
Clarifying the differentiation of the effects of determinants to individual investors’ decision-making behavior such as investors' knowledge level; sex; ages; less experience and experienced investors, investors' asset...
It is expected that there is difference of the effects of determinants to individual investors’ decision-making behavior such as investors' knowledge level; sex; ages; less experience and experienced investors, investors' asset... Therefore, this research tends to make these hypotheses clear by applying Independent sample t-test and One-way or two way Anova analysis technique as well.

32. RESEARCH OBJECT
The main research object of this study is Vietnamese individual investors’ decision-making behavior in the security market. We want to clarify the determinants in TPB affecting to Vietnamese individual investors’ decision-making behavior in the security market.

33. RESEARCH DESIGN
This study divides two phases: preliminary study (first phase) and official study (second phase).
1. In the preliminary study phase (qualitative research)
Research on desk (documents research) is the main technique using to synthetic theories of TPB aiming to develop a conceptual model that explains individual investors’ decision-making behavior.
Focus group interviews with individual investors are conducted to identify the main constructs (determinants) affecting to Vietnamese individual invetstors’ decision-making behavior and build the theoretical framework of the research.

34. RESEARCH DESIGN (cont.)
1. In the preliminary study phase (qualitative research)
Operationalization of the constructs into scale items (indicators) should have been done by using in-depth interview with some experts and individual investors to fit to respondents’ knowledge in the research field.
A pilot test is performed with a convenience sampling technique in order to investigate the reliability of the scales and to check the scales’ face validity.

35. RESEARCH DESIGN (cont.)
2. In the official study phase (quantitative research)
A survey with a large scale of individual investors will be conducted in Vietnam to fill questionnaire offered.
The research boundaries in this study are stock investment environment; so individual investors who had made transactions in the security market is regarded as our research objects.

36. RESEARCH METHODS
Based on the database of individual investors supplied by the security companies in Vietnam, a survey with a large scale is mainly used in this research by using individual face- to -face interview.
All of data collected will be analyzed through applying AMOS software.
The objective of this phase is to test empirically the conceptual model mentioned in the first phase by using Structural Equation Modeling (SEM).

37. THE EXPECTED DIFFICULTIES AND SOLUTIONS
Far too little attention has been paid to official research on investors’ behavior both in academic and empirical study is regarded as one of the most difficulties of our research. It will limit our ability of make a literature review perfect for conducting this study.
it is expected that the operationalization of the constructs to measure the effects of determinants to Vietnamese individual investors’ decision-making behavior be considered as the second difficulty to do this study.

38. THE EXPECTED DIFFICULTIES AND SOLUTIONS
The reason is that human behavior is an abstract concept, rich in nature and cannot easily be defined as well.
Individual investors’ decision-making behavior differs among characteristic of persons and situations. As a result, they cannot be directly observed. They can only be measured through observable measures (items) that vary in their degree of observational meaningfulness and validity. A single indicator is not likely to capture the full theoretical meaning of each underlying construct and consequently, multiple indicators are necessary.

39. THE EXPECTED DIFFICULTIES AND SOLUTIONS
The reason is that human behavior is an abstract concept, rich in nature and cannot easily be defined as well.
Individual investors’ decision-making behavior differs among characteristic of persons and situations. As a result, they cannot be directly observed. They can only be measured through observable measures (items) that vary in their degree of observational meaningfulness and validity. A single indicator is not likely to capture the full theoretical meaning of each underlying construct and consequently, multiple indicators are necessary.

40. THE EXPECTED DIFFICULTIES AND SOLUTIONS
Therefore, the solution for this is that this study will use in-depth interview with some experts and key individual investors with an aim to build a system of scale items how to fit with the Vietnamese interviewees’ perception and knowledge.

41. The creation of research topic
Research on investors’ behavior by approaching TPB is an outstanding and a quite new topic in academic and empirical study as well. Therefore, the application of TPB in explaining individual investors’ decision-making behavior is considered as a creative point of this study.
The second creative point is that this study uses the combination of both qualitative and quantitative research. We want to emphasize on the role of qualitative research and its significance in the whole of research.

42. The creation of research topic (cont.)
Through qualitative research, we can identify exactly the research question; explore some main constructs in theoretical framework and build scale items (indicators) of constructs with an aim to fit interviewers’ knowledge in quantitative research. The use of qualitative research in the design, data collection, and analysis stages of survey research as well as in experimental designs can considerably benefit quantitative research methods.

43. The expected results
We expect that the outcomes of this research will make a contribution to the literature of TPB and its application in explaining individual investors’ decision-making behavior in the security market.
Firstly, the research will gain an extended model of TPB to apply on explaining individual investors’ decision-making behavior in the financial market in general and in the security market in practical.

44. The expected results (cont.)
Secondly, this study will develop a series of scale items measuring constructs (determinants) in TPB to explain individual investors’ decision-making behavior.
At the same time, this study also indicates which are determinants affecting Vietnamese individual investors’ decision-making behavior through analyzing affection degree of determinants to their behavior to make investment decisions.

45. Thank you very much for your listening!