IJSSER

Title: EFFECT OF BEHAVIOURAL BIASES ON INVESTMENT DECISIONS FOR INDIVIDUAL INVESTORS AT NAIROBI SECURITIES EXCHANGE
Authors: CYNTHIA KARENDI KIVUTI, Dr. Onesmus Mutunga
\|\| \|\|
1CYNTHIA KARENDI KIVUTI, 2Dr. Onesmus Mutunga1. SCHOOL OF BUSINESS, UNIVERSITY OF NAIROBI, KENYA 2. Lecturer, School of Business, University Of Nairobi, Kenya
MLA 8 KIVUTI, CYNTHIA KARENDI, and Dr. Onesmus Mutunga. "EFFECT OF BEHAVIOURAL BIASES ON INVESTMENT DECISIONS FOR INDIVIDUAL INVESTORS AT NAIROBI SECURITIES EXCHANGE." Int. j. of Social Science and Economic Research, vol. 5, no. 5, May 2020, pp. 1354-1389, ijsser.org/more2020.php?id=94. Accessed May 2020. APA KIVUTI, C., & Mutunga, D. (2020, May). EFFECT OF BEHAVIOURAL BIASES ON INVESTMENT DECISIONS FOR INDIVIDUAL INVESTORS AT NAIROBI SECURITIES EXCHANGE. Int. j. of Social Science and Economic Research, 5(5), 1354-1389. Retrieved from ijsser.org/more2020.php?id=94 Chicago KIVUTI, CYNTHIA KARENDI, and Dr. Onesmus Mutunga. "EFFECT OF BEHAVIOURAL BIASES ON INVESTMENT DECISIONS FOR INDIVIDUAL INVESTORS AT NAIROBI SECURITIES EXCHANGE." Int. j. of Social Science and Economic Research 5, no. 5 (May 2020), 1354-1389. Accessed May, 2020. ijsser.org/more2020.php?id=94.
References [1]. Allin, D. (2016). Donald Trump's America. Survival [2]. Ayyub, R. The destruction of India's judicial independence is almost complete. The Washington Post, 24th March 2020 [3]. Barik, S. Amit Shah: Facial recognition software fed with government data used to identify over 1,100 rioters. Medianama, 11th March 2020 [4]. Bermeo, N. (1997). Myths of Moderation: Confrontation and Conflict during Democratic Transition. Comparative Politics [5]. Chenoweth, E. and Stephan, M.J. (2011). Why Civil Resistance Works: The Strategic Logic of Nonviolent Conflict. Columbia University Press [6]. De Clercq, G. and Paone, A. Yellow vest protests hit with police water cannon, tear gas in Paris. Reuters, 12th January 2019 [7]. Giugni, M. (2004). Social Protest and Political Change: Ecology, Antinuclear and Peace Movements in Comparative Perspective. Rowman and Littlefield [8]. Goicichea, J. Why New York City Is a Major Destination for LGBT Travelers. The Culture Trip, 16th August 2017 [9]. Huntington, S.P. (1968). Political Order in Changing Societies. Yale University Press [10]. Johnson J. (2015). The Game's Afoot: Social Movements in Authoritarian States. The Oxford Handbook of Social Movements [11]. Jha, L.K. CAA in 'Clear Violation' of Indian Constitution: Amnesty International to US Congress. The Wire, 1st February 2020 [12]. Klandermans, B. (2015). Motivations to Action. The Oxford Handbook of Social Movements [13]. McAdam, D., Tarrow, S., and Tilly, C. (2001). Dynamics of Contention. Cambridge University Press [14]. O'Brien, T. (2015). Populism, protest and democracy in the twenty-first century. Contemporary Social Science [15]. Rao, S. India Under Modi Is Becoming a Brutal Authoritarian State. Haartez, 24th December 2019 [16]. Scholl, C. (2015). The New Social Movement Approach. Handbook of Political Citizenship and Social Movements [17]. Slater, J. Police stormed a university in India. Muslim students say the violence was an act of revenge. Washington Post, 16th December 2019 [18]. Tarrow, S. (2014). Contentious Politics. The Oxford Handbook of Social Movements. [19]. Tilly, C. (2008). Contentious Performances. Cambridge University Press [20]. Welzel. C. (2013). Freedom Rising, Human Empowerment and the Quest for Emancipation. Cambridge University Press
Abstract: While investors have traditionally been viewed as rational, with time, some variations from rationality have been experienced and this can be attributed to behavioural biases affecting investors. Investors trade excessively, follow the behaviours of other investors and sell wining stocks while holding onto losing stocks. The researcher aimed to determine the effect of behavioural biases on investment decisions for individual investors at NSE. The target population was individual investors at NSE.A sample of 100 investors was selected for this study and data collected through questionnaires. In the study, descriptive research design was used, as it is good in explaining behaviours and attitudes. Descriptive and inferential statistics were employed in the analysis and STATA 13.0 was used for analysis. Data were expressed in frequencies and percentages and results presented in tables and figures. The relationship between the dependent and independent variable was established using simple regression analysis. Regression diagnostics tests including tests for normality, heteroscedasticity and multicollinearity were carried out to ensure fitness of the model. The researcher did correlation analysis and results indicate there was a significant weak negative correlation between anchoring and investor's percentage returns. (R= -0.30, P= 0.03). Regression results indicate that anchoring, availability and herding had a significant effect on investment decisions with a P value of 0.03 for anchoring , 0.04 for availability and 0.04 for herding. Results indicates that investors who have anchoring and availability had lower returns than those without the biases. Those who had herding behaviour experienced better results than those who had no herding behaviour. Other behavioural biases were found to have no significant effect on investor's returns. From the multivariable analysis, R2 results indicate that 27.90% of the changes in investors returns can be explained by behavioural biases. The other changes in returns, 72.10% can be explained by other factors not accounted for in this study. F test from ANOVA analysis indicate that there were no big variances in the means. The study concludes that investors experience biases that affect their decisions and thus they should be sensitised on how to carefully analyse the markets and the information available to avoid poor decisions. The study recommends more education on finance topics to increase knowledge in the field.

IJSSER is Member of