The influence of psychological factors of individual investors on the target of invectors in vietnam stock market

MINISTRY OF EDUCATION AND TRAINING
UNIVERSITY OF ECONOMICS HOCHIMINH CITY
----------

NGUYỄN BÍCH CHƯƠNG

The influence of psychological factors of individual investors on the target of
investors in Vietnam stock market

MASTER OF BUSINESS

HO CHI MINH CITY, 2014


MINISTRY OF EDUCATION AND TRAINING
UNIVERSITY OF ECONOMICS HOCHIMINH CITY
----------

NGUYỄN BÍCH CHƯƠNG

The influence of psychological factors of individual investorson the target of
investors in Vietnam stock market
MAJOR: FINANCE / ACCOUNTING
MASTER THESIS(Honours)
SUPERVISOR: Dr. TRẦN HÀ MINH QUÂN

HO CHI MINH CITY, 2014


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ACKNOWLEDGEMENT
I wish to acknowledge the support of my supervisors, Dr. Tran Ha Minh Quan
who tirelessly encouraged and guided me in the completion of this research and was
always available to tune me in the right direction.
I also express the most enthusiastically grateful to my professors at
International School of Business, University of Economics, Ho Chi Minh City, for
their teaching and guidance during my course.
I wish to recognise the support and encouragement I received from my friends
to help each other to complete our theses.
I wish to thank my mum who has always supported me in my goals and equally
encouraged me in my studies.
I wish to thank my company, Dong Nai Urban Environment Service Company
Limited for creating favorable conditions of time and money for me to complete my
course.


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Abstract
Economic activities appeared thousands of years ago, when people just
exchange each other‟s basic necessities, until great progress today, economy have
been extensively studied, but behavioral finance is a new area. Behavioral finance
theories, which are based on the psychology, attempt to understand how emotions and
cognitive errors influence individual investors‟ behaviors.
This study examines the relationship between investors‟ sentiment and their
target on Vietnam stock market. There are many psychological factors that affect
performance of investors, but this paper focus on four psychological factors of
individual investors: Overconfident, ExcessiveOptimism, Psychology of Risk and
Herd Behavior. The target of investors is investor look for short-term arbitrage or
dividend income and capital gains in the long-term.

The servey was conducted at some sercurities companies at Ho Chi Minh City
and Bien Hoa city, 400 questionaires were distributed directly to investors, 214 votes
was eligible. The results show that there is existence of psychological factors of
individual investors in the stock market and they impact the target of investors.
As there are limited studies about behavioral finance in Vietnam, this study is
expected to contribute significantly to the development of this field in Vietnam.
Keywords: Stock market, behavioral finance, overconfident, optimism, herd
behavior, psychology of risk.


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Abstract ................................................................................................................................ 2
CHAPTER 1: INTRODUCTION........................................................................................ 5
1.2 Problem statement .................................................................................................... 6
1.3 Scope ........................................................................................................................ 7
1.4 Research questions ................................................................................................... 8
1.5 Research Structure ................................................................................................... 8
CHAPTER 2: LITERATURE REVIEW AND HYPOTHESES ........................................ 9
2.1 Target of investors ................................................................................................... 9
2.2 Review of psychological factors and hypotheses .................................................. 10
2.2.1 Overconfidence ............................................................................................... 10
2.2.2 Excessive Optimism ....................................................................................... 11
2.2.3 Psychology of Risk ......................................................................................... 13
2.2.4 Herd Behavior ................................................................................................. 15
2.2.5 Moderator variables ........................................................................................ 16
2.3 Model ..................................................................................................................... 18
CHAPTER 3: METHODOLOGY ..................................................................................... 19
3.1 Research process .................................................................................................... 19
3.2 Data collection ....................................................................................................... 19

3.3 Measurement items ................................................................................................ 20
3.4 Pilot study .............................................................................................................. 21
3.5 Main survey............................................................................................................ 22
3.6 Methodology of data analysis ................................................................................ 22
3.6.1 Descriptive statistics ....................................................................................... 22
3.6.2 Reliability analysis .......................................................................................... 22
3.6.3 Exploration factor analysis (EFA) .................................................................. 23
3.6.4 Binary logistic regression ............................................................................... 23
CHAPTER 4: RESEARCH RESULTS............................................................................. 24
4.1 The main characteristics of the sample .................................................................. 24
4.2 Identify the general behavior of individual investors ............................................ 26
4.2.1 Overconfidence ............................................................................................... 26


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4.2.2 Excessive Optimism ....................................................................................... 27
4.2.3 Psychology of Risk ......................................................................................... 28
4.2.4 Herd behavior ................................................................................................. 29
4.3 Exploring and measuring the psychological factor group constitutes the
behavior of individual investors................................................................................... 29
4.3.1 Over Confidence ............................................................................................. 30
4.3.2 Excessive Optimism ....................................................................................... 31
4.3.3 Psychology of risk .......................................................................................... 32
4.3.4 Hers behavior .................................................................................................. 33
4.4 Exploratory factor analysis (EFA) ......................................................................... 33
4.5 Check the existence of the psychological factors .................................................. 37
4.5.1 Overconfident ................................................................................................. 37
4.5.2 Excessive Optimism ....................................................................................... 37
4.5.3 Psychology of Risk ......................................................................................... 38

4.5.4 Herd behavior ................................................................................................. 39
4.6 The relationship between behavioral factors with gender, age and level .............. 39
4.7 The effect of behavioral factors to investors‟ target .............................................. 43
4.8 Hypothesis testing result ........................................................................................ 44
CHAPTER5:CONCLUSION,IMPLICATIONS,AND LIMITATIONS .......................... 46
5.1 Conclusion ............................................................................................................. 46
5.2 Managerial implications......................................................................................... 47
5.3 Limitation and for further research ........................................................................ 51
References ......................................................................................................................... 53
APPENDIX 1: Questionnaire ............................................................................................ 56
APPENDIX 2: The frequency test of the general behavior of individual investors ......... 58


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CHAPTER 1: INTRODUCTION
1.1 Research background
Vietnam's stock market was launched in 2000, in the first 5 years, the market
does not seem to really attract the attention of the wider public and the up and down
movements of the market does not create social impact that may extend to affect
theoperation of the economy as well as the lives of every citizen.But from the
beginning to the mid of 2006, with growth reaching 60%, Vietnam stock market
became the 2nd faster frowth “point” in the world anh the awakeing of the fledgling
market is increasingly “fascinated” investers at domestic and abroad. Many reasons
are given to explain this strong growth, but the majority opinions, said that one of the
main causes is psychological investing, investing with the movement of investors in
domestic. “Playing” the stock has been talking as a "fad", a "movement" spread with
stunning speed. After a time developextremely strongly and considered as one channel
with highest interest, end of 2009 stock market peaked at 1,170 points and no brakes
sliding bubble stock has burst, many investors were bankrupted… The sharp decline

of the VN-Index was affected by various factors such as tightening of monetary
policies, especially lending for stock investment, high deposit interest rates, high
inflation rate, and a recession of the US economy. Lack of timely intervention of
authorities was also areason why VN-Index fell dramatically. Many comments and
recommendations given by security companies or even global financial organizations
did not match with what has really happened. Belief in the growth of stock market did
not help these analysts to save the VN-Index from remarkable declination. After 13year growth of Ho Chi Minh stock market, Vietnamese investors‟ decisions are still
difficult.


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1.2 Problem statement
Every theory, every model of efficient markets seems pointless in Vietnam
stock market. Maybe it's time to use the theory based on basic human psychology to
explain stock market anomalies. Behavioral finance can be helpful in this case because
it is based on psychology to explain why people buy or sell stocks (Waweru et al.,
2008).
Behavioral finance is a financial sector that proposes psychology-based theories
to explain the abnormal stock market. In behavioral finance, it is assumed that the
information structure and the characteristics of market participants affect system
investment decisions as individuals and as a result of market. Behavioral finance
attempts to explain and increase understanding of the theoretical models of investors,


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including the emotional processes involved and the extent to which they influence the
decision-making process. Basically, behavioral finance attempts to explain what, why,
and how of finance and investment, from the human perspective. There has been

controversy about the true meaning and effect of financial behavior since the field
itself is still developing and perfecting itself. This evolution continues to occur
because many scholars have a wide range of such diverse specialties and academic and
professional. Finally, behavioral finance studies of psychological factors and
sociological processes that affect financial decisions of individuals, groups and
organizations.
Noted by Daniel Kahneman in a speech entitled "Psychology and Market" at
Northwestern University in 2000: "If you listen to financial analysts on the radio or on
TV, you quickly learn that the market has a psychology. Indeed, it has character. It has
thoughts, beliefs, moods, and sometimes stormy emotions."
1.3 Scope
There are many psychological factors discovered through research that they
have a significant impact on the behavior of investors. Among those, there are four
common psychological factors exist in almost every human being, there are:
Overconfident, ExcessiveOptimism, Psychology of Risk and Herd Behavior.
The research was conducted at some securities companies in Ho Chi Minh city
and Bien Hoa city,
The goal of this research: prove there is existenceof psychological factors of
investorsin Vietnam stock market and clarify the impact of psychological factors to
investors‟ target?
This research focuses on understanding and analyzing the impact of the four


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psychological factors: over-confident, optimistic, attitude toward risk and herd
behaviour to individual investors‟ target on Vietnam stock market.
1.4Research questions
The research focuses on achieving the following questions:
•

What are the behavioral variables influencing investors‟ target? The
relationship between these variables.

•

Are there herd psychological effects on Vietnam stock market?

•

At which impact levels (if any) do the behavioral factors influence the
individual investors‟ target at the VietNam Stock market?

1.5 Research Structure
This thesis has five chapters
Chapter 1: Introduction, give the overview of the research and the problem need
to be solved.
Chapter 2: Literature review and hypotheses, describes theoretical background,
build the theoretical model and hypotheses
Chapter 3: Methodology, appraise measurement scale, research model and
hypotheses proposal.
Chapter 4: Research results, present the result after conducting the research
methodology and evaluation.
Chapter 5: Conclution, implication and limitations.


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CHAPTER 2: LITERATURE REVIEW AND HYPOTHESES
This chapter presents a review of relevant literature related to factors affecting

individual investors‟target. This chapter also states the hypotheses and propose
conceptual model for this study.
2.1 Target of investors
In this study, target of investors was shown through their investment decision
making: investors looking for short-term arbitrage or dividend income and capital
gains in the long-term.
A long-term investment was defined is holding a stock over one year.
Theoretically, if you hold a stock for a long time, you will go through periods of
volatility and eventually, then you can gain profits as the underlying company grows,
with an assumption that a good company will grow increasingly and revenues over
time. Long-term investment also provides dividend income over the long-term.
Short-term investment is not limited to day trading. Short-term investment was
defined as those that are hold their stock within one year and then take advantage of
market volatility that produces a quick profit.
Geist (2003) recognized the impact of psychology on investors‟ financial
decision making. He said that from the investing process however much we try to
eliminate our psychology, we will finally fail, because our conscious and unconscious
psychological convictions continually operate and influence our decision-making.


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2.2 Review of psychological factors and hypotheses
2.2.1Overconfidence
In the financial field, overconfidence is defined as the overestimating valuation
of a financial asset (Odean, 1998).
Investing is not an easy process. Investors have to gather information, analyze
the information, and making a decision. However, investors used to misinterpret the
accuracy of our information when they are overconfident and overestimate their skill
in analyzing it. It happens after we get some success. After getting some success in the

market, investors may exhibit overconfident behavior.
Many psychological researchers have found that investors used to overestimate their
knowledge (Lichtenstein, Fischhoffs and Philips, 1982) and they also overestimate their
ability and with the personal importance of the task, their overestimates increase.
"People are overconfident. Psychologists have determined that overconfidence
causes people to overestimate their knowledge, underestimate risks, and exaggerate
their ability to control events. Does overconfidence occur in investment decision
making? Security selection is a difficult task. It is precisely this type of task at which
people exhibit the greatest overconfidence." (Nofsinger, 2001).
According to Daniel and Titman (1999) overconfidence effects on the way that
individual investors process information directly and indirectly. The direct effect,
discussed by Daniel, Hirshleifer and Subrahmanyam (1998) is that investors put too
much weight on their own information because they tend to overestimate the precision
of their information. The indirect effect occurs because investors filter information and
bias their behavior in ways that allow them to maintain their confidence.


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Barber and Odean (1999) also believe that overconfidence cause high levels of
trading in financial markets. They attest that overconfidence increases trading activity
because it causes investors make sure about their own opinions and not consider
sufficiently the other opinions. In their paper, they test whether a separate class of
investors, those with accounts at discount brokerages, trade excessively, in the case
that their trading profits are not enough to cover their costs.
In the precision of information, their method to test for overconfident was to
determine whether the securities bought by the investors outperformed those they sold
by enough to cover the costs of trading. They research return horizons of 4 months,
one year and two years following each transaction (they calculated returns from the
CRSP daily return files). The results showed that on average, the securities that

investors bought underperformed those they sold.
Several studies analyze the impact of gender on the confidence level and found
that both men and women show overconfidence, but at men the level is higher (Barber
and Odean, 2001), but women make the individual investment performance better than
men. Overconfidence leads to more transactions but hurt the investment performance.
H1. Overconfidence has a positive impact on investor‟s target.
2.2.2 Excessive Optimism
Althought there are many researchers have extensively studied the effect of
overconfident, but the effect of optimism on individual economic choice has little
attention. Puri and Robinson (2007) is one of the first recorded the impact of optimism
on individuals economic decisions. Distinguishing between reasonable and excessive
optimism, they document that moderate amount of optimism is associated with better
decision making. They recorded that reasonably optimistic people work harder. It is


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important to record that optimism is subjective awareness which depends on
personality characteristic.
In psychology and in finance, optimism took great attention and there has been
a lot of literature on the effect of optimism in decision making. Optimism could be
defined as the trend to expect the best possible outcome for a certain situation. More
detail, optimism in literature is defined as the generalized positive expectations about
future events (Scheier and Carver (1985)).
Optimism is a brainpower attitude that explains situations and events as being
best optimized, meaning that in some way for factors that may not be fully
comprehended, the present moment is in an optimum state. The concept is typically
expanded to encompass the attitude of hope for future conditions show as optimal as
well. This knowledge, although censured by counter views such as pessimism,
idealism and realism, leads peopel believes that everything will be good.

A typical theoretical studies performed by Gervais, Heaton, and Odean (2002)
found that excessive optimism often cause a positive impact because it encourages
managers to conduct investment. This effect is positive because the fear of risk causes
the negative impact on the value of the company. However, excessive optimism also
causes a negative impact because it may lead companies or investors accept the
opportunity to invest in negative NPV of the asset or the high risk assets.
The status of the human psyche tends to rate themselves as superior than
average. This make them often outrageous optimistic about the market, economic
systems and the investment potential. Many excessive optimism investors said that bad
investments would not have influence with them that could affect the portfolio because
people failed to admit workers potentially detrimental in the investment decision.


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The effect of psychological deviations due to excessive optimistic:
- The psychology of optimism might be the main reasons investors are too
focused on the company and their investment because of the optimism can bring to
them the thought that other companies in the low races with their companies.
- The psychology of optimism may be the cause of making the investment
trust's net gain from the market, when in fact they are faced with inflation, fees, and
taxes.
- The psychology of optimism may be the cause for people to invest more rosy
reports about the prospects for the company from the analyst or the main listing. In
addition, those who invested excessively optimistic are generally less important to the
bad news about their investments. At the same time, optimistic sentiment could cause
investors tend to invest in companies in close proximity to their geographic areas
(local) because they may be overly optimistic about the local area overview.
H2. ExcessiveOptimism has a positive impact on investor‟s target.
2.2.3 Psychology of Risk

Since the 1960s, many researchers have used term of perceived risk to explain
consumers‟ behavior. Within the term of consumer behavior, perceived risk is the risk
that a consumer believes it exists in the purchase of goods or services, whether a risk
actually exists or not. The notion of perceived risk has a strong basis in the term of
consumer behavior that is rather similar with the discipline of behavioral finance, that
mean between consumers and investors‟ decision making process, there are many
similarities.
In stock market, investors usually make many uncertain decisions due to
unclear informations, that why investing is really risky. The perceived degree of


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uncertainty by individuals affects their decisions regarding investing, consumption and
saving. Perceptions include psychological and emotional aspects, which later on
instruct judgment and decision making.
Research has shown there is consistency in the public‟s deviations from
objective risk evaluation and that emotional counters appear to drive perceived benefit
and perceived risk (Alhakami and Slovic, 1994). They found that if a stock was
„liked‟, people tended to evaluate its riskwas low and its benefits was high and which
stock was „disliked‟, the risk was high and benefit was low, which leads to a negative
relationship between risk and return.
Some studies have shown that attitude to stock market risk depends on the
recent behaviour of the stock market (Clarke and Statman 1998; Shefrin 2000;
MacKillop 2003; Grable, Lytton and O'Neill 2004; Yao, Hanna and Lindamood 2004).
The other perspective on that evidence can be proceededfrom research by Weber and
Milliman (1997) who offered that risk preference may be stable, such as stock market
performance, may be engendered by changes in perceptions of risk. They further found
that influences on investment choices simultaneously affected risk perceptions.
When investors are happy, they don‟t like gamble, because they don‟t want to

hazard their good mood. Thus, we don‟t know exactly how emotional states affect risk
preferences and translate into market pricing. As with the evidence on the impact of
mood on risk choices, experimental evidence concerning the relationship between risk
endurance and depression does not provide a clear knowledge. Some studies question
the significance of perturbation and depression in explaining choices above risky
alternatives Others infer that risk aversion is correlated with depressive trend
(Eisenberg, Baron, and Seligman 1998). More importantly, as these authors recognize,


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risk aversion is correlated with perturbation and depression. Eisenberg, Baron,
andSeligman report that the correlation between depressive symptoms and risk
aversion result from the correlation with perturbation.
Economic risks can be manifested in lower incomes or higher expenditures than
expected. The causes can be many, for instance, the hike in the price materials, the
lapsing of deadlines for construction of a new operating facility, disruptions in a
production process, emergence of a serious competitor on the market, the loss of key
personnel, the change of a political regime, or natural disasters.
H3. Psychology of Risk has a negative impact on investor’s target.
2.2.4 Herd Behavior
Psychology herd or mob mentality describes the way that some people are
affected by their close ones through certain behaviors, trends, and / or under the
fulcrum. The social psychologists study the related topics such as group intelligence,
crowd wisdom, and decentralized decision.
Psychology herd is mental phenomena of many individuals, arising from the
interaction between the psychology of the crowd members or the community, or by
certain psychological prominent, influential. That is the conscious personality
(individual consciousness) disappear and the emotional turning, thinking of the
individuals is in the same direction.

In the stock market, herd behavior involves the investors tend to ignore the
nature of the personal information, incline the observed results (Bikhchandani and
Sharma, 2001), incompatible with the basic elements and the foundation of the market.
In financial market herding effect is identified as trend of investors‟ behaviors
to follow the others‟ actions. Investors usually calculate carefully the present of herd,


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because investors rely on community information more than private information can
conduct the price deviation of the securities from fundamental value; therefore, many
good chances for investment at the present can be impacted. Researchers also pay
attention to herding; because its effect on stock price changes can inpact the attributes
of risk and return models and this has impacts on the viewpoints of asset pricing
theories (Tan, Chiang, Mason & Nelling, 2008).
In the area of behavior, herding can engender some emotional biases, including
conformity, congruity and cognitive conflict. Investors may prefer herding if they
believe that herding can help them to extract useful and reliable information. In this
instance, herding can contribute to the evaluation of professional performance because
low-ability ones may mimic the behavior of their high-ability peers in order to develop
their professional reputation (Kallinterakis, Munir & Markovic, 2010).
Follow Bikhchandani and Sharma, herd behavior exists in two basic forms of
herd behavior is intentional herd behavior and unintentional herd behavior.
Perspective review on unintentional herd behavior, Christie and Huang (1995) defines
that herd behavior is when small investors remove personal beliefs and conduct
investment decisions primarily based on those behaviors collective market.
H4. Herd Behavior has a positive impact on investor’s target.
2.2.5 Moderator variables
The age
The psychologicalevidence shows that older people will react inappropriately

with new information because they usually treat and collect new informationsslowly
and inefficiently. Older investors often have the effect of account allocation weaker


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(Dhar and Zhu, 2006)and level of confidence lower than the young investor (Barber
and Odean, 2001). Research by Kumar (2006) also pointed out that investors were also
less implicated in adventure investment activities (take gamble) on the stock market.
At the same time, the author also clarified the relationship between age, investment
experience and investment skills. Research showed that the investment result after 70
years old declined, this demonstrated that the negative effects of age. The regression
estimates show that investment skills increase with experience due to the positive
impact of learning over time but declines with age due to adverse effects of cognitive
age. At the same time, the decline occurred more rapidly in the older investors have
lower levels and poorer.
Gender
A number of studies have also clarified the relationship between gender and
investment decisions on Vietnam stock market. The relationship between gender and
psychological confidence, Pulford (1997) concluded malesare more confident than
females. At the same time, research by Odean (1998) also pointed out that, the
overconfident makes investors trade more often than other investors and as a result the
transactions are often ineffective.
Level
Level of investors help them implement and apply their competencies, talents,
help improve the efficiency of investment, investors have a higher level, they aremore
optimistic, more confident, less pessimistic and less herd behavior.
Investors have low level tend to appreciate the important role of the elements
of macroeconomics in making individual securities investment decisions. Beside,
there

are

many

factors:

recommendations

of

analysts,

market

research;


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recommendations of the stock broker; recommendations from the amateur analysts;
insider trading informations; intuition, rumors…also affect investors.The lower level,
the impact of these elements stronger,vice versa. This affirms, reviewed at a certain
aspects, level of investors have a positive impact on the psychology of individual
investors.
2.3 Model

Overconfidence

H

1

ExcessiveOptimis

H
2

m
Psychology
of

H
3

HerdRisk
Behavior

H
4

4

Gend
er

Age

Level

Investor’s target

Figure 2.Conceptual
model


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CHAPTER 3: METHODOLOGY
This chapter presents the research design process, data collection method and
find out relationship between psychological factors and individual investors‟target in
VietNam Stock Market.
3.1 Research process
The purpose of these methods is comparing between theory and reality. The
research process includes eight steps illustrate in Figure 3.1

3.2 Data collection
There are many kinds of data collection methods such as structured interviews,
semi-structured interviews, unstructured interviews, self-completion questionnaire,
observation, group discussion, etc, self-completion method was chosen. This method
is chosen for some reasons. The first reason is that as the research questions are
defined clearly, questionnaire is the best choice to have standardized data, which is
easily to process, and analyze. As the respondents are investors, they may not have


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much time for interviews, thus, questionnaires may make them feel more comfortable
because they can do it whenever they have free time. Questionnaires also are more
convenient for respondents in case they need to provide some sensitive information, in
other words; they tend to be more honest than in an interview (Bryman & Bell, 2007).
3.3 Measurement items

This essay was based on the investigation results analysis by questionnaires to
investors, consists 19 questionnaires to identify and measure the behavior of individual
investors. (Trần Thị Hải Lý & Hoàng Thị Phương Thảo, 2012).
These questions help assess the level of investor confidence:
 Investors are confident that they have the ability to choose good stocks than others (c1).
 Investors completely control their investment activities (c2).
 Investors understand clearly about stocks in their portfolio (c3).
 Investors fully understand the market (c4).
 Investors have never done an impulsive transaction (c5).
Optimistic sentiment was reflected in the results answer of these questions:
 Investors continued to invest in the market (in terms of market going slight
increase when the survey was conducted) (o1).
 Investors continued to increase capital in the market within the next year (o2).
 Over the years, investors believe that the stock market will rehabilitate (o3).
 If the VN-Index declined by 5%, the investor believes that the index will quickly
recover (o4).
 Vietnam stock market is still an attractive investment channel. (o5)
Attitudes to risk are reflected in the results answer of these questions:


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 Investors liked the fluctuate sharply opportunity to receive higher profits (r1)
 Investors prefer to invest in companies that are familiar or well-known about it (r2)
 When prices fall, investors usually hold stocks longer to wait the prices increase
again (r3)
 Investors prefer to invest in companies that pay stable dividends (r4)
Herd mentality is shown by the results answer of these questions:
 Does an investor consult others decision when investing or not? (ex: petition of
broker, analysts…) (h1)

 If investors have private information contrary the majority of other investors‟
transactions in the market, do they decide to keep their or not? (h2)
 Do investors look at the trading volume on the electrical panel to make the
investment decision or not? (h3)
 Do investors trade according to foreign investors? (h4)
Investment objectives variable measured by the question:
- Investors looking for short-term arbitrage or dividend income and capital gains in the
long term? (Y)
3.4Pilot study
Two phases of study were undertaken in this study: a pilot study and a main
survey. A pilot study was conducted before formal main survey in order to control
errors such as ambiguous or repetitive questions. In the pilot study researcher did a
pilot survey of 30 people at some security companies. The questionnaire was divided
into two parts: personal information, behavioral factors influencing investment target.
In the part of personal information, nominal measurement was used. Nominal scales
were used to classify objects: gender, age, educational level.


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In the second part, the questions were designed by 5-point Likert scale (1:
strongly disagree, 2: disagree, 3: neutral, 4: agree, 5: strongly agree).
3.5Main survey
The main survey was distributed directly to investors at some securities
companies in Bien Hoa city and Ho Chi Minh city, 400 surveys were given. Beside,
the author designed the questionnaires on docs.google.com, then posted onsome
forums: Phutoan.com.vn, Vietstock.vn, Saga.vn…,The purpose of this survey was to
validate the measures and to test the structural model.The detail of the questionnaire in
Vietnamese version will be shown in Appendix 1.
3.6Methodology of data analysis

3.6.1 Descriptive statistics
To count and evaluate the general information like Mode of data collection,
gender, age, education level, of respondents, the descriptive statistics is conducted in
this study.
3.6.2 Reliability analysis
Thesis will perform verification scales to measure the psychological group
through Cronbach's alpha coefficient to optimize the psychological scale. Cronbach‟s
alpha coefficient was used to test the scales on psychological groups. In generally, the
value of Cronbach‟s Alpha for acceptable reliability is 0.7, it could decrease to 0.6 in
exploration research, and any variables, which have the value of Correlated Item-Total
Correlation below 0.4, would consider to be rejected (Hair et al, 1998).


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3.6.3 Exploration factor analysis (EFA)
In this study, EFA method was used mostly for data reductions reason and test
validity of measurement scale.Factor analysis can be used to find meaningful patterns
within a large amount of data.The goal of factor analysis is to reduce “the
dimensionality of the original space and to give an interpretation to the new space,
spanned by a reduced number of new dimensions which are supposed to underline the
old ones” (Rietveld & Van Hout 1993).By performing EFA, the underlying factor
structure is identified. For this study, Exploration factor analysis will be conducted by
Varimax rotation in condition of KMO value more than 0.5.
3.6.4 Binary logistic regression
Binary logistic regression is a type of regression analysis where the dependent
variable is a dummy variable (coded 0, 1), in this study, the dependent variable was the
target of investors: Investors looking for short-term arbitrage or dividend income and
capital gains in the long term? Code 0 is investors choose invest in short-term, code 1
is investors choose invest in long-term.