FACTORS AFFECTING INVESTMENT DECISIONS AMONG LISTED FIRMS IN THE NAIROBI SECURITIES EXCHANGE
The importance of investment decision-making cannot be overstated since many of the factors that result in a firm’s success or failure are directly tied to the choices of decisions made. When wrong investment decisions are made, they are not easily reversible and if the firm persists or reverses them they may lead to bigger losses. It is for this reason that this research sought to investigate factors affecting investment decisions among listed firms in the Nairobi Securities Exchange. The study focused on the following factors: financial market information, investment risk, investor’s financial knowledge, and firms’ profitability to establish whether they influence investment decisions. The study employed a descriptive survey design and targeted 178 finance managers of the 67 firms listed on the NSE. Stratified and purposive sampling techniques were adopted in this study and a questionnaire was used to collect data. The researcher employed descriptive and inferential statistics to analyze data collected from the study. The results were analyzed and presented using tables. Based on the results, the researcher concludes that the four independent variables; financial market information, investment risk, firms’ profitability and investor’s financial knowledgesignificantly influence investment decisions of firms listed on the NSE.
Afrifa, G. A., & Padachi, K. (2016). Working capital level influence on SME profitability. Journal of Small Business and Enterprise Development, 23(1), 44-63. DOI: https://doi.org/10.1108/JSBED-01-2014-0014
Avram, E. L., Savu, L., Avram, C., Ignat, A. B., Vancea, S., & Horja, M. I. (2009). Investment decision and its appraisal. Annals of DAAAM& Proceedings, 1905-1907.
Baker, H. K. & Nofsinger, J.R. (2010).Behavioral Finance: Investors, Corporations and Markets. New Jersey: John Wiley and Sons. DOI: https://doi.org/10.1002/9781118258415
Baker, H. K., & Filbeck, G. (Eds.). (2013). Portfolio theory and management. Oxford University Press.
Binh, T. Q. (2014). A Case study of voluntary disclosure by Vietnamese Listed Companies. International Journal of Management Sciences and Business Research, 3(4).
Buonanno, G., Faverio, P., Pigni, F. , Ravarini, A. , Sciuto, D. & Tagliavini, M. (2005). Factors affecting ERP system adoption: a comparative analysis between SMEs and large companies. Journal of Enterprise Information Management, 18(4), 384-426. DOI: https://doi.org/10.1108/17410390510609572
Elton, E. J., & Gruber, M. J. (1997). Modern portfolio theory, 1950 to date. Journal of Banking & Finance, 21(11-12), 1743-1759. DOI: https://doi.org/10.1016/S0378-4266(97)00048-4
Erkekoglu, H., & Kilicarslan, Z. (2016). Do political risks affect the foreign direct investment inflows to host countries? Journal of Business Economics and Finance, 5(2), 218-232. DOI: https://doi.org/10.17261/Pressacademia.2016219263
Fama, E. F., & French, K. R. (2004). The capital asset pricing model: Theory and evidence. Journal of economic perspectives, 18(3), 25-46. DOI: https://doi.org/10.1257/0895330042162430
Farooq, A., & Sajid, M. (2015). Factors Affecting Investment Decision Making: Evidence from Equity Fund Managers and Individual Investors in Pakistan. Research Journal of Finance and Accounting, 6(9), 2222-1697.
Frias-Aceituno, J. V., Rodríguez-Ariza, L., & Garcia-Sánchez, I. M. (2014). Explanatory factors of integrated sustainability and financial reporting. Business strategy and the environment, 23(1), 56-72. DOI: https://doi.org/10.1002/bse.1765
Goldstein, I., & Yang, L. (2017). Information disclosure in financial markets. Annual Review of Financial Economics, 9, 101-125. DOI: https://doi.org/10.1146/annurev-financial-110716-032355
Hung, A., Heinberg, A., & Yoong, J. (2010). Do Risk Disclosures Affect Investment Choice?. DOI: https://doi.org/10.7249/WR788
Kamuti, J. M., & Omwenga, J. (2017). "Factors influencing investment decisions in Nairobi Securities Exchange: A case of Dyer & Blair Investment Bank Limited." International Academic Journal of Economics and Finance, 2(3), 1-15.
Kaplan, R. S., & Mikes, A. (2012). Managing risks: a new framework. Harvard Business Review, 90(6), 48-60.
Kefela, G. T. (2010). Promoting access to finance by empowering consumers-Financial literacy in developing countries. Educational Research and Reviews, 5(5), 205-212.
Kofarbai, H. Z., & Zubairu, M. (2016). Efficient market hypothesis in emerging market-a conceptual analysis. European Scientific Journal, 12(25). DOI: https://doi.org/10.19044/esj.2016.v12n25p260
Kothari, C. R. (2004). Research methodology: Methods and techniques. New Age International.
Laffont, J. J., & Maskin, E. S. (1990).The efficient market hypothesis and insider trading on the stock market. Journal of Political Economy, 98(1), 70-93. DOI: https://doi.org/10.1086/261669
Lawrence, A. (2013). Individual investors and financial disclosure. Journal of Accounting and Economics, 56(1), 130-147. DOI: https://doi.org/10.1016/j.jacceco.2013.05.001
Makori, D. M., & Jagongo, A. (2013). Working capital management and firm profitability: Empirical evidence from manufacturing and construction firms listed on Nairobi securities exchange, Kenya. International Journal of Accounting and Taxation, 1(1), 1-14.
Murumba, K. (2012). Performance Measures for Mutual Funds Performance. An Empirical Review: http://erepository.uonbi.ac.ke.
Nye, K., Pete, W. & Cinnamon, H. (2013). Personal Financial Behavior: The Influence of Quantitative Literacy and Material Values. Numeracy, 6 (1):23-26.
Osabutey, E. L., & Okoro, C. (2015). Political risk and foreign direct investment in Africa: The case of the Nigerian telecommunications industry. Thunderbird International Business Review, 57(6), 417-429. DOI: https://doi.org/10.1002/tie.21672
Pilbeam, K. (2018). Finance & financial markets. Macmillan International Higher Education. DOI: https://doi.org/10.1057/978-1-137-51563-6
Popa, A. E., & Ciobanu, R. (2014). The financial factors that influence the profitability of SMEs. International Journal of Academic Research in Economics and Management Sciences, 3(4), 177. DOI: https://doi.org/10.6007/IJAREMS/v3-i4/1117
Reilly, F. K., & Brown, K. C. (2006).Investment analysis and portfolio management (Thomson/South-Western). Ch. 5, Securities Market Indexes.
Roberts, B., Struwig, J., Gordon, S., Viljoen, J., & Wentzel, M. (2012). Financial literacy in South Africa: Results of a baseline national survey. Pretoria: Financial Services Board.
Rusu, M. (2013). International Economic Conference of Sibiu 2013 Post Crisis Economy: Challenges and Opportunities, IECS 2013 Smart Specialization a Possible Solution to the New Global Challenges. Procedia Economic and Finance, 6, 128-137. Sibiu, Romania: Curran Associates. DOI: https://doi.org/10.1016/S2212-5671(13)00124-X
Sachse, K., Jungermann, H., & Belting, J. M. (2012). Investment risk–The perspective of individual investors. Journal of Economic Psychology, 33(3), 437-447. DOI: https://doi.org/10.1016/j.joep.2011.12.006
Souza, T. T., & Aste, T. (2019). Predicting future stock market structure by combining social and financial network information. Physica A: Statistical Mechanics and its Applications, 535, 122343.
Copyright (c) 2020 Prince Worzie
This work is licensed under a Creative Commons Attribution 4.0 International License.
License and Copyright Agreement
In submitting the manuscript to the journal, the authors certify that:
- They are authorized by their co-authors to enter into these arrangements.
- The work described has not been formally published before, except in the form of an abstract or as part of a published lecture, review, thesis, or overlay journal.
- That it is not under consideration for publication elsewhere.
- That its release has been approved by all the author(s) and by the responsible authorities – tacitly or explicitly – of the institutes where the work has been carried out.
- They secure the right to reproduce any material that has already been published or copyrighted elsewhere.
- They agree to the following license and copyright agreement.
Authors who publish with International Journal of Engineering Technologies and Management Research agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License (CC BY-SA 4.0) that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
- Authors can enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or edit it in a book), with an acknowledgment of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) before and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work.
For More info, please visit CopyRight Section