| Stock market related research reveals several challenges faced by investors and policy makers such as behavioral biases and various psychological factors that cause irrational behavior in stock markets as well as uncertainities/risks that hinder stock market participation.Adding to the field of behavioral finance,this dissertation comprehensively sheds light on the factors that might contribute in these challenges in emerging markets.(1)The basic assumption of standard finance i.e.efficient market hypothesis(EMH)asserts that the stock prices in the stock markets reflect all available information and are always trade at fair value.However,the followers of behavioral finance believe that the stock prices do not solely exhibit the fundamental value of any firm,and that the behavioral factors can drive stock prices in the market and fundamental value of firm very far apart.To this end,a bunch of studies,especially in developed countries,have been proved that psychological factors influence investors'behavior and decision in the stock markets.Based on self-determination theory and behavioral finance theory,this study attempts to fill the gap by investigating the effects of psychological factors including overconfidence,conservatism,availability bias,investor's sentiment,herding bias,under/overreaction,representation bias,anchoring,religious bias,and demographics on investors'decision.The study noted that investment decision is significantly influenced by overconfidence,conservatism,sentiment bias,herding bias,under/overreaction,anchoring bias,religious bias,educational level,and investment experience.The influence of availability bias and representative bias on investment decision was insignificant.(2)The study explores the mediation and moderation effects of intrinsic and extrinsic motivation in the relationships between sources of information i.e.word-of-mouth(WOM)communication,financial advice and investors'stock trading behavior.The results exhibit that the WOM communication and financial advice significantly influence stock trading behavior.Likewise,we found that intrinsic motivations significantly mediate between financial advice and stock trading behavior.Extrinsic motivations have significant mediation effects between sources of information and stock trading behavior.Taken together,the results indicate that financial advice indirectly sparks stock trading through intrinsic and extrinsic motivations,whereas WOM communication performs the same function through extrinsic motivations.In terms of interaction effects,the study found a significant interaction between financial advice and extrinsic motivation.(3)Research on stock market participation puzzle has mostly focused on market related factors.While,in today's era of technological development,technology has not only changed the traditional ways of firms'operations,including financial industry,but also has dramatically enhanced their efficiency and production capacities.Henceforth,some of the scholars have established a vital role of technological factors such as usefulness,ease of use,perceived benefits in the stock market participation puzzle.Yet,there is a sparse literature focusing on the negative factors such as uncertainty and risks that cause the low adoption of stock trading.As such,based on social cognitive theory and perceived risk theory,this dissertation attempts to quantify the effects of different dimensions of uncertainty and risk that might have significant impact on investors'stock trading adoption in emerging markets.This study investigates the relationships of uncertainty dimensions,including perceived technology uncertainty,perceived regularity uncertainty,perceived information asymmetry with stock trading adoption and the interaction effects of trust and perceived benefits in the relationships between uncertainty dimensions and stock trading adoption in China.Moreover,it measures the direct effects of perceived risk dimensions,including time,financial,performance,social,physical,psychological,opportunity cost and privacy risk on stock trading adoption and the moderation effects of individualism/collectivism and uncertainty avoidance in the association between stock trading adoption and actual use in Pakistan.The study found significant negative effects of perceived technology uncertainty,perceived regulatory uncertainty,and perceived information asymmetry on stock trading adoption of individual investors.Perceived service intangibility was found to have only insignificant effects on stock trading adoption.In terms of interaction results,trust significantly moderates the relationship between stock trading adoption and respectively,perceived technology uncertainty and perceived information asymmetry.Similarly,perceived benefits significantly moderate the relationship between intentions to adopt IST and both perceived technology uncertainty and perceived regulatory uncertainty.Correspondingly,the study obtained significant influence of time,financial,performance,privacy and opportunity cost risks on stock trading adoption.Moreover,insignificant effects of psychological,social and physical risk were found on stock trading adoption.The moderation effects of individualism/collectivism and uncertainty avoidance were significant in the association between stock trading adoption and actual use.The overall findings provide insightful theoretical and managerial implications to regulators,brokerage firms,and government to enhance households' participation in the stock markets.The study helps investors in recognizing the influence of their own behavioural characteristics on their stock investment decision,which in turn leads rationality in the stock markets.The significant negative impact of uncertainty and risk dimensions on stock trading acceptance,imply that stockbrokers and planners should focus on such factors,which can be used for reducing the impact of various uncertainty and risks on stock trading adoption.The government can build up people confidence on holding stocks if the regulatory standards such as eligibility criteria of stock brokerage firms,punishments for violating investors' privacy,and standards for services and charging fees etc.,for all stakeholders involved in the entire system of stock exchange,are clear,strong,and enforced in effect.Besides the practical implications,the study has several theoretical contributions and gives an impetus for future research possibilities for academicians and practitioners. |
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