Research Proposal: Analyzing Investment Decision-Making Factors

This research proposal investigates the multifaceted factors that influence investment decisions. It begins by introducing the significance of investment decisions and the various elements considered by investors, including market outcomes, risk-return parameters, and individual behavior. The proposal clearly outlines the problem statement, which highlights the debate over which factors investors prioritize. The research aims to identify the key influences on investment choices and recommend strategies for investors to maximize returns. The report justifies its focus on individual investors and their attitudes, behaviors, and adherence to financial principles. The framework section defines critical variables like investment decisions, dividend payments, return expectations, emotional inclinations, and behavioral science, supported by past research. The methodology employs a qualitative approach, using secondary data from financial reports and international bodies to analyze factors affecting investment choices. The study aims to provide a comprehensive understanding of investor behavior and market dynamics.

RUNNING HEAD: RESEARCH PROPOSAL
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Factors to consider before making an investment decision

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Table of Contents
1 Introduction.............................................................................................................................3
2 Problem Statement..................................................................................................................4
3 Aims and Objective.................................................................................................................4
4 Potential Output Justification..................................................................................................5
5 Framework..............................................................................................................................6
Investment Decision...............................................................................................................6
Different factors......................................................................................................................8
6 Methodologies.........................................................................................................................9
7 Research Project Organization..............................................................................................11
8 Conclusion.............................................................................................................................13
9 References.............................................................................................................................14

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1 Introduction
Investment decisions are made by investment managers and investors with a motive to
get a higher return. In order to get a higher return on investment, many factors are considered
by investors while taking investment decisions and these decisions and supported by some
decision tools (Dhochak & Sharma, 2016). Some of the factors that influence investment
decisions are market outcomes, considering the risk-return parameter, and influenced by
personal behavior. According to Joshi (2018), investors invest where there are wealth
maximization and an increase in shareholder value by the companies. On the other side, the
risk that investors take while investing is directly prepositional to return they are getting. In
general, terms, investing decision includes various factors such as characteristics or outcome
of the market, individual risk profile and information related to accounting or financial
aspects of companies.
This report includes a clear picture of the dependent and independent factors that
influence the decision of investors related to investment. This paper will include the solution
of problems that are stated. The main objective of the report is to identify which factors have
a major influence on investors. The report framework includes problem statement, objectives
of the study, conceptual framework and methodology used to collect and interpret data
followed by findings and conclusion. The conceptual framework includes a literature review
of different factors that influence investment decisions and criteria that are considered by
investors in order to make a decision regarding investment. At last, by analyzing which factor
has a major influence on the investors while taking an investment decision is concluded and
strategies are suggested for the organization to attract more investors.

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2 Problem Statement
According to financial theory, investors are considered as rational wealth maximizes
and follows basic financial rules before investing that is a consideration of risk and return
factors. According to traditional economic theory, people are considered as rational agents
that want to take advantage of each and every opportunity available in the market for getting
a higher return. Investors take themselves as the logical and rational decision-maker, but
when it comes to investing their emotional inclinations also plays an important role
(Nofsinger, 2017).
Due to this is a controversial scenario what factors investors considered while making
an investment decision. Hsiao & Kelly (2018), stated that expected returns, financial stability
of companies and dividend pay-out ratio are some factors that investors take into
consideration. On the other side, Nofsinger (2017), find out six other factors that are
important such as investment strategies of firms, dividend payment pattern, profits through
trading, long term investments options and portfolio of investment management, all these
factors affect the investment decision. Hence, it is a problem statement to know which factors
play an important role or greatly impact on the investment decisions taken by investors.
3 Aims and Objective
The research objective is to know the factors that influence investors while taking
investment decisions or factors that have the most influence on the investment decision.
Further, this study helps to determine the relationship between different factors and investor's
perspectives on different factors.
In a nutshell, the main purpose of this study or report is:

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RQ1 To know factors that are influencing investors while taking investing decision
RQ2 To recommend strategies that can be adopted by investors to gain high return on
investment
4 Potential Output Justification
The report justifies the factors that individual investors consider while investing in
any securities and while taking an investment decision. The report justifies different factors
that are considered by an individual based on individual attitude, common behavior and on
the basis of some old financial rules of investment. Butt, Shafi, Rehman & Shoaib (2011),
provided that the company’s factors also influence investor decisions such as dividend
payment, financial performance, and investment or growth strategies. Kuhnen & Knutson
(2011), argued that behavioral science and emotional inclinations are the main factors that
influence the decisions.
Therefore, this study focuses on the gap of different researchers and highlights the
areas that investors considered in investment decision making. In this study, the researcher
tries to find out the relationship between these factors and investment decisions and the views
of investors while considering these factors. Furthermore, an area in this report highlights the
factors that Australian investors consider while taking investment in order to strengthen the
result of the study. This study will focus on the perspectives of different authors and
economists about factors that influence investment decision making. In addition, the
Australian market scenario is taken into consideration to understand the mindset of investors
when they invest and the expectation of investors during investment. As a result, the study is
done to give a background to companies about what factors they should focus on in order to
attract more investors and to stabilize their market performance and position.

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Further, researchers also get benefit from the study as it will give the opportunity to
the researcher to widen the scope of study and identify major factors that the companies can
also consider to attract more investors. In addition, this research report can be considered as
the additional literature source to gather information about factors that are considered by
investors at the time of investment decisions.
5 Framework
This section mainly focuses on the introduction of variables that are used in this report
that are investment decision meaning, factors influencing this decision that are dividend
payment, return expectation, emotional inclination, and behavioral science. Further, in this
section work of past researchers is also presented in order to understand the background of
the study. In addition to this, investment theories and concepts are also discussed from the
different literature review.
Investment Decision
Investment is taken as the amount sacrifice at present scenario in order to earn future
returns. Present investments are not that risky but future investments are uncertain and
contain a high level of risk (Isidore & Christie,2019). Hence, investors take investment
decisions by considering different factors in order to mitigate the risk. The factors that
investors considered while taking investment decision includes both market outcome and
individual behavior. The investment decision includes a set process that has the following
steps such as the setting of objectives related to investment, security analysis, portfolio
construction and revision ad then evaluating portfolio to know the expected return and degree
of risk. The investment decision not only includes market outcomes rather it is also affected
by the cognitive and psychological aspects of investors (Schatz & Bashroush,2018).

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According to Chandra (2017), behavior science is a critical aspect in the investment
decision, it is defined as the area of psychology that plays an important role at the time of
individual decision-making process regarding investment decisions. Pasewark & Riley
(2010), said that investors have done deep research before investing but research fails as
investors behave irrationally because of fear of loss due to uncertain events.
Chandra (2017), supported the aspect that most of the investors follow a
conventionalist approach as they try to “minimize the risk at the maximum return”. The
concept of behavioral science has been developed in recent years and includes that internal
and external factors of individuals also affect financial or investment decisions. Internal
factors include the influence of family, friends, beliefs, and norms that lead to irrational
behavior by investors. External factors include the influence of accounting information,
fluctuation in share prices and market outcomes that lead to a rational decision by investors.
A rational investor mainly invests with three basic motives that are risk minimization,
liquidity maintenance and wealth maximization (Korniotis & Kumar,2011). This indicates
that a rational investor considers these three points while taking an investment decision.
Gitman, Joehnk, Smart & Juchau (2015), stated that from qualitative studies related to the
investment decision includes the reaction of investors on changes in the market and with that
evidence it is identified that investors are overly sensitive to the intangible situation. From
some of the studies related to factors in the investment decision, it is known that there is a
positive reaction between investment and market outcomes such as changes in stock prices,
increasing earnings per share and fluctuation in the market.
Huang & Pearce (2015), from its study of 32 investors highlighted that most of the
investors invest with the motive of wealth maximization and its study concluded that

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confidence and behavioral factors contribute more or play the cursory role in the investment
decisions and influence of friends, family and any market changes have no such impact on
investment decisions. The factors that have the least influence on investment decisions are
expected losses, risk minimization, family member’s opinions or views and intuition of
getting the return. Further, the factors that have more influence on investment decisions are
financial information, expected return, and behavioral science. The unexpected factors that
have no influence on investors are family recommendations and religion.
Different factors
Financial Information: Financial information that investors consider while taking
investment decisions are the financial position of firms, their income statement, retained
earnings, paid-up capital, the dividend paid, earnings per share, dividend per share, and past
performance of firms in order to understand their growth prospectus (Korniotis &
Kumar,2011).
Behavioral Finance: This area includes psychological factors that influence investors in
decision making. This theory states that investors are normal and influenced by both factors
that are psychological and tangible factors. Some of the factors under behavioral finance are
social influence, emotion, and self-deception. Investors while making investment decisions
perceive information differently because of changing emotional states (Pasewark &
Riley,2010). Therefore, behavioral science also includes some factors that influence an
investment decision.
Family and Friend Opinion: The individual investor’s decisions are also influenced by the
opinion of their friends and family members. Further, a recommendation from portfolio
management companies and brokers also influence the investment decision of investors. Big

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and small investors have different reactions to recommendations as some get influenced by
opinions or some not.
Market Outcomes: The term market outcomes in finance reflect the situation of the share
market in the country as before investing, investors focus on the market situation whether the
market is bear or bull. As in the bearish market, investors believe that the market will go
down and share prices of the firms will drop that resultant in a downward trend. As in the
bullish market, investors believe that market share prices will increase and investors have
believed that it will give higher returns (Smit & Trigeorgis,2012). Hence, market outcomes
are considered as a factor that affects the investment decision.
Figure 1: Conceptual Framework for factors affecting decision making
Source: (Korniotis & Kumar,2011).
Accounting
Information
Factors affecting
investment decision
Market Outcome
Behavioral Science Active trading
Confidence
Higher Return

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6 Methodologies
1. The approach used in Research
The research approach that is used in order to conduct the research or analyse the
result is qualitative approach. This approach helps in to collect data from secondary
sources and evaluate the result on subjective basis. The qualitative approach depends
on the observation and quality of the data collected and information perceived from
this data. In this report, the qualitative research approach is used that includes
collecting information and data from various other secondary sources in order to
understand human behavior and experience including contradictory behaviors, beliefs,
and emotions (Quinlan, Christina, Carr & Griffin, 2019).
2. Data Sources
The factors that influence investment decisions are obtained by using secondary data.
The secondary sources from which data is collected includes financial and broker
reports, Economic report of different foreign countries, foreign regulations and reports
from international bodies such as World Bank, BIS and IMF. In this report, further
information is collected from published reports by government, periodicals and from
official websites (Flick,2015).
3. Data Collection method
To collect secondary data different methods are used such as collection from different
websites, and documents and records. The collection of data was done from
secondary sources such as from various published literature and from different
authenticated sources.

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4. Data Analysis
After collecting data from different sources the researcher will analyze the data using
different tools all data that is collected through observation and surveys will be
bifurcated under different heads as independent variables and dependent variables.
The factors that have a direct influence on the investment decision are considered as
independent variables that are accounting information, family and friend’s
recommendations, emotional inclination and behavioral science. Another side
dependent variable is an investment decision because an investor’s investment
decision depends on these factors that are stated above. Each dependent variable has
an influence on the investor.
7 Research Project Organization
1. Structure of the study
The study or work on these aspects will be organized in the following ways:
 Chapter one includes the aim and objective of research and problem statement
of the research proposal
 Chapter two includes a literature review or the introduction of topics that are
discussed that are “factors to be considered in investment decision”.
 The third chapter includes a detailed research methodology used in research
that includes a data collection method, data analysis tools. And sources of data
collection.
2. Project Schedule
The following table includes the timeline of the project or study:
Task Time is taken Start End
Proposal for 10 15 July 2019 25 July 2019

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Research
Literature review 12 26 July 2019 9 August 2019
Data Collection 26 10 August 2019 12 August 2019
Data Analysis 22 13 August 2019 26 September 2019
Final Report
Submission
14 27 September 2019 11 October 2019
Total Duration 84 (12 weeks)
3. Project budget
The budget for this proposal is $4.000 including the indirect and direct costs that are
part of the implementation of plan and research completion and incurred in the tenure
of 84 days as shown in the above table. The budget includes the cost of collection of
data as some sites require a subscription fee and payment to open and to access the
required information. To analyze data different tools and experts' opinions are
required due to that budget of research proposal set to $4,000.
8 Conclusion
It is concluded from the above research proposal that factors that affect the investing
decision of investors are accounting information, behavioral science and at last family and
friend opinion or recommendations. The most important factor that is identified and focused
also by different researcher is accounting information as the information collected by
investors in order to invest are dividend payment structure, earnings per share and
profitability and past record of the companies or firms. It is identified that many of investors
focus on visible data and information rather than intuition or behavioral science concept. But