Research Proposal: Investor Sentiment, Uncertainties, and Anomalies

This research proposal, submitted for a Higher Degree Research application at QUT, investigates the influence of investor sentiment and uncertainties on investment decision-making. The proposal outlines the research problem, which focuses on how sentiments and uncertainties impact investor choices and lead to anomalies in the market. The research will explore the impact of investor sentiment, the role of uncertainty, and the emergence of anomalies in decision-making. The proposal includes a literature review, research aims, questions, and hypotheses, along with a theoretical framework based on behavioral finance and theories of reasoned action. The methodology section outlines the use of an interpretivism approach, an inductive research approach, and the use of questionnaires and literature to collect data. The research aims to identify strategies for mitigating the negative effects of sentiment and uncertainty, contributing to a better understanding of investment behavior and decision-making processes. The proposal also includes a timeline for completing the research.

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1. Research Project Title
This is the working / draft title for the project.
To analyse the impact of investor sentiment and uncertainties on the development of
anomalies and its impact on investment decision making of investors.
2. Research Project Summary
Provide a brief overview of the project, similar to an abstract, or executive summary.
In the research proposal presented below, the research that will be conducted in order to
achieve the intended aim of analysis of the impact that personal sentiments and uncertainties
has on the investment and decision making of the investors studying the field of behavioural
finance. In the current proposal, a research problem has been formulated based on which
literature review has been conducted. Further this research proposal also includes formulation
of research aims and research questions that are to be addressed in the intended research
followed by identification of the theoretical frameworks that will be used in the research
(Blajer-Gołębiewska, Wach and Kos, 2018). This is followed by research methodology which
details the various tools and techniques that will be used by researcher to conduct his research
and this is followed by justifying the significance of conducting this research and its
importance i.e. contribution. Lastly, a timeline related to the conducting of entire research will
be presented in the research proposal.
of Business
HDR RESEARCH PROPOSAL TEMPLATE
Instructions:
1. Writing a research proposal is a requirement for application to Higher Degree Research at QUT.
2. This template may be used as a suggested format for your Research Proposal for Application. You do not
have to use this template, however it is recommended that you structure your research proposal
according to the following sections and headings.
3. It is recommended that you prepare your Research Proposal electronically using a clear and legible font
size and adhere to the word / page limit indicated.
4. Overall word limit: No set word limit, however 5 to 6 pages is recommended.

3. Research Problem
Using references to existing research, identify the current research problem or challenge that is
the intended focus of your proposed research.
In this research proposal, the main problem that scholar will address is how different
sentiments and the uncertainties of the investors and financers impact their decision
making. The different aspects of the rising anomalies due to these sentiments and
uncertainty of an investor will be observed and how their decision making gets impacted
due to such anomalies’ influences will be discussed in this research proposal. What are the
possible solutions to meet such influences will be further addressed in this report. The
problems to be addressed are:
Research Objectives:
 To understand the concept of investor sentiment.
 To identify impact of uncertainties on anomalies occurring during investment
decision making.
 To assess the anomalies arising in decision making due to investor sentiment and
uncertainty.
 To recommend appropriate strategies for reduction of anomalies during the
decision making process.
4. Project (research topic) details
Provide a brief statement under each of the headings below.
1.1. Literature Review
Provide a brief review of the literature for the area of research interest. This sets the scene and
context for the research topic. It should define the problem, its causes, its extent and its
significance. Ensure the literature review is grounded in the academic literature and includes
citations.
Literature review helps a researcher In identifying and analysing the past research that has
been conducted and formulating the best approach in conducting his research which will
further add on in the field.
Theme 1: Influence of sentiments and uncertainties on investment decisions.
As per the view point of Kaur and Kaushik (2016), sentiments as well as uncertainties is
statistically of extreme importance. The need and achievement of certain objectives were the
key points that influenced the preference i.e. sentiments of investors. Further the risk taking
capability of the investor mainly influences the decision making i.e. the degree of risk that an
investor is ready to take while making investment decisions. The uncertainness of the society

and the resources available within a family are additional factors that further impact the
decision-making. Based on the economic differences of various countries, there is additional
differentiation in the manner investors belonging to different countries invest.
However, Gupta, Mahakud and Debata (2018), contradicts that uncertainty and sentiment
although are contributors in the decision making but they do not act as major contributors.
Factors like investment strategies, objective of investment, time period, returns generated and
frequency of investment are some of the key anomalies that are occurring in the investment
making investment decisions. The security of the investment that is being made additionally
impacts the decision making rather that uncertainties’ or sentiment’s impact on the investment
decision making. The author further states that uncertainty aspect leads clouding of the
judgement and rationality of the decision making power of the investor making him take
decisions that might not give maximum profitability.
Theme 2: Advantages and disadvantages of the anomalies in decision making.
Lucke and Eichler (2016), states that sentimental aspect as well as uncertainties and caution
have a very positive influence on the decision making regarding investment. The profile of the
investor and his risk taking ability helps in determining the investment tendency and take those
decisions that will give them maximum returns. These factors collectively categorized under
behavioural finance helps the investors in identifying which categories of investment will suit
their lifestyle and give them returns accordingly rather than taking economic factors only into
consideration. It also helps in recognizing the sentimental values or habit so that
implementation of the decisions taken can help in achieving the intended investment
objectives.
Another author Frino, Lepone and Wright (2015), argues that investment decisions based on
these aspects are often irrational and does not give maximum yield or return to the investors.
This leads to anomalies like biasness in the decision making involving various factors of
anomalies like overconfidence, ambiguity, lack of adequate knowledge etc. that impacts the
decision taken by the investors negatively because they tend to overestimate or underestimate
an investment decision based on their sentiment rather than adopting a rational and justified
approach. Further, unccertainties also purports many disadvantages like constriction of better
investment avenues, unavailability of all the investment options etc.
Theme 3: Strategies for overcoming drawbacks of such sentiment and uncertainties’ impacts
on investment decisions.
According to Ang, Cheng and Wu (2015), the best strategy to minimize the negative impact of
behavioural finance in decision making involves addressing the biasness that an investor has.
The author states that rather than sticking to what he thinks or feels, an investor should collect
and analyse opinions that are contrary to his opinions so that he can conduct a critical
evaluation. Further, instead of taking those investment decisions that are being crowded, they
should rather use their judgement and instinct in making those investment decisions.
Additionally, Petersen, Kushwaha and Kumar (2015), states that correct identification of the
risk taking capability and integrating it with personal objectives, an investor can formulate
rational investment decisions that will increase their profitability. Another major strategy for
making correct investment decisions is developing the correct mix of investments to be made
so that the categories which are more beneficial can be identified.
1.2. Research Aims, Questions, and / or Hypotheses
Outline the research aims, questions, and / or hypotheses to be addressed. Ensure the research

aims, questions and / or hypotheses reflect the research problem developed in the brief
literature review.
Aim: To analyse the impact of investor sentiment and uncertainties on the development of
anomalies and its impact on investment decision making of investors.
Based on this aim and the research problem formulated, I will address following research
questions:
Research Questions:
 What is the impact of investor's sentiment on the investment decisions made?
 How the uncertainty in investor's decision making and leads to occurrence of
anomalies?
 Which anomalies are arising due to sentiment and uncertainty of the investors?
 What are the appropriate strategies that can be recommended to reduce such
anomalies in investor's decision making?
1.3. Theoretical Framework
Outline the potential theory or theories you have considered to investigate the research
problem.
Theoretical Framework based on the themes formulated in the literature review done by the
researcher will help him in identifying what are the appropriate models or theories that will
assist him in conducting his research (Rantala, 2015).
Researcher will use following theoretical framework for my research i.e. Theory of
behavioural finance under which the evolution of modern investment techniques and options
available with the investor will be discussed and then evaluated. It focuses on two major issues
i.e. reason why standard theories are no longer a viable option and role of behavioural finance
in bridging this gap between traditional theories and changing market. Two additional theories
in relation to reasoned action and planned behaviour will be discussing in my research project
under which those factors that can be controlled are summed up with uncontrollable variables
of behaviour and their impact collectively on rational investment decision making. These help
in predicting the kind of decisions that will be taken by the investors and possible deviations
can be identified. These theories will help in effectively meeting the objectives of the research
that researcher intend to carry out and will help in providing adequate reasoning so that
meaningful interpretation and conclusions can be made.

1.4. Research Methods
Describe the potential methods of research you have considered. For example, archival/library
study, analysis of existing data sets, laboratory/field research, use of quantitative or qualitative
methods, etc.
Provide details of any resources identified as required to conduct this research. Such as, the
materials/equipment you intend to use (surveys, interviews, purchase of specialised datasets,
space/lab hire etc).
Research Methodology involves various tools and techniques that help the researcher in
identifying the correct tools and techniques required to be used for collection, analysis and
interpretation of the data to be used in the research.
Research Philosophy: Philosophy basically helps in determining the ideology that researcher
will use in data collection. In this research, out of the two philosophies i.e. interpretivism and
positivism, in this scholar will use interpretivism approach which is used for conducting
qualitative research incorporating human behaviour and aspects which I need to study in my
intended research. This will help in conducting my research based on behavioural finance and
assist in drawing meaningful conclusions related to investor’s sentiments.
Research Approach: Approach helps in determination of the procedure or plan that the
researcher intends to follow in order to collect the required data and conduct proper analysis.
There are two major approaches for research i.e. inductive and deductive (Flick, 2015). In my
research, researcher will implement inductive approach which is used in qualitative research
under which scholar will collect the required data and then interpret it accordingly using
appropriate theories and models for conducting my research. This will help me in drawing
relevant conclusions based on the objectives of my research.
Research Methods: In order to collect the relevant data, there are numerous methods
available with the researcher so that research can be conducted in a meaningful manner. For
conducting present research, researcher will use questionnaire method for collection of
primary data from my respondents. In addition to this, scholar will also use other literary
mediums like case studies, Published journals, articles etc. so that I can gather comprehensive
data related to my topic.
Data Collection: There are two major sources of data collection i.e. primary and secondary.
Primary sources involve direct data collection methods like questionnaires which will be used
in research and secondary resources are also there like reference to previous research papers
published or case studies conducted and these too will be used by me in order to conduct
research related to my topic of behavioural; finance so that appropriate conclusions can be
drawn.
Sampling: Sampling involves selection of a few respondents that will help in collection of the
relevant data and for this purpose scholar will select 30 investors belonging to different
categories and segments so that appropriate and unbiased analysis can be made and relevant
conclusion and interpretations can be formed regarding the research.
Data Analysis: Based on Qualitative or Quantitative research, the researcher conducts the
analysis of the data that has been collected by him (Silverman, 2016). For my research, scholar
will use thematic analysis which involves pictorial representation of the data collected using

different figures and charts like bar graphs, pie charts etc. This will simplify the process of
data collection for me.
Ethical Consideration: Ethical consideration involves declaration on behalf of the researcher
that he has not adopted any unethical means for conducting his research. Scholar will ensure
that respondents fill a declaration form stating that they have not been coerced in any manner
to respond in a particular manner. Further scholar will declare that no biasness will be
incorporated while conducting the research. Further, proper reference and citation to the
articles will be done that considered for research.
1.5. Significance / Contribution of Research
Outline the justification for the research project based on the literature reviewed. I.e. outline
what it is that we currently do not know but will know after your study is completed, and why
is it important to know this.
Describe what the research will add to the body of existing knowledge and the impact on the
discipline.
This section should be used to demonstrate how your research aligns with the existing key
research areas or research strategic goals of the faculty/discipline to which you are applying.
The research that I will be conducting will help in determining what are the key anomalies
rising due ot sentiment and uncertainty on the rationality of the decision making of
investors. This research is extremely significant for the present day investors looking for
investment options and methods. The emerging influence of behavioural finance in the
decision making of investors will be evaluated in this research paper and by reading this
research paper, the investor will be able to identify the scope and extent to which an
investor should take his decisions based on the personal traits, uncertainties and the
influences. This research will also help in developing insights related to the various
aspects that influence the decision making and identify their positive or negative impact in
the decision making behaviour of the investors. This will also help in determining the
various advantages and disadvantages of related to impact of investor sentiment and
uncertainty in behavioural finance. Lastly, the research will widen the scope within which
the investors operate and help them in providing a broader purview so that rationality of
decisions can be improved.
5. Research Project Plan / Timeline
Provide an outline / plan of the stages of your research. This may include, but not limited to:
ethics approval, literature review, data collection, thesis writing. This is a draft plan for
completion of tasks and activities aligned to annual milestones of the degree.

6. References / Bibliography
Please provide one or both of the following in an appropriate and consistent referencing style:
a) A list of references cited in the research proposal
b) A bibliography of planned reading

Petersen, J.A., Kushwaha, T. and Kumar, V., 2015. Marketing communication strategies and
consumer financial decision making: The role of national culture. Journal of Marketing, 79(1).
pp.44-63.
Ang, J.S., Cheng, Y. and Wu, C., 2015. Trust, investment, and business contracting. Journal of
Financial and Quantitative Analysis, 50(3). pp.569-595.
Frino, A., Lepone, G. and Wright, D., 2015. Investor characteristics and the disposition effect.
Pacific-Basin Finance Journal, 31. pp.1-12.
Lucke, N. and Eichler, S., 2016. Foreign direct investment: the role of institutional and cultural
determinants. Applied Economics, 48(11). pp.935-956.
Gupta, G., Mahakud, J. and Debata, B., 2018. Impact of CEO’s characteristics on investment
decisions of Indian listed firms: Does crisis make any difference?. Cogent Economics &
Finance. 6(1). p.1439258.
Kaur, I. and Kaushik, K.P., 2016. Determinants of investment behaviour of investors towards
mutual funds. Journal of Indian Business Research, 8(1). pp.19-42.
Blajer-Gołębiewska, A., Wach, D. and Kos, M., 2018. Financial risk information avoidance.
Economic research-Ekonomska istraživanja, 31(1). pp.521-536.
Rantala, V., 2015. How do investment ideas spread through social interaction? Evidence from
a Ponzi scheme. The Journal of Finance.
Flick, U., 2015. Introducing research methodology: A beginner's guide to doing a research
project. Sage.
Silverman, D. ed., 2016. Qualitative research. Sage.