Tài liệu Factor affect individual investor behavior in viet nam luận văn thạc sĩ

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UNIVERSITY OF ECONOMICS HO CHI MINH CITY VIETNAM INSTITUTE OF SOCIAL STUDIES THE HAGUE THE NETHERLANDS VIETNAM- NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS FACTORS AFFECT INDIVIDUAL INVESTOR BEHAVIOR IN VIETNAM STOCK MARKET CASE STUDY: HO CHI MINH STOCK EXCHANGE (SUMMARY) A thesis submitted in partial fulfilment of the requirements for the degree of MASTER OF ARTS IN DEVELOPMENT ECONOMICS By LE NHU HAl LONG Academic Supervisor: Dr. CAO HAO THI HO CHI MINH CITY, JULY 2009 Table Of Contents Abstract ..................................................................................................................... 1 1. Introduction .......................................................................................................... 1 2. Literature review .................................................................................................. 2 2.1 Prospect Theory ............................................................................................... 3 2.2 Heuristics ......................................................................................................... 4 2.3 Demographic Characteristics oflndividual Investor ....................................... 7 2.4 Empirical Studies ............................................................................................. 7 2.5 Conceptual Framework .................................................................................... 8 3. Research Methodology ......................................................................................... 8 3.1 Research Design ............................................................................................... 8 3.2 Measurement .................................................................................................... 9 3.3 Pilot Survey .................................................................................................... 11 3.4 Survey Design ................................................................................................ 12 4. Data Analysis and Empirical Findings ............................................................. 12 4.1 Satnple ............................................................................................................ 4.2 Descriptive Statistics ...................................................................................... 4.3 Reliability Analysis .................................................................. ~ ..................... 4.4 Factor Analysis .............................................................................................. 4.5 Hierarchical Regression Analysis .................................................................. 4.6 Hypothesis Testing ......................................................................................... 12 12 12 13 15 16 5. Conclusions and Recommendations ................................................................. 16 5.1 Main Findings ................................................................................................ 5.2 Implications .................................................................................................... 5.3 Recommendations .......................................................................................... 5.4 Limitations ..................................................................................................... 5.5 Future Research Directions ............................................................................ 16 17 17 19 19 References ............................................................................................................... 20 Abstract The objectives of this research are to determine the main factors influencing individual investor behavior, to determine the relationship between factors and behavior of individual investors. The scope of the research is limited to individual investor in Ho Chi Minh City. The results indicated that jive factors including Information disclosed by listed company, Information from professional organization/institution, Rumor information, Information from inside company, and Herd behavior demonstrate a significant influence upon individual investor behavior. The hypothesis testing results indicated that most hypotheses in the conceptual framework were supported except the influence of individual demographic characteristics on individual investor behavior. 1. Introduction The first securities trading center of Vietnam stock market (VSM) was launched in July 2000 in Ho Chi Minh City as a pilot project. The second securities trading center was established in Hanoi five years later in March 2005. Till December 31st, 2008, there had been 170 stocks listed on Ho Chi Minh stock exchange (HoSE) with total capitalization value of VND169,346 billions, 168 stocks listed on Hanoi securities trading center (HaSTC) with total capitalization value ofVND50,428 billions. 1 Most investors still keep in mind a lesson they had learnt when the market index had trotted up to peak at 571.04 points on July 61h, 2001 until it had quickly collapsed to the trough of below 130 points. As a result of this, many investors who just shortly before were making massive profits had ended up with huge debts. Another similar event did occur in 2006, during which VN-Index had achieved at 632.69 points, which is far higher than previous record of 571.04 points, until it had kept dropping down constantly and finally maintained at around below 400 points in March, 2006. Within two months, investors had seen a quick unexpected change and failed to react effectively. I Bao cao phan tich nen kinh t6 VietNam 2008 va thj tnrang chfrng khoan 2009 (Vietnam economy in 2008 and stock exchanges in 2009 analysis report). Retrieved Feb 201\ 2009 from: http://www.fpts.com.vn/FileStore/File/2009/01/25/Bao_cao_nam_2008-FPTS.pdf 1 The instability of VSM that had been witnessed in the two cited periods above is particularly due to the impact of the so-called "psychological element" on individual investors - investors usually follow exactly any move of majority. Vietnamese investors do not only lack information about the market, but also they are in short of experience. Basically, they base their trading activities on those of majority. It is easy to see that VSM did not operate under any economic rules; theories of market efficiency completely fail. Perhaps, this is the time to use the theory based on basic human psychology to explain the behavior of investor in VSM. Based on the above background, this research focuses on the following objectives: • To determine the main factors influencing individual investor behavior. • To determine the relationship between factors and behavior of individual investors. • To suggest recommendations for policy markers, listed company, and individual investors. Descriptive statistics are firstly used to describe the basic features of the data in this research; secondly, this research using qualitative study to explore potential factors which may have an impact on the decision making of the individual investor. Finally, quantitative study measures the decision making of individual investor and factors that have identified. The statistic software used in this research is SPSS 15.0. The respondents in this research consist of individual investors who had trading account at securities company in Ho Chi Minh City. 2. Literature review Decision-making is a complex process. Decisions can never be made by just relying on the personal resources and complex models, which do not take into consideration the situation. Decision-making can be defined as the process of choosing a particular alternative from a number of alternatives. It is an activity that follows after proper evaluation of all the alternatives. They need to update themselves in multidimensional 2 fields so that they can accomplish the desired results/ goals in the competitive business environment. In the present of Vietnam stock market situation, behavioral finance is becoming an integral part of the decision-making process, because it heavily influences investors' performance. They can improve their performance by recognizing the biases and errors of judgment to which all of us are prone. Behavioral finance deals with individuals and ways of gathering and using information. Besides, behavioral finance seeks to understand psychological decision processes. In addition, it focuses on the application of psychological and economic principles for the improvement of financial decisionmaking. According to behavioral finance, investor behavior derives from psychological principles of decision making to explain why people buy or sell stocks. Behavioral finance focuses upon how investors interpret and act on information to make investment decisions. This research based on the basic findings and principal theories within behavioral finance in order to explain the psychologies of various irrational investor behaviors in stock market, which lead to the hypotheses of this research. 2.1 Prospect Theory Value Figure 1 Prospect theory value function (Source: Kahneman, D., & Tversky, A. (1979). Prospect theory: An analysis of decision making under risk. Econometrica, 47(2), 263-291) 3 Prospect theory was developed by Kahneman and Tversky (1979) as a psychologically realistic alternative to expected utility theory. It allows one to describe how people make choices in situations where they have to decide between alternatives that involve risk, in particular, choices under risk are usually underweighted in comparison with outcomes under certainty. The tendency mentioned will lead to a pervasive effect of aversion to risk when provided sure gains while risk seeking involving sure losses. The phenomenon can be simply described in S-shaped value function as Figure 1. 2.2 Heuristics Heuristics is the decision process by which the investors find things out for themselves, usually by trial and error, lead to the development of rules of thumb. In other words, it refers to rules of thumb which humans use to made decisions in complex, uncertain environments. According to Fromlet (200 1), heuristics can also be defined as the "use of experience and practical efforts to answer questions or to improve performance". Due to the fact that more and more information is spread faster and faster, life for decision-makers in financial markets has become more complicated. Heuristics may help to explain why the market sometimes acts in an irrational manner. The following will introduce a number of heuristics of investor psychology that affect investor decision-making. 2.2.1 Herd Behavior According to Chan (2003 ), herd behavior may be the most generally recognized observation on financial markets in a psychological context. In addition, according to Black (1986), investors with no access to insider information, irrationally act on noise as if it were information that would give them an edge. The first hypothesis of this research is proposed: H 1: Herd behavior have an impact on individual investor behavior. 2.2.2 Overconfidence Investors are usually overconfident about their abilities to complete difficult tasks successfully, such as picking winning stocks. They believe their knowledge is more accurate than it really is and that their forecasts are more precise than their experience 4 should validate. Several factors contribute to overconfidence. One of these factors, called the illusion of knowledge, is having more information available. Increased levels of information do not necessarily lead to greater knowledge because many investors may not have the training, experience, or skills to interpret this information. Also, investors tend to interpret new information as confirmation of their prior beliefs. Daniel et al. (1998) offer a theory is that stock prices overreact to private information and under-react to public information. Besides, according to Odean (1998), overconfident traders believe their private information to be more precise than it is. From these ideas, it can be consider that the decision making of individual investor affected by private and public information. • Private Information According to Merton (1987), individual investors tend to hold only a few different common stocks in their portfolios. Economist argues that individual investors hold only a few different common stocks in their portfolios because they have insider information of the company which stock they are holding. In addition, Damodaran et al. (1993) proved that insider trading is motivated by private information. Besides, in the present, insider trading is also taking place in the Vietnam stock market; some investors rely on the relationship with someone who has responsibility in the listed company to capture the information, which is not announced outside yet, to implement buying/selling this stock. The following hypothesis is proposed: H2 : Information from inside company (insider information) have an impact on the individual investor behavior. • Public Information According to French el al. (1986), public information is information that becomes known at the same time and available to the whole market, no one trades on the information before it is released. In the present of Vietnam stock market, public information can be come from different source, such as: rumor information, 5 information disclosed by listed company, information from professional organization/institution. Rumor information According to Schindler (2007), a rumor is a piece of information that has poor authenticating data, not yet been confirmed by official sources or denied by them. A rumor can either be confirmed as true or be found to be false at a certain point in the future. In the present of Vietnam stock market, there are many types of rumor that could influence the stock market. The following hypothesis is proposed: H 3 : Rumor information have an impact on the individual investor behavior. Information disclosed by listed company Information disclosed by listed company Is the information about the company financial performance, board of director, future project, and stock trading of member in board of director. This information must be disclosed to the public through the media, such as: newspaper, television, or the website of the company. The following hypothesis is proposed: H 4: Information disclosed by listed company have an impact on the individual investor behavior. Information from professional organization/institution Information from professional organization/institution is the information announces to the public through by the media. This information source is come from investment funds, specialized magazines, or from the report of prestigious organization/institution (i.e. report ofHSBC, JP Morgan, and Merrill Lynch about Vietnam stock market). This source of information has an important for individual investors when they make decision to buy or sell stocks. When a good analyzed report about stock market announces, this will take investors to buy stock, and in the other hand, they will sell stock. The following hypothesis is proposed: 6 H 5 : Information from professional organization/institution have an impact on the individual investor behavior. 2.3 Demographic Characteristics of Individual Investor Grinblatt et al. (2001) found influence of several demographics (age and gender) on the propensity to buy stocks. Besides, according to Westernholm el al. (2003), male investors trade more frequently and are more diversified than female investors. In addition, according to Chen et al. (2005), an experienced trader may be less inclined toward behavioral biases in their trading decisions. The following hypothesis is proposed: H 6 : The relationship between factors and individual investor behavior will be significantly influenced by the factors related to demographic characteristics. 2.4 Empirical Studies 2.4.1 Andre Farber, Nguyen Van Nam, and Vuong Quan Hoang (2006) The question about the herd behavior on Vietnam stock market was firstly asked in the early of 2001, and it have experimental demonstrated in 2006. Farber et al. (2006) proved that herd behavior is very strong in Vietnam by statistic model. They have checked the effect of herd behavior on the market return. Results of their study for Vietnam stock market are: investors behave in herd when the market situation forces the stocks to extreme positive returns; herd behaviors do exist on the Vietnam stock market. 2.4.2 Robert A. Nagy and Robert W. Obenberger (1994) Nagy and Obenberger (1994) using the varimax algorithm of orthogonal rotation to analyzed 34 variables that presented by seven summary factors, such as: neutral information, accounting information, self-image/firm-image coincidence, classic, social-relevance, advocate-recommendation, and personal financial needs. Their findings suggest that the recommendations of brokerage houses, individual stock brokers, family members and coworkers go largely unheeded. Many individual investors discount the benefits of valuation models when evaluating stocks. 7 2.4.3 John R. Nofsinger (2001) Nofsinger (200 1) investigate the trading behavior of investors by developing a measure of abnormal trading and using the buy and sell volume of institutions and individuals around firm-specific news releases in the Wall Street Journal and macro-economic announcements. He found that investors conduct heavy trading around the publication of firm-specific news in general, and earnings, dividend, and capital budgeting news in particular. 2.4.5 Clara Vega (2006) Vega (2006) measured the effect of private and public information on the post-earning announcement drift. The empirical results show that the more information (private or public) investors have about the true value of an asset, and the more they agree and trade on this information-the smaller the abnormal return drift. 2.5 Conceptual Framework In this research, the conceptual framework is illustrated in Figure 2. Moderator variables Antecedent variables Demographic characteristics of individual investor: • Age • Gender • Investment experienced Public information • Rumor information • Information disclosed by listed company • Information from professional organization/institution Private information • Information from Inside Company (insider information) Outcome variable Individual Investor Behavior Herd behavior Figure 2 Conceptual Framework 3. Research Methodology 3.1 Research Design The research design of this research comprises three main steps as illustrated in Figure 3. 8 Step 1 Literature Review In-depth Interviews Step 2 Pilot Survey Reliability Analysis Exploratory Factor Analysis (EFA) Step 3 Survey I ~ Reliability Analysis Exploratory Factor Analysis (EFA) ~ I Confirmatory Factor Analysis (CFA) Figure 3 Research process 3.2 Measurement 3.2.1 Indicators of Independent Variables Rumor Information The indicators to measure Rumor information are: (a) information from internet such as: chat-rooms, news groups, and forums; (b) information from society about company debt; (c) information from society about stock dividend payout. Information disclosed by Listed Company The indicators to measure Information disclosed by listed company are: (a) the decision of board of directors to buying back shares of company or selling shares which are held by the member of the board of directors; (b) quarterly and annual earnings announcements, net income and realized sales figures; (c) cash and stock dividend announcements; (d) capital investments, joint ventures, new products. Iriformation from Professional Organization/Institution The indicators of this measurement are adopted: (a) analytical reports of a professional organization/institution (HSBC, JP Morgan, Merrill Lynch); (b) analytical reports of 9 investment funds; (c) recommendation from brokerage house; (d) recommendation from individual stock broker; and (e) recommendation from friends/coworkers. Information from Inside Company (Insider Information) The measurement of Information from inside company of this research is: (a) information from people who have a special relationship with the member of board of director/management; (b) information from member of board of director/management; (c) information from the officers who are working in the company. Herd Behavior Base on the study of Schindler (2007), this research measure herd behavior by five indicators, included: (a) observation of other people's behavior; (b) news and comments on stock-price changes through news media; (c) news and comments on trading and transactions through news media; (d) reports on investor behavior through news media; and (e) action by a large group of people or population segment. 3.2.2 Indicators of Moderator Variables Gender The measurement for gender is a dummy variable indicating whether the investor is a male (1) or female (0). Age This research divided age in three categories: (a) less than 26; (b) from 26 to 45; and (c) more than 45. Investment Experienced The experience categories were (a) less than 1 year, (b) 1-3 years, (c) 3-5 years, and (d) more than 5 years. 3.2.3 Measures of Dependent Variable: Individual Investor Behavior This research measure individual investor behavior by three indicators, included: (a) Intend to buy/sell; (b) My first choice to buy/sell; and (c) Strongly recommend others to buy/sell. 10 3.2.4 Measurement Scale The measurement scale of this research is five-point Likert (5 is the highest level and 1 is the smallest level) 3.3 Pilot Survey 3.3.1 Sample In the pilot survey, questionnaires were collected by face to face interview with 39 potential respondents who were invested at Securities Companies in Ho Chi Minh City, Vietnam. 3.3.2 Descriptive Analysis The results of a preliminary assessment show that all items have item-total correlations values greater than .30 and factor loading values greater than .50. There is only one item with item-total correlations values less than .30, "Information from society about company debt" with item-total correlation .227. According to Nunnally (1978), this item should be deleted. This item was not removed because they have strong theoretical support and the sample size of 39 in pilot survey was not large enough to justify exclusion. 3.3.3 Reliability Analysis of the Pre-test Cronbach's alpha scores were used to assess the reliabilities for the five groups of information factors. These ranged from 0.642 to 0.846. The reliability score of individual investor behavior criteria is 0.656; all alpha values are well above the threshold of 0.60. 3.3.4 Factor Analysis Factor analysis was used to reduce the 20 information factors into meaningful sub-sets of factors. The analysis identified seven groups of information factors with an eigenvalue greater than 1, accounting 79.32% of the cumulative variance; and one group of individual investor behavior criteria with an eigenvalue greater than 1, and accounting for 61.263% of the variance. The common accepted decision criteria in 11 social science research were applied: an eigenvalue higher than 1, at least 50% variance being explained, and simplicity of factor structure (Hair et al., 1995). 3.4 Survey Design Similar to the questionnaire in the pilot survey, the final survey in the research required respondents to think of a security in which they intend to buy/sell. The final questionnaire includes 26 closed questions. A closed question both asks a question and gives the respondents a fixed response from which to choose. 4. Data Analysis and Empirical Findings 4.1 Sample The population of this research is individual investors in Ho Chi Minh City. Data were collected from a sample of 187 individual investors who are trading at Securities Company in Ho Chi Minh City by face to face interview. 4.2 Descriptive Statistics A frequency analysis was conducted for the characteristic related to the demographic of individual investor. This information includes the age, gender, and investment experienced. The results show in Table 1. 4.3 Reliability Analysis Cronbach's alpha scores were used to assess the reliabilities for the five groups of information factors and individual investor behavior criteria. The Information disclosed by listed company, Information from professional organization/institution, Rumor information, Information from inside company (insider information), and Herd behavior had reliabilities ranging from .773 to .610 respectively. The individual investor behavior criteria reliability was .638. All principal components had a Cronbach's alpha value more than .60, a threshold acceptable in exploratory research (Nunnally, 1978). 12 Table 1 Descriptive Statistics Frequency Percentage (%) Under26 29 15.5 From 26 to 45 125 66.8 Above 45 33 17.6 Female 77 41.2 Male 110 58.8 Less than 1 year 44 23.5 From 1 year to 3 years 86 46 From 3 years to 5 years 39 20.9 More than 5 years 18 9.6 BSC 39 20.9 esc 14 7.5 PVSC 8 4.3 BVSC 39 20.9 VICS 41 21.9 ICBS 21 11.2 Mirae Asset 11 5.9 ORS 14 7.5 Measure Age Gender Value Investment experienced Securities company 4.4 Factor Analysis Factor analysis was used to reduce the 20 information factors into meaningful sub-sets of factors. The analysis identified five groups of information factors with an eigenvalue greater than 1, accounting 60.481% of the cumulative variance; and one group of individual investor behavior criteria with an eigenvalue greater than 1, and accounting for 59.131% of the variance. The results of factor analysis show in Table 2 and Table 3. 13 Table 2 Factor Analysis of the Information Factors Factor 1: Herd behavior Herd2 Herd4 Herd3 Herdl HerdS Insider2 Insider! Insider3 Com Dis2 Com Dis3 Com Disl Pro_Org2 Pro_Org4 Pro_Org3 Pro Orgl Rumorl Rumor2 Eigenvalues Variance explained(%) Cumulative variance explained (%) Factor 2: Factor 3: Information Information from inside disclosed by company listed company Factor 4: Information from professional organization/ institution Factor 5: Rumor information .785 .729 .701 .665 .636 .828 .762 .682 .821 .807 .790 .739 .669 .639 .626 4.277 15.693 15.693 2.112 12.488 28.181 1.507 12.371 40.552 1.302 11.709 52.261 .732 .587 1.085 8.221 60.481 Table 3 Factor Analysis of the Individual Investor Behavior Criteria Factor 1: Individual Investor Behavior Criteria .858 .766 .672 1.774 59.131 59.131 Behav2 Behavl Behav3 Eigenvalues Variance explained(%) Cumulative variance explained(%) In the factor analysis results, KMO of the information factors was .733 and KMO was .583 for the individual investor behavior criteria. The p-values of the key information factors and the individual investor behavior criteria were statistically significant. 14 4.5 Hierarchical Regression Analysis Two hierarchical models were developed. The first introduces the five sets of information factors in Model 1. Three individual demographic characteristics were included in Model 2 as dummy variables. The results of this analysis are presented in Table 4. Table 4 Hierarchical Regression Analysis of Individual Investor Behavior Criteria Variables Modell Antecedent variables Herd behavior Information from inside company Information disclosed by listed company Information from professional organization/institution Rumor information Moderators variables Gender Agel Age2 Expl Exp2 Exp3 Constant/Intercept term F-value R2 -value Adjusted R2-value Model2 .364** .133* .241 ** .145* .180* .314** .149* .259** .157* .178** 2.41E-017 12.853 ** .262 .242 -.059 -.297 -.038 .201 .354 -.001 .34 6.619** .294 .249 * p < 0.05 ** p < 0.01 From the results of analysis showed above, it can be conclude that there is no relationship between individual demographic characteristics and individual investor behavior. All of factors have significant statistic (Sig.) less than .05, with range from .038 (Information from inside company) to .00 (Herd behavior, and Information disclosed by listed company). Therefore, the multiple regression model is expressed as follow: Y= .364X1 + .133X2 + .241X3 + .145X4 + .180X5 Where: Y: Individual investor behavior X 1: Herd behavior 15 X 2 : Information from inside company X 3 : Information disclosed by listed company X 4 : Information from professional organization/institution X 5 : Rumor information 4.6 Hypothesis Testing A total of six hypotheses were developed to examine the relationships in the conceptual framework. Table 5 Summary ofHypotheses Testing Hypothesis H• H2 m....... Descriptions Results of hypotheses testing ..~.~E.~. .?~~~Y~?.!.. .~~Y.~.~-~. . i..~.P~~!. .?.-~.~~~~y~~~~l..}~Y~.~!.?~.?.~~-~Y.i.?~ · . . . . . . . . ..~~.PP.?~~~ Information from Inside Company (insider information) have an impact Supported on the individual investor behavior. . .................................................... ......................................................... ............................................................................................... . Ru..~.?..!.. }?.f.?!.~~!i.??. hay_~ a~.}~.P~~!. .??.!he }.~.~i.Yi4~~1 investo,!._behavior. . . . . . . ~~P.P?~~?. Information disclosed by listed company have an impact on the Supported individual investor behavior. .................................. ........... .................................................. .................................... ..................................... ... ···················································· Supported Information from professional organization/institution have an impact on Hs the individual investor behavior. .................................... ......................................................... ,,,,,,,,................................. ....................................................... ......................................................... ............................................................................................................................. .. H6 The relationship between information factors and individual investor Rejected behavior will be significantly influenced by the factors related to individual demographic characteristics. 5. Conclusions and Recommendations 5.1 Main Findings The results of analysis showed that individual investor behavior is expressed as follow: Y= .364X 1 + .133X2 + .241X3 + .145X4 + .180X5 Where: Y: Individual investor behavior X 1: Herd behavior X 2 : Information from inside company X 3 : Information disclosed by listed company X 4 : Information from professional organization/institution 16 X5 : Rumor information 5.2 Implications The results of this research supported the information factors and the investor behavior criteria developed in the literature review. The results of this research may be helpful for board of director of company. Under the guidance of board of director, functional departments will analyze the main criteria of their business and provide all on their information channel fully and exactly thence the investors. Besides, from the results of this research, the board of director must control the internal information. Finally, the results of this research will help to improve brokerage service in securities compames. 5.3 Recommendations • Recommendations for Policy Markers The State Securities Commission should often provide the investors with the analytical reports and the warnings of market movement (when the market's growth is too "hot" or too "cold"), that could help the investors have more accurate information about the market situation thence they will decide between buying or selling reasonably. The State securities Commission should strengthening inspection and monitoring the published information of the listed companies and the stock companies as well because these are the most important information sources that could influent buying or selling decisions ofthe investors significantly. The State securities Commission should limit the bad rumors that affect the listed company or the rumors that aim to seek profit of the particular investment groups as well. Besides, they must issue denial of the rumor, which is true or false, so the rumor could not influent the investors. The State securities Commission should closely control the insider trading, insider trading already exists in the present on VSM. Insider trading will be a disadvantage for 17 small investors; if insider trading is still perform regularly, its will be an obstacle to the development of VSM. • Recommendations for Listed Company The listed companies must have their high awareness of providing the accurate and transparent information to the investors. According to the results of the previous chapter, the information of the listed companies exercises their large influence on the behavior of investors when they make the decisions to buy/sell stocks. The listed companies must analyze the main criteria of their business and provide all on their information channel fully and exactly thence the investors could have a proper look at the real value of enterprise as well as the price of their stocks which are being traded on the stock market. The listed companies should have the published information department which will provide all the necessary information of business to the investors and adjust immediately the false rumors which relate to the business operations. In addition, the listed companies must control the internal information, which is not announced to the public yet, to make justice to the investors, who do not know the information yet, and limit the investors who get the information to seek profit from some ways. • Recommendations for Individual Investors Investors must check and review the accurate level of the information flow, since then they could make the decisions properly. Now the individual domestic investors are standing against the foreign investors and the investment organizations that have a large amount of potential capital, good knowledge and investment experience. Therefore, the domestic investors should equip themselves with the knowledge of the securities and the stock market and the knowledge of economy so they could analyze and select information to make the proper investment decisions that could make profits for themselves; avoiding the situation that they invest with the surfing style or the mass of human psychological behavior. 18
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