Investor Participation on the Stock Market. To What Extent Does Investor Behaviour Matter?

Abstract

The study aims to investigate the extent to which Investor behaviour impacts Investor participation on the stock market, drawing lessons from Uganda Securities Exchange (USE), therefore providing theoretical and policy implications. The study took a quantitative and cross-sectional research design using structured self-administered questionnaires. Data were obtained from 261 local investors using a simple random sampling approach. The data were analysed using the Statistical Package for the Social Sciences (SPSS Ver. 25), in which descriptive, correlation, and regression tools were used. The study revealed that Investor behaviour has a significant positive impact on Investor participation on the stock market. The Prospect theory, Nudging, and Theory of Planned Behaviour have a significant impact in regard to explaining Investor participation on the stock market. The study provided key theoretical and policy implications by highlighting the importance of behavioural aspects of finance, including the significant explanatory power of behavioural theories for Investor participation on the stock market. The study further highlights the relevance of Prospect theory, Nudging, and Planned Behaviour and discovers that Nudging and Planned Behaviour are greater predictors of Investor participation, while Prospect theory is to a lesser extent. Though aspects of the Prospect theory, like mental accounting, remain key, as the findings reveal.

Keywords: Investor participation, Uganda Securities Exchange, Investor Behaviour, Stock Market