Abstract:
The study aims to identify factors that influence investment decisions of individual investors
and to explore how these factors are connected to the investors’ socio-economic characteristics
in the Sri Lankan Stock Market. The study covers individual investors from all five districts
belonging to the Northern Province of Sri Lanka and data were marshalled from 272 individual
investors with a self-administrated questionnaire using a convenient sampling technique. The
collected data were then analysed with a number of statistical techniques including
Independent t- test, Analysis of variance (ANOVA) and relevant post hoc tests. The study
identified eight most influencing factors on investment decisions: past performance of the
company’s stock, company stability, firm's goodwill, firm's reputation in the industry, dividend
paid, expected corporate earnings and expected dividend. Further results highlighted seven
least influencing factors on investment decisions: opinions of firm's majority stockholders,
easy to obtaining borrowing funds, diversification needs, friends/co-workers' opinions, forms
governing body and social status. The study disclosed that the socio-economic characteristics
of investors (age, gender, marital status, educational qualifications and monthly income) have
a statistically significant impact on the investment decisions of individual investors. The study
has made a theoretical contribution and proffers many useful practical implications to the
investors, practitioners and policy makers.
