Assessing the factors that affect the behavior of individual investors on the vietnamese stock market

Classification of investors by risk preference Pie chart 4.2.1 The level of impact of the " the reputation of the issuing company" factor Pie chart 4.2.2 The level of impact of the " Fun

BANKING ACADEMY FOREIGN LANGUAGE FACULTY

-

GRADUATION THESIS

Assessing the factors that affect the behavior

of individual investors on the Vietnamese stock market

Supervisor Student name Class

Faculty Student ID

: Associate Prof Dr Tran Thi Xuan Anh : Nguyen Thi Huyen

: K20 ATCC : Foreign Language : 20A7510078

Hanoi, May, 2021

CERTIFICATE OF ORIGINALITY

I declare that this thesis is my work, with the consultation of Associate Professor Ph.D.Tran Thi Xuan Anh The results and figures are honest and accurate, do not copy any other thesis The entire content of this thesis is presented on my own and compiled from legally cited sources

If I find out that copying other research results is found, I take full the responsibility

Students perform

Nguyen Thi Huyen

I would like to say thanks to teachers of the faculty of foreign language - Banking Academy

In addition, I am extremely grateful to my parents for their love, caring and sacrifices for educating and preparing me for my future

I am extending my thanks to friends for their help and support during my study at banking academy

Thank you sincerely!

TABLE OF CONTENTS

Abstract 1

Chapter 1: Introduction 1.1 Introduction 2

1.2 Background of the study 3

1.3 Objectives of study 3

1.4 Significance of study 3

1.5 Scope and limitation of the study 3

1.6 Definitions of terms 4

Chapter 2: Review of related literature 2.1 Literature review 5

2.1.1 The Behavioral Finance Theory -Introduction of the theory 5

-The basic contents of behavioral finance theory 6

-Review of previous studies about behavioral finance theory 7

2.1.2 Two methods by which the investment decision is influenced -The fundamental analysis 7

-The technical analysis 9

2.2 Theoretical and Conceptual framework Chapter 3 Methodology 12

3.1 Locate of the study 12

3.2.Research Design 12

3.3 Data gathering procedure 13

3.4 Population and Sample description 13

3.5 Research instrument 13

3.6 Research ethics 14

3.7 Reliability and validity 14

CHAPTER 4: FINDINGS AND DISCUSSION 4.1 Data description 4.1.1 Classification of investors by gender 16

4.1.2 Classification of investors by age 16

4.1.3 Classification of investors by the annual income 17

4.1.4 Classification of investors by the academic level 18

4.1.5.Classification of investors by the risk preference 18

4.2 Factors impacting investors in the Vietnam stock market 4.2.1 The level of impact of the “Reputation of the issuing company” factor on individual investors' behavior 19

4.2.1.1 The degree of impact of the "Reputation of the issuing company" factor on individual investors' behavior in terms of gender 20

4.2.1.2 The degree of impact of the "Reputation of the issuing company" factor on individual investors' behavior in terms of age 20

4.2.1.3 The degree of impact of the "Reputation of the issuing company" factor on individual investors' behavior in terms of annual income 20

4.2.1.4 The degree of impact of the "Reputation of the issuing company" factor on individual investors' behavior in terms of educational level 21

4.2.1.5 The degree of impact of the "Reputation of the issuing company" factor on individual investors' behavior in terms of risk preference 22

4.2.2 The degree of impact of the "Fundamental analysis" method on the behavior of individual investors 22

4.2.2.1 The level of impact of the “Fundamental analysis” method on individual investors' behavior in terms of gender criteria 23

4.2.2.2 The level of impact of the “Fundamental analysis” method on individual investors' behavior in terms of age 24

4.2.2.3 The level of impact of the “Fundamental analysis” method on individual investors' behavior in terms of the annual income 24

4.2.2.4 The level of impact of the “Fundamental analysis” method on individual investors' behavior in terms of the educational level 25

4.2.2.5 The level of impact of the “Fundamental analysis” method on individual investors' behavior in terms of the risk preference 25

4.2.3 The degree of impact of the "Technical analysis" method on individual investors' behavior 26

4.2.3.1 The level of impact of the “Technical analysis” method on individual investors' behavior in terms of gender 27

4.2.3.2 The level of impact of the “Technical analysis” method on individual investors' behavior in terms of age 27

4.2.3.3 The level of impact of the “Technical analysis” method on individual investors' behavior in terms of the annual income 28

4.2.3.4 The level of impact of the “Technical analysis” method on individual investors' behavior in terms of the educational level 29

4.2.3.5 The level of impact of the “Technical analysis” method on individual investors' behavior in terms of the risk preference 29

4.2.4 The degree of impact of the " Recommendation of counselors" factor on

individual investors' decision… 30

4.2.4.1 The level of impact of the “Recommendation of counselors” factor on individual investors' behavior in terms of gender criteria 31

4.2.4.2 The level of impact of the “Recommendation of counselors” factor on individual investors' behavior in terms of age 31

4.2.4.3 The level of impact of the “Recommendation of counselors” factor on individual investors' behavior in terms of the annual income 32

4.2.4.4 The level of impact of the “Recommendation of counselors” factor on individual investors' behavior in terms of the educational level 32

4.2.4.5 The level of impact of the “Recommendation of counselors” factor on individual investors’ behavior in terms of the risk preference 33

4.2.5 The degree of impact of the "Herd behavior" factor on individual investors' behavior:

4.2.5.1 The level of impact of the “Herd behavior” factor on individual investors' behavior in terms of gender 35

4.2.5.2 The level of impact of the “Herd behavior” factor on individual investors' behavior in terms of age 35

4.2.5.3 The level of impact of the “Herd behavior” factor on individual investors' behavior in terms of the annual income 36

4.2.5.4 The level of impact of the “Herd behavior” factor on individual investors' behavior in terms of the educational level 37

4.2.5.5 The level of impact of the “Herd behavior” factor on individual investors' behavior in terms of the risk preference 37

4.2.6 The degree of impact of the " Overconfidence" factor on individual investors’ behavior 38

4.2.6.1 The level of impact of the “Overconfidence” factor on individual investors' behavior in terms of gender 39

4.2.6.2 The level of impact of the “Overconfidence” factor on individual investors' behavior in terms of age 40

4.2.6.3 The level of impact of the “Overconfidence” factor on individual investors' behavior in terms of the annual income 40

4.2.6.4 The level of impact of the “Overconfidence” factor on individual investors' behavior in terms of the educational level 41

4.2.6.5 The level of impact of the “Overconfidence” factor on individual investors' behavior in terms of the risk preference 42

4.3 Assessing factors affecting investor behavior on the Vietnamese stock market

in the current time

4.3.1 The reputation of the issuing company factor 42 -Advantages

-Advantages

- Disadvantages

CHAPTER 5: CONCLUSION AND RECOMMENDATION

5.1 Summary of the findings 46 5.2 Recommendations 47

a Individual investors on the Vietnam stock market

b Stock companies

c Companies listed on the stock market

d State management agencies

5.3 Final thoughts 51

LIST OF TABLES

Table 4.2.1.1: The level of impact of the "Reputation of the issuer" factor by gender

Table 4.2.1.2: The level of impact of the "Reputation of the issuer" factor by age

Table 4.2.1.3: The level of impact of the "Reputation of the issuer" factor by the annual income

Table 4.2.1.4: The level of impact of the "Reputation of the issuer" factor by the educational level

Table 4.2.1.5: The level of impact of the "Reputation of the issuer" factor by the risk preference

Table 4.2.2.1: The level of impact of the "Fundamental analysis” method by gender Table 4.2.2.2: The level of impact of the "Fundamental analysis” method by age

Table 4.2.2.3: The level of impact of the "Fundamental analysis” by the annual income

Table 4.2.2.4: The level of impact of the "Fundamental analysis” method by the educational level

Table 4.2.2.5: The level of impact of the "Fundamental analysis” method by the risk reference

Table 4.2.3.1: The level of impact of the "Technical analysis” method by gender Table 4.2.3.2: The level of impact of the "Technical analysis” method by age

Table 4.2.3.3: The level of impact of the "Technical analysis” method by the annual income

Table 4.2.3.4: The level of impact of the "Technical analysis” method by the

educational level

Table 4.2.3.5: The level of impact of the "Technical analysis” method by the risk preference

Table 4.2.4.1: The level of impact of the “Recommendation of counselors” factor by gender

Table 4.2.4.2: The level of impact of the “Recommendation of counselors” factor by age

Table 4.2.4.3: The level of impact of the “Recommendation of counselors” factor by the annual income

Table 4.2.4.4: The level of impact of the “Recommendation of counselors” factor by the educational level

Table 4.2.4.5: The level of impact of the “Recommendation of counselors” factor by the risk preference

Table 4.2.5.1: The level of impact of the “Herd behavior” factor by gender

Table 4.2.5.2: The level of impact of the “Herd behavior” factor by age

Table 4.2.5.3: The level of impact of the “Herd behavior” factor by the annual income Table 4.2.5.4: The level of impact of the “Herd behavior” factor by the educational annual

Table 4.2.5.5: The level of impact of the “Herd behavior” factor by the risk preference Table 4.2.6.1: The level of impact of the “Overconfidence” factor by gender

Table 4.2.6.2: The level of impact of the “Overconfidence” factor by age

Table 4.2.6.3: The level of impact of the “Overconfidence” factor by the annual income

Table 4.2.6.4: The level of impact of the “Overconfidence” factor by the

educational level

Table 4.2.6.5: The level of impact of the “Overconfidence” factor the risk preference

LIST OF FIGURES

Pie chart 4.1.1 Classification of investors by gender

Pie chart 4.1.2 Classification of investors by age

Pie chart 4.1.3 Classification of investors by annual income

Pie chart 4.1.4 Classification of investors by academic level

Pie Chart 4.1.5 Classification of investors by risk preference

Pie chart 4.2.1 The level of impact of the " the reputation of the issuing company" factor

Pie chart 4.2.2 The level of impact of the " Fundamental analysis " method

Pie chart 4.2.3 The level of impact of the " Fundamental analysis " method

The chart 4.2.4 Level of impact of “Consultant's recommendation” factor

Pie chart 4.2.5: The level of impact of the " Herd behavior " factor

Pie chart 4.2.5: The level of impact of the " Herd behavior " factor

xi

❖ Survey questionnaire my survey

❖ The reputation of the issuing company * Sex Crosstabulation

❖ The reputation of the issuing company * age Crosstabulation

❖ The reputation of the issuing company * The annual income Crosstabulation

❖ Reputation of the issuing company* Educational level Crosstabulation

❖ Reputation of the issuing company* risk preference Crosstabulation

❖ The fundamental analysis* Sex Crosstabulation

❖ The fundamental analysis* age Crosstabulation

❖ The fundamental analysis* the annual income Crosstabulation

❖ The fundamental analysis* the educational level Crosstabulation

❖ The fundamental analysis* the educational level Crosstabulation

❖ The technical analysis * Sex Crosstabulation

❖ The technical analysis* age Crosstabulation

❖ The technical analysis* annual income Crosstabulation

❖ The technical analysis* educational level Crosstabulation

❖ The technical analysis* risk preference Crosstabulation

❖ The recommendation of counselors* sex Crosstabulation

❖ The recommendation of counselors* Age Crosstabulation

❖ The recommendation of counselors* the annual income Crosstabulation

❖ The recommendation of counselors* the educational level Crosstabulation

❖ The recommendation of counselors* the risk reference Crosstabulation

❖ The herd behavior* Sex Crosstabulation

❖ The herd behavior* age Crosstabulation

❖ The herd behavior* the annual income Crosstabulation

❖ The herd behavior* educational level Crosstabulation

❖ The herd behavior* risk reference Crosstabulation

❖ The confidence* Sex Crosstabulation

❖ The overconfidence* age Crosstabulation

❖ The overconfidence* the annual income Crosstabulation

❖ The overconfidence* the educational level Crosstabulation

❖ The overconfidence* risk preference Crosstabulation

xii

ABSTRACT

The thesis with the topic "assessing the factors that affect the behavior of individual investors on the Vietnamese stock market" has been researched by Nguyen Thi Huyen (2021) Thanks to the suggestion and recommendation of Tran Thi Xuan Anh advisor,

my thesis has been edited and completed In this essay, 400 individual investors in the Vietnamese stock market were surveyed covering criteria including age, gender, annual income, education level, and preference risk Research subjects of the thesis include the reputation of the issuing company, the fundamental analysis, the technical analysis, the recommendation of counselors, the herd behavior, and investors' overconfidence Through my thesis, individual investors can have an overview of the market, consider the psychological adjustment before making investment decisions to maximize profits By analyzing the participants' psychology and evaluating the previous literature, the result of the survey has shown that the participants have been affected by 4 factors and 2 analytical methods at different levels In addition, in each factor and method, there is a difference in the level of each criterion

CHAPTER 1: INTRODUCTION 1.1 INTRODUCTION

The stock market is an important part of the financial market which is divided into the primary and secondary markets For individual investors, the stock market is an opportunity to profit from leisure money Besides, investors can diversify their investment channels, except for buying gold, real estate, or depositing in banks Moreover, the securities market helps businesses mobilize long-term capital through stock issuance, in addition to bank loans Therefore, the stock market is the channel that brings abundant capital from the public to promote the growth of businesses For the economy, the stock market is a measure of the strength of the economy Indicators that measure the market or share price of companies represent the situation of the economy Finally, thanks to the stock market, the government would better control the performance of the economy as well as the operations of listed companies

Firstly, the State Securities Commission of Vietnam has been established on November 28th, 1996 Four years later, the Ho Chi Minh City Stock Exchange was officially put into operation in the first trading session with REE and SAM After more than twenty years of establishment and development with many memorable milestones, Vietnam's stock market has gradually changed, improved, and improved In the Vietnamese securities market, individual investors account for a large proportion, the behavior of investors has a significant influence on the entire securities market However, many individual investors on the Vietnamese stock market often make short-term investments and are influenced by the majority because of unstable sentiment, lack of knowledge about the stock market Therefore, when the market is adjusted, investors are easily depressed, panicked in making inaccurate decisions, which makes the market worse Therefore, the study

of factors that affect the behavior of individual investors is necessary because my thesis gives investors an objective view of the market before making investment decisions This is the reason why I chose the topic “assessing the factors that affect the behavior of individual investors on the Vietnamese stock market"

1.2 BACKGROUND OF THE STUDY

Nowadays, the demand for securities investment has been increasing rapidly The stock market is in a booming period According to data from the Vietnam Securities Depository, by the end of the first quarter of 2021, the Vietnam stock market had 113,875 opened securities trading accounts - the highest number of the newly opened stock account in the trading history of the market This information has shown that a lot

of new investors pay attention to the market Responding to demand the increase for investors' interest in the stock market, I chose the “Assessing factors impacting the behavior of individual investors on the Vietnamese stock market” topic to help investors make an effective investment decision The data of the article is primary data through the survey questions of individual investors on the Vietnamese stock market in

2021 Therefore, the article has the latest update to meet the current need of customers, gives investors an overview of the stock market in the present

1.3 OBJECTIVES OF THE STUDY

The objective of the course are factors impacting the behavior of individual investors on the Vietnamese stock market” to make effective investment decisions

of individual investors on the Vietnamese stock market

In conclusion, investors can answer the question: What factors affect the behavior

of individual investors on the Vietnamese stock market and the level of influence of these factors through my thesis

The article is conducted in just three months, completed on 17th June 2021

1.4 SIGNIFICANCE OF THE STUDY

My research assesses the impact on individual investor behavior on the Vietnamese stock market because the number of investors participating in the market is increasing sharply Therefore, the article aims to meet the needs of many investors who are interested in Vietnam's stock market Through my thesis, investors can read references and consider methods to achieve high profitable performance Finally, this thesis would provide important and necessary data to university lecturers or researchers on this subject

1.5 SCOPE AND LIMITATION OF THE STUDY

Scope and limitation of the study: The subjects of my thesis are factors affecting the investment behavior of individual investors on the Vietnamese stock market

a) The scope of research: studying the factors affecting the investment behavior of individual investors on the Vietnamese stock market

b) In terms of time: data in 2020 and 2021

c) The method of studying

-Quantitative methods: use the descriptive statistical method based on data

collected from the survey of individual investors on the Vietnamese stock market

-Qualitative method: use the theoretical basis to assess the factors that affect

the investment behavior of individual investors on the stock market Vietnam

In the survey, studying the following factors: Reputation of the issuing company, fundamental analysis, technical analysis, recommendations of consultants, herd behavior and overconfidence

1.6 DEFINITIONS OF TERMS

➢

A stock exchange is an exchange where stockbrokers and traders can buy

and sell shares through stocks, bonds, and other types of securities

➢

Securities are proof of the owner's legal ownership with assets or capital

of an issued company or organization Securities can be in the form of

certificates, book entries, or electronic data

➢

The securities market is an important part of the capital market The stock

market is divided into primary market and secondary market

➢

The primary market is where the shares are first issued to the public to

raise capital for companies.

➢

The secondary market is where the stock is bought and resold after the

primary issue, so no new money is generated and just a change of stock ownership between the buyer and the seller

CHAPTER 2: REVIEW OF RELATED LITERATURE 2.1 LITERATURE REVIEW

2.1.1 The Behaviral Finance Theory

a) Introduction :

Baker & John ( 2011) have indicated that psychology in stock investment plays an important role in making decisions This book helps to minimize the influence of emotions before making the investment decision

Victor & Helen (2000) has shown that behavioral finance theory is a combination of essential factors in the economic field including psychological concepts and behavioral aspects in asset valuation, asset allocation, and market prices, as well as investor behavior, corporate management behavior, and social impacts

A study by Ali ( 2019) has shown that the role of behavioral finance theory is to help investors explain unusual phenomena that traditional financial theories encounter, for example, stock market bubbles in the US Behavioral finance theories are based on two foundations: Cognitive psychology and the limitations of arbitrage investment However, behavioral finance theory is not official and is often opposed

by efficient market researchers This theory is still in its infancy with several additional items in this theory separated from traditional financial theory Nowadays, there have been still many arguments about behavioral finance

According to Baker & John ( 2011), the application of behavioral finance not only helps investors explain unreasonable behaviors but also adjusts the pricing model of financial assets including stocks, bonds, derivatives, commodities Besides, this theory can be used in corporate management theory, capital structure in corporate finance, and in explaining the interactions between different markets

Renisa ( 2015) has also revealed that the role of behavioral finance is to help the readers avoid repeating unusual mistakes that investors often make For example, autobiography is an important term in behavioral finance This word describes how people use sub information to evaluate a major event In life and investing activities, people always have to make decisions In the context of limited information and the

slow processing of the brain, people are used to using emotional elements In detail, investors often have the habit of investing in stocks they know because of the ambiguity and uncertainty about the other stocks Investors also don't want to change their habits It is a reason why investors often invest in fixed stocks instead

of diversifying their portfolios In addition, investors often overestimate the assets they hold

b The basic content of behavioral finance theory:

The Research Foundation of CFA Institute Literature Review (2008) shows that the financial theory includes the following basic contents

Overconfidence and overoptimism — investors overestimate their ability and the

accuracy of the information they have Odean (1998) has shown that overconfident investors often receive a lower return on assets than the market because these people appreciate their knowledge and underestimate the potential risks Therefore, they lose the ability to control the matter, face many risks and make inappropriate decisions For example, investors are too confident in their ability to analyze and choose stocks without diversifying their portfolios or putting a lot of capital into the company’s stock they are working for In addition, Brad & Tarrance (2001) has demonstrated that overconfident investors trade excessively In the finance area, men are more overconfident than women According to the statistical results, the study noted that men trade 45% more transactions than women, which reduce men's net profits

The reputation of the issuing company: Many investors assess a company based

on the reputation of issuing company rather than underlying probabilities One possible manifestation of this inclination is the assumption that the shares of a “good company” would be a good investment According to the study of Shefrin and

Statman (1995), survey respondents believe that the shares of companies in the annual Fortune magazine survey would be good investments Their findings indicate that these companies tend to be large companies with low book-to-market ratios, which are characteristics linked empirically to poor subsequent returns In addition, Epstein (1994) also demonstrated the effects of social information on individual investors

Advisor's recommendation: Malmendier and Shanthikumar (2003) have indicated

that advisors’ analysis influences the decision-making of individual investors

Research by Krishnan and Booker (2002) agreed with this opinion Moreover, research has also shown that investors often use the analyst's recommendations to make short-term decisions to hold or sell stocks

Herd behavior in humans is a social behavior that is caused when individuals

subjugate their will, thoughts, and behaviors to the majority; the group or herd Tatsuya & Reid ( 2015) has shown that in developed countries, investors are affected insignificantly by herd behavior while there is an increase in the level of herd behavior because of low accounting standards, lax enforcement of regulations

in emerging market countries In addition, information may be updated slowly, inadequately In this case, the investor tends to imitate the actions of other investors

in the market

c Review of previous studies about behavioral finance theory

Pham, N T & Nguyen, T L (2018) conducted a study of factors affecting the investment behavior of individual investors on the Ho Chi Minh City stock market The results of this study show that five factors including advisor's recommendation, the reputation of the company, herd behavior, the quality of information on financial reports, and the overconfidence

2.1.2 Two methods influence investment decisions

a The fundamental analysis

Definition: The fundamental analysis is a method based on fundamental factors that

impact the price movement of stocks in the market This method use the basic information about the company, the industry of the company, and macro-economic conditions The purpose of the fundamental analysis is to determine the intrinsic value of the stock and then compare it with the market price of the stock to make recommendations for buying/selling in the market Fundamental analysis is the indispensable method in stock investment analysis Arshad & Vagar (1999 ) have shown that about 90% of investors use fundamental analysis for their stock investments

Classification: is divided into two methods: top-down and bottom-up Top-down

analysis is about seeing the big picture concerning the industries and sectors where investors want to make investments After the identification of stocks, investors

observe the in-depth information and financial statements to make the investment decision By contrast, the bottom-up method is an investment approach that focuses

on the analysis of individual stocks and does not emphasize the importance of macro- economic cycles and market cycles In bottom-up investing, the investor focuses their attention on a particular company and its fundamentals, ignoring the large economy and the industry in which that company operates This approach assumes that individual firms can perform well even in a non-performing industry ( Adam, 2021) According to Claudia ( 2021), the main content of the top-down analysis method has the following order of steps:

Economy and stock market analysis

+ Analysis of the world economy can forecast the expected return when investing in each country, and then selecting stocks to allocate capital the most effectively + Analysis of the domestic economy: industries and companies always operate in close relationship with the fluctuations of the domestic economy Moreover, both industries and companies are affected by factors: gross domestic product, total output industry, unemployment rate, inflation rate, budget deficit interest, consumer's confidence

+ Macroeconomic policies of the Government include fiscal policy and monetary policy The government uses macro policies to manage macroeconomics Therefore, these policies are closely followed to forecast their potential impact on the both performance of the economy and specific companies

+ Stock market analysis: the stock index reflects the strength of the economy Therefore, when analyzing the stock market, analysts often focus on economic indicators including money supply and inflation, interest rather than the stock's price

on the stock market

b Industry analysis

Industry analysis includes two basic contents Firstly, macro analysis of the industry

is implemented to determine the relationship between the industry's performance, business cycles, industry life cycle, factors affecting the business operations of the industry, and the competitive level in the industry Secondly, the prediction of the

expected return of the industry is based on many pricing models Therefore,

investors consider to decide the proportion of investment in the industry

+ Predicting the industry's rate of return is implemented to decide on the proportion

of asset allocation across industries, which is based on two models: net present value of cash flows and relative valuation model Then, these results would be compared with the market price to make an investment decision

b The technical analysis method

Claudia's essay (2011) also shows the technical analysis method including the following main contents:

Definition: Technical analysis is often recorded in the form of graphs, trading

activities taking place in the past including changes in price, trading volume of any securities or the whole market Investors use technical analysis to deduce the trend that may happen in the future

The concept of technical analysis in the stock market sector has a completely different meaning from the conventional concept Technical analysis is the study of the behavior of the market, not the analysis of goods and materials in the market

Characteristics of technical analysis: Three assumptions underlie technical

analysis Firstly, the market volatility reflects it all Secondly, price moves in the direction of the trend Eventually, history would repeat

+ Market volatility reflects everything: This can be considered as the foundation of technical analysis Any other theory that wants to be accepted must first understand and accept this assumption Technical analysts argue that factors that influence a stock's price such as macro, micro, and psychological factors are reflected in market prices Therefore, technical analysts suppose that studying price movements is necessary

+Price moves in the trend The concept of a trend is very important in technical analysis The purpose of creating a graph is to show price movements in the market Therefore, the investor can identify price trends early, and then trade based on these trends The techniques are repetitive of pre-existing price trends The purpose of technical analysis is to determine the repetition of fluctuating price patterns that

occurred in the past From this assumption, we also have a consequence that "a moving trend will continue to follow its trend until it reverses"

+ History will repeat Most of the content of technical analysis and the study of market volatility must be aimed at studying human psychology Price models, for example, have been identified and proven for more than a hundred years These modes show the market sentiment The application of these models were effective

in the past and have assumed to continue in the future because these models are based on human psychology which is often constant

Some theories about technical analysis

+DOW theory: According to William ( 2015) has shown that Dow theory is the basis of technical analysis The basis for building the object of the theory is the fluctuations of price on the market, which is shown in the average index of the market and not based

on the same basis with fundamental analysis Dow Theory has 12 important principles First, the market average reflects all (except God's action) Because the average market index reflects all trading activities of thousands of investors Besides, the events that happened were reflected in the supply and demand of the securities The DOW theory examines three basic trends in the market in the following order: Primary trend ( long-term stocks), secondary trend (medium-term trend), and tertiary trend ( small fluctuations over a few days) The Dow theory of the bull market includes the first

"accumulation" process, a period of steady growth, and finally a period of fluctuations

On the contrary, the bear market also includes three periods The first period is the

"allocation" period The second period is called the "chaotic" period During this period, the seller sells at all costs In the third period of accumulation with very low trading volume, the market decline is weaker Besides, the DOW theory also points out that two average lines of the market must together confirm the market trend; the relationship between price and volume is intimate; horizontal lines can be substituted for secondary trend; Use the closing price for research; The final content of Dow theory

is a trend that should be assumed that is continuing until there is an identified indication

of the reversal trend

+ The odd lot theory refers to a technical theory that assumes that the small-scale investors dealing in the buying and selling of odd lots are wrong most of the time

Hence, when small-scale investors put a stock on sale, and the sales of odd lots have

an upper hand, then as per the odd-lot theory, it is considered to be a favorable time

to buy In case, odd lot buys have an upper hand, then it is a feasible time to sell ( Gordon, 2020)

+ The theory of the short seller: A short sale is a form of selling an asset or stock that the seller does not own Investors can borrow securities, and then sell them In anticipation of a decrease in price, the seller would buy back stock at a lower price and repay them in the specified future ( Adam, 2021)

2.2 THEORETICAL AND CONCEPTUAL FRAMEWORK

All the studies cited above use secondary data This means that their data is obtained through a collection of previous research, information on official websites, and research papers of the organization Then, the author has gathered and classified

it with the same characteristics Because of the use of secondary data, the articles lack the practicality to meet the current need

CHAPTER III METHODOLOGY

This chapter would present research on a system of factors affecting individual investors' behavior in the stock market in Vietnam In more detail, I outline the research methods, data collection methods and data analysis methods

3.1 LOCALE OF THE STUDY

In order to research on the topic " factors affecting individual investors' behavior in the Vietnamese stock market", the survey was conducted by individuals in the stock market in Vietnam in 2021

Qualitative: Data will be collected in two ways: primary data collection and

secondary data collection Secondary data sources collected and selected by Google, official websites of economic-related finance theory behavior To know how factors affect individual investors' behavior in the Vietnamese stock market, I also collect and analyze primary data through survey question with 400 individual investors who currently have a trading account on the Vietnam stock market

Quantitative methods: data is collected through individual investors' surveys, then

I used both the descriptive statistical method and computers to classify data accurately

3.3 DATA GATHERING PROCEDURE

To collect data, I could post questionnaires to stock forum groups on Facebook In addition, I have submitted questionnaires to customers of VPS securities company through Zalo

Secondary data will be collected from reliable sources on the Internet or through books and newspapers Finally, I synthesized data and combined with primary data

to give the most objective results for the investigation process

3.4 POPULATION AND SAMPLE DESCRIPTION

Population: is an individual investor who currently has a trading account on the

Vietnamese stock market

Sample: To assess the factors affecting investment behavior of individual investors

A survey was conducted by 400 randomly individual investors who currently have trading accounts on the Vietnamese stock market

Based on the above formula, I could assume that the Confidence Interval is 95%; the standard deviation is + 5% or -5%; the ratio (p) is 50% We calculate n = 385, for the

convenience of calculating%, I rounded up 400 participants in the study Respondents: Using descriptive statistical methods to analyze the factors affecting the investment

behavior of individual investors in the stock market of Vietnam These factors include representativeness of the issuing company; fundamental analysis: technical analysis; recommendation of counselors; herd behavior; individual investor's overconfidence in Vietnam's stock market in the different conditions including gender, age, education level, annual income, and risk preference In conclusion, the influence of factors on individual investor's behavior changes when there is a difference in gender, age, education level, annual income, risk preference

3.5 RESEARCH INSTRUMENT

Data collected from the survey of individuals participating in stock investment in the Vietnamese stock market is primary data This data should be encoded into a numeric

format to facilitate statistical computation and to easily recombine the choices of a variable In the article, the levels "Never", "seldom", "often", "most", "always" are numbered 1,2,3,4,5 respectively

Building scales about factors affecting the investment decision of individual investors are measured on the 5-level Likert scale The Likert scale, invented by the American psychologist, Likert, is used to determine the opinions or attitudes of interviewees about certain issues presented in the form of propositions In the survey table of this thesis, the influence of factors is divided into five levels by Likert as follows: "Never", "seldom", "often", "usually", "always"

After collecting paper data, surveys, and online interviews, the data could be processed by statistical software, then the results would be synthesized to give the most objective judgment

3.6 RESEARCH ETHICS

In the academic environment, ethics is always appreciated Firstly, in research, plagiarism is considered dishonest activity and a serious violation of morality Sources of information and references are cited in APA's 6th format to avoid plagiarism Secondly, all information of surveys or interviews in the my thesis are guaranteed to be accurate and objective Participants in the study are completely voluntary In addition, their personal information is not revealed Their answer is only used for this research Finally, I would report the detailed results during the research Besides, I would send back the results for them to refer to and consider changing the factors affecting their psychology, which leads to the ineffective investment I try my best to avoid mistakes and omissions in all research activities 3.7 RELIABILITY AND VALIDITY

Reliability: my thesis uses Cronbach Alpha to evaluate reliability Cronbach Alpha's function reflects the degree of the close correlation between observed variables that are appropriate or unsuitable for inclusion in the scale This thesis has α = 0.87 (0.9> α> = 0.8) which is an acceptable scale

Validity: - survey was conducted by 400 individual investors on Vietnam's stock market This number is found through a popular and proven formula, so this number could represent all investors in the stock market in Vietnam Besides, the content of

my thesis pointed out that the factors affecting investor's psychology include: Representativeness of the issuing company; Fundamental analysis: Technical analysis; Recommendation of counselors; Herd behavior; Individual investor's

;Overconfidence in Vietnam's stock market in the different conditions such as gender, age, education level, annual income, and risk preference According to a previous study by Pham & Nguyen (2018), this thesis is generalizable

CHAPTER 4: FINDINGS AND DISCUSSION

Pie chart 4.1.1 Classification of investors by gender

Among 400 participants in my survey, there are 250 male investors (accounting for 62%) and 150 female investors (accounting for 38%)

under 30 from 30 to 50 over 50

Pie chart 4.1.2 Classification of investors by age

Among 400 investors participating in the survey, there are 150 people under the age

of 30, 210 people from 30 to 50 years old, and 40 people over 50 year old, equivalent to 38%, 52% and 10%, respectively

4.1.3 Classified by annual income

annual income

10%

38%

52%

Under 120 million from 120 millions to 360 millions Over 360 millions

Pie chart 4.1.3 Classification of investors by annual income

Through a survey of 400 people about their annual income, the pie chart shows that the number of people with annual income under 120 million is 150 people (accounting for 38%), people with annual income from 120 to 360 million (accounting for 52%), and people with annual income over 360 million (accounting for 10%)

4.1.4 Classification of investors by academic level

The academic level

5%

26%

69%

high school degree bachelor degree master degree

Pie chart 4.1.4 Classification of investors by academic level

Among the 400 random investors surveyed, there are 275 university- educated investors people, 105 high school-educated people and 20 postgraduate-educated people, equivalent to 69%, 26% and 5% respectively

4.1.5 Classification of investors by risk preference

risk preference

8%

24%

68%

high risk middle risk safe

Pie Chart 4.1.5: Classification of investors by risk preference

Among 400 investors, the number of people choosing the "middle risk" option is the highest number with 273( accounting for 68%) , the second position is the " high risk" option with 97 people (accounting for 24%) Finally, there are 30 people (accounting for 8%) choosing “ safe” option

4.2 FACTORS IMPACTING ON INVESTORS IN VIETNAM STOCK MARKET 4.2.1 The impact of the reputation of the issuing company on the investor's behavior

never seldom often Usually always

Pie chart 4.2.1 The level of impact of the " the reputation of the issuing

company" factor

The pie chart shows that the total percentage of investors choosing the two "always" option and "usually" option is 82% - the relatively high number while the total number of investors choosing the two "seldom" option and "never" option are only

22 investors in 400 ( accounting for 6%) among 400 participants in my survey

In conclusion, individual investors on the Vietnamese stock market are very interested in the reputation, brand, and image of the company they would invest in Companies with a good reputation and image would attract large capital from individual investors to their securities

However, the level of influence of the reputation of issuing company on investor behavior based on the criteria is different

4.2.1.1 The level of impact of the “Reputation of the issuing company” factor

on individual investors' behavior in terms of gender

Based on the 4.2.1.1 table, female investors pay more attention to the factor

"Reputation of the issuing company" than male investors When being asked " Does the the reputation of the issuing company impact your investment behavior?", the percentage of female investors choosing the answer “ always" is 10% more than that

of men investors In contrast, the proportion of men choosing the answer "seldom"

is nearly twice as much as that of women In addition, the "Never" option was not selected by women, only men The reason for this result may be that women tend to

be more cautious than men, so they want their investment to get some assurance from the reputation of the issuing company

4.2.1.2 The degree of impact of the "Reputation of the issuing company"

factor on individual investors' behavior in terms of age

The 4.2.1.2 table above has demonstrated that the group of investors over 50 years old is the group - the most interested in the reputation of the issuing company before investing The second position is the group of investors from 30 to 50 years old The group under 30 years old is less influenced by this factor

The total proportion of people over 50 choosing "always" and “ usually” is 87.5%, followed by the group of investors from 30 to 50 years old ( accounting for 85.2%) and the group of investors under 30 ( accounting for 76%)

In contrast, a total of the rate of investors choosing “ seldom” and “ never” is sorted

in descending order: the group of investor under 30 years old (accounting to 6%), the group of investors from 30 to 50 years old ( accounting to 5.3%) and that of investors over 50 years old ( accounting to 5%) Moreover, no one in the group of investors over 50 years old chose this answer

4.2.1.3 The degree of impact of the "Reputation of the issuing company"

factor on individual investors' behavior in terms of annual income

The 4.2.1.3 frequency table above shows that investors having an annual income of under 120 million VND is less affected by the reputation factor of the issuing

companies while the investor with annual income over 360 million is the most significantly influenced by this factor in three groups

The proportion of investors with annual income under 120 million VND choosing

"never" accounts for 6.1% In addition, the rate of investors choosing " seldom" is 9.1% The rate of investors of this group choosing these two answers are 15.2% - the highest proportion of the three groups divided by annual income, followed by investors from 120 to 360 million VND ( accounting for 4.7%) and investors with annual income over 360 ( accounting for 4.5%)

In addition, the total rate of investors choosing “ usually” and” always” is sorted in descending order: the group of investors with an annual income over 360 million VND ( accounting for 84.4%), the group of annual income from 120 million to 360 million VND ( accounting for 82.6%), and finally the percentage of people annually income under 120 million VND ( accounting for), which shows that individual investors in the Vietnamese stock market are significantly important to the reputation of the issuing company

4.2.1.4 The degree of impact of the "Reputation of the issuing company" factor

on individual investors' behavior in terms of educational level

The 4.2.1.4 table demonstrates that high-school educated investors are the least influenced by the reputation of the issuing company when making investment decisions, followed by university-educated investors ( accounting for 2.2%) and investors having postgraduate qualifications The total rate of high school-educated investors choosing “ never” and “ seldom” is 15% This percentage is 5 times higher than the total rate of university-educated investors Especially, two "never" and

"seldom" options, postgraduate-educated investors did not choose

In contrast, the total proportion of investors choosing “ always” and “ usually” is sorted in the following ascending order: high school–educated investors, university-educated investors, and postgraduate-educated investors Moreover, the percentage

of investors having postgraduate qualifications choosing "always" is 40%, nearly

twice as much as the rate of college-educated investors, and nearly four times as much as that of the other group

4.2.1.5 The degree of impact of the "Reputation of the issuing company" factor

on individual investors' behavior in terms of risk preference

The 4.2.1.5 table above shows that high-risk investors are the least affected by the reputation factor of the issuing company while the safe group is the most significantly influenced by this factor in three group

The total rate of the group of high-risk investors choosing two "never" and "seldom"

is nearly 4 times higher than that of both risk group and low-risk groups Especially,

in the group of investors who are afraid of risk, no one chose the answer "never"

However, individual investors choosing the answer "usually" account for the highest proportion in the scale Moreover, the total percentage of safe investors and medium-risk investors choosing the "usually" and "always" option is equal to 88.6%, higher than that of the risk-loving group

4.2.2 The degree of impact of the "Fundamental analysis" method on the behavior

always usually often seldom never

Pie chart 4.2.2 The level of impact of the " Fundamental analysis "

method

The level of impact of the "Fundamental analysis" method on the investment behavior of individual investors:

In a survey of 400 investors, eight people chose "Never" (accounting for 2%) and 30 people chose "Seldom" (accounting for 8%) when answering the question "which one is your level of interest in fundamental analysis about company before deciding

to invest in" There are 50 investors choosing "often" (accounting for 13%), 232 investors choosing "Usually" (accounting for 57%) and 80 investors choosing

"always" (accounting for 20%)

The pie chart demonstrates that the fundamental analysis is an important method in making the investment of individual investors in the Vietnamese stock market There are very few investors who do not pay attention to this fact Fundamental analysis is considered the leading and indispensable method in investment analysis,

is a basis for investors to make their investment decision This is consistent with the researches of the fundamental analysis presented in this first-chapter thesis

However, the level of influence of the reputation of issuing company on investor behavior based on the criteria is different

4.2.2.1 The level of impact of the fundamental analysis method on the behavior

of individual investors in terms of gender criteria

Based the 4.2.2.1 table, female Investors pay more attention to the "fundamental analysis" method than male investors When being asked " which one is your level

of interest in fundamental analysis about company before deciding to invest in?", the percentage of women choosing the answer "always" is 13% more than that of men In addition, the total rate of male investors choosing two "always" and“ and

“usually” option is equal to that of female investors with 77% In contrast, the proportion of men choosing the answer "seldom" is twice as much as that of women In addition, the rate of male investors choosing "never" is three times as much as that of female investors The reason for this result may be that women are often more cautious than men

4.2.2.2 The level of impact of the “Fundamental analysis” method on

individual investors' behavior in terms of age

The 4.2.2.2 table demonstrates that the group of investors over 50 years old is the most interested in fundamental analysis before making an investment decision The second position is the group of investors from 30 to 50 years old, with the largest number of participants in the market The group under 30 years old is less influenced by the factor " the fundamental analysis"

The result of the survey shows that the total rate of people over 50 years old choosing the "usually" and "always" option is the highest percentage with 93 percent among the three groups, followed by that of investor from 30 to 50 year old with 83.3 percent and investors under 30 years old with 67%

However, we can realize that the most chosen answer is "usually" In addition, the total rate of investors choosing the two "usually" option and "always" option is sorted in ascending order: the group of investors over 50 ( accounting for 93%), the group of investor from 30-50 years old (accounting for 83.3%) and the that of investors under 30 ( accounting for 67%)

4.2.2.3 The level of impact of the “Fundamental analysis” method on

individual investors' behavior in terms of the annual

The 4.2.2.3 table shows that investors with an annual income under 120 million VND are the least affected by the fundamental analysis method in the three groups classified by the annual income while the group of investors over 360 million VND

is the most interested in this factor

The total proportion of investors having an annual income under 120 million choosing

“ seldom” and “ never” is 11% - the highest among the three groups divided by annual income, followed by the group with annual income from 120 million to 360 million VND ( accounting for 10%), and finally the group of investors having the annual income over 360 million VND ( accounting for 3%) Moreover, no investor with an annual income over 360 million VND chose the "never" option

The "usually" option accounts for the highest percentage on the scale It is sorted by descending order of influence of fundamental analysis method: the rate of investors with annual income over 360 million VND( accounting for 83%), investors with annual income from 120 million to 360 million VND, and investors with annual income under 120 million VND ( accounting for 78%)

4.2.2.4 The level of impact of the “Fundamental analysis” method on

individual investors' behavior in terms of the educational level

The 4.2.2.4 table shows the group of investors with high school education is the least influenced by the technical analysis method when making investment decisions, followed by the group of university-educated investors and postgraduate-educated investors

This is proved by the "never" option, the percentage of high school-educated investors choosing this group accounts is 6%, nearly six times as much as that of university-educated investors Particularly, in the group of investors with postgraduate qualifications, the "never" option was not chosen The "seldom" option has the same characteristics as the answer "never", the level of interest in fundamental analysis is ranked in descending order: high school, university, and postgraduate

In addition, individual investors chose the answer “Usually” accounting for the highest proportion in the scale Finally, in the answer "Always", the university-educated investor chose this answer - the highest percentage of the three divided groups, twice as much as the university-educated group and more than three times the high school-educated group

In conclusion, individual investors in the Vietnamese stock market are significantly interested in the fundamental analysis method In conclusion, that the interest level accompanied by their educational level

4.2.2.5 The level of impact of the “Fundamental analysis” method on

individual investors' behavior in terms of the risk preference

The 4.2.2.5 table shows that the risk preference level is in the opposite direction of the level of interest in the fundamental analysis method

The frequency table shows that the rate of high-risk investors choosing two answers

"Never " option is nearly five times as much as that of the medium-risk group In particular, investors in the "safe" group did not choose this answer In addition, the proportion of "high risk" investors choosing the answer " seldom" is nearly 3 times

as much as the rate of the "medium risk" group and 4 times as much as the " safe" group

In contrast, the rate of individual investors choosing the answer "usually" accounts for the highest percentage in the scale Moreover, the percentage of safe investors choosing the two "usually" and "always" option are the highest with 90%, followed

by the medium-risk group with 81.9%, and the “risk-loving” group with 65%

4.2.3 The degree of impact of the "Technical analysis" method on

individual investors' behavior:

never Seldom Often usually always

Chart 4.2.3: The level of impact of the " Fundamental analysis " method

The pie chart has shown that no investor chose "Never", 13 individual investors chose "seldom" (accounting for 3%), 55 individual investors chose "Often" (accounting for 14%), 97 investors chose "Usually" (24%) and 235 individual investors chose "Always" (accounting for 59%) before the question: "Which one is your level of interest in technical analysis about a company before deciding to buy this company's stock"

Among the two methods are surveyed, technical analysis have the greatest impact on individual investors' behavior because 59% of investors chose the “always” option Moreover, no investor completely ignored this method when making investment decisions In addition, the percentage of investors choosing both " often" and "seldom" only accounts for over 17% of the total investors participating in the survey

However, the level of influence of the reputation of issuing company on investor behavior based on the criteria is different

4.2.3.1 The level of impact of the “Technical analysis” method on individual investors' behavior in terms of gender

Based on the result of the 4.2.3.1 table, male investors pay more attention to the

"technical analysis" method than females Being asked " Which one is your level of interest in technical analysis about a company before deciding to buy this company's stock", the percentage of men choosing the answer "always" is 14% more than women In contrast, the percentage of women choosing the "seldom" option is twice

as high as that of men In particular, the answer is the "never" option both men and women did not choose In conclusion, the behavior of individual investors is greatly influenced by technical analysis

4.2.3.2 The level of impact of the “Technical analysis” method on individual investors' behavior in terms of age

According to the 4.2.3.2 table, the group of investors over 50 years old is the least interested in the technical analysis method before making their investment decision, followed by investors under 30 years old The investment decision of people from

30 to 50 years old is the most affected by this factor

The rate of people over 50 years old choosing “always” is the lowest among the three age groups with 38% This figure is half of the group of people under 30 years old, and 20% smaller than the investor group from 30 to 50 years old In addition, the answer "usually" is the same characteristics as the answer "always" The option

"usually", the percentage of investors from 30 to 50 years old choosing this answer

is the highest, then investors under 30 years old, finally investors over 50 years old