Original Article

Factors affecting investment
intentions: A consumer behaviour
Received (in revised form): 08th September 2013

Kang Li Lim
is currently working as a Credit Analyst in a leading bank. He completed his PhD and Master in Business Research from the University of
Western Australia. He obtained a First Class Honors in his undergraduate degree in Banking and Finance from Nanyang Business School
at the Nanyang Technological University in Singapore. His research interests include consumer behaviour, investment decision making and
financial services.

Geoffrey N. Soutar
graduated in economics from the University of Western Australia (UWA) and undertook doctoral training at Cornell University. He was Director
of the Graduate School of Management at UWA from 2000 until 2007. He has been a consultant to a large number of organisations in
Australia and internationally and has published more than 150 research papers in journals and in book chapters, as well as a number of
research monographs, across a wide range of management and marketing areas.

Julie A. Lee
is a Winthrop Professor in the Marketing discipline at the University of Western Australia. Since completing her PhD in Business
Administration from the University of Illinois at Urbana Champaign, she has been a faculty member at several universities. She has also
consulted across a range of industries and organisations, including acting as an expert witness in cases drawing on her expertise in crosscultural consumer behaviour and marketing research.

ABSTRACT The purpose of this study is to examine investors’ decision-making from the
perspective of a consumer using constructs commonly found in the consumer behaviour
field. An investment intentions model incorporating product knowledge, product involvement, risk and uncertainty avoidance, and mediated by perceived risk and uncertainty, was
developed and analysed using structural equation modelling. The research found that product knowledge and product involvement had the greatest impact on intentions, suggesting
the applicability of these constructs in finance research. Perceived risk was the only mediating construct. The model explained more than 60 per cent of the variation in intentions.
A major contribution of this research came from the development of an investment intentions model to examine retail investors’ investment decision-making processes from
a consumer behaviour perspective. It helps practitioners to develop a better understanding
of the factors that impact on their clients’ intentions to invest in the stock market. This study
is the first to include a set of consumer behaviour constructs in an investment intentions
model that was not examined before, despite the close relationship between behavioural

Correspondence: Kang Li Lim,
E-mail: limk0021@ntu.edu.sg

© 2013 Macmillan Publishers Ltd. 1363-0539 Journal of Financial Services Marketing Vol. 18, 4, 301–315

the growing field of behavioural finance has focused on explaining individual-level behaviour. 2003). Nagy and Obenberger. 1980). low transaction costs and flexibility that many other classes of assets do not have. 301–315 . This approach led to many studies that have examined the financial (for example.2013. of which investment behaviour may be considered a subset. 2004) and demographic (for example. 1973). economic (for example.1057/fsm. suggesting that there are a growing number of retail stock market investors. 2004). Many of these traditional finance theories are used by portfolio managers in structuring people’s investment portfolios together in an attempt to take into account macro and microeconomic factors. 1973. 4. 1951. Products transacted on stock markets have long been a favourite asset class. Markowitz. 1363-0539 Journal of Financial Services Marketing Vol. Dean. Indeed.Lim et al finance and consumer behaviour that includes elements of psychology and sociology in individual decision-making. Baker and Haslem. The broader consumer behaviour literature has identified © 2013 Macmillan Publishers Ltd. 2007). 1952. the volume and percentage of people who invest in stock market securities have risen sharply in recent years (Dreman et al. 1999. The behavioural finance discipline has expanded our understanding of individual investors’ behaviour. consumer behaviour. Modigliani and Miller. This is surprising. 18. 1998. who have long been of interest to researchers. as there is a close relationship between behavioural finance and consumer behaviour. providing additional insights into the individual characteristics and psychological processes that influence people’s investment intentions and subsequent choices (Ritter. Lewellen et al. 1977. overconfidence (Benos. 1958. 2010). 1972). perceived risk and uncertainty. Behavioural finance and consumer behaviour draw on psychology to explain individual-level behaviour. Despite recent developments in traditional and behavioural finance. The objective of the present study was to bridge this gap by examining the effects of a number of relevant consumer behaviour constructs on investors’ intentions to invest in the stock market. with such research examining the influence of micro-behavioural aspects on decision-making processes. 1994. which assumes that investors are rational and look to maximise their return for a given level of risk. including 302 heuristics (Kahneman and Tversky. THEORETICAL BACKGROUND AND HYPOTHESES Marketing has examined the ways in which people’s background characteristics and psychological processes influence a range of behaviours. Wang. In contrast. Shefrin. doi:10. Journal of Financial Services Marketing (2013) 18. 301–315. 1998. Singapore Exchange Limited. representativeness (Kahneman and Tversky. 1990) factors that influence people’s stock market investment decision processes. risk and uncertainty avoidance. 2001. Clark-Murphy and Soutar. Early studies into people’s investment intentions made use of Modern Finance Theory (for example. Black and Scholes. as both include elements of psychology and sociology in their examination of individual decision-making. 1998) and mental accounting (Thaler. Odean. Grether. investment model INTRODUCTION The expansion of financial markets has provided opportunities for people to invest in a variety of securities and financial instruments. as they provide liquidity. 1973. Clark-Murphy and Soutar. Warren et al. often joining these factors with elements from sociology and economics. few studies have examined the factors that consumer behaviour researchers have developed.23 Keywords: investment intentions.

p. 4. risk perceptions are dynamic and change according to context. In consumer behaviour. few investor studies have examined the applicability of consumer behaviour constructs. Recent evidence suggests that predispositions towards risk and uncertainty avoidance have different impacts on consumers’ purchase intentions. attitudes towards and perceptions of risk and uncertainty were felt likely to play important roles. Risk avoidance Risk avoidance is an attitude. generalised attitudes towards risk have been studied extensively. two category-specific ability constructs (product knowledge and product involvement) and perceptions of risk and uncertainty on intentions to invest in the stock market was examined. 1980). 1999. risk and uncertainty avoidance attitudes are particularly relevant to people’s investment decisions. This distinction may be particularly important in investment decision-making. 1363-0539 Journal of Financial Services Marketing Vol. who vary more on these attributes than do professional institutional investors (Grinblatt and Keloharju. Whereas individual risk attitudes are stable over time. These factors may be especially important and relevant for retail investors. Consequently. 1992. Weber and © 2013 Macmillan Publishers Ltd. whereas risk perception is a transitory response to a situation-specific stimulus (Weber et al. as they have greater need for information and may lack the skills needed to make successful stock market investment decisions. or a stable tendency. 1997). such as product knowledge and product involvement. As there is a distinction between risk and uncertainty. A very large and rich consumer behaviour literature has developed. 18. rather than focusing on people’s predispositions towards risk or uncertainty. 1993). although the link between financial investment choices and consumer behaviour has been recognised for a number of years (Thaler. risk relative to return on investment). Therefore. such as Nicosia’s (1966) Consumer Decision Process Model. some researchers have argued that uncertainty has a greater influence on behaviour than does risk (Stone and Gronhaug. 2002). to avoid risk (Douglas and Wildavsky.Factors affecting investment intentions many factors that have not or have rarely been considered in finance. While many predispositional constructs have been examined in consumer behaviour. rather than attempting to operationalise a general behavioural decision-making framework. In particular. 1980). Indeed. 90). they proved difficult to operationalise and many of their relationships could not be tested (Foxall. at least in a tourism context (Quintal et al. The constructs and their suggested relationships are discussed in more detail in subsequent sections. the present study focused on a selected set of consumer behaviour constructs that were felt to be directly relevant to the study of people’s stock market investment intentions. 2001). Risk is often examined as an objective factor (for example. 1982). Engel et al’s (1968) Consumer Behaviour Model and Howard and Sheth’s (1969) Theory of Buyer Behaviour. it would be expected that they might have different impacts on attitudes and behaviour. Consumer behaviour began its growth stage in the 1960s with the integration of various concepts into comprehensive models of buyer behaviour. although few studies have examined risk and uncertainty as distinct constructs within a decision-making framework (Ghosh and Ray. based on traditional finance. it was seen as important to examine whether this result held true in an investment intentions context. 2010a). However. and ‘financial markets provide a rich environment in which to study consumer behaviour’ (Wilcox. the impact of two predispositional constructs (risk avoidance and uncertainty avoidance). 301–315 303 . These general models were designed to provide a comprehensive explanation of the ways in which consumers behaved and the factors that influenced them when they were making a particular decision. Specifically. 2000. However. These predispositional factors may be especially important for retail investors.

2002). 18. Quintal et al’s (2008) six-country study found that perceived risk had a greater impact on attitude than did perceived uncertainty. a belief or assessment of the risk associated with a particular behaviour) impact behaviour. Similarly. Hofstede (1994) found that low uncertainty-avoidant individuals were flexible. showed greater tolerance for other people’s opinions and behaviours. 2001) and other researchers (for example. although Quintal et al (2008. accepted uncertainty without a great deal of discomfort. It was expected that uncertainty avoidance would positively influence people’s perceptions of the uncertainty involved in investing in the stock market. the greater will be that person’s perceptions of the riskiness of investing in the stock market. took risks easily. They found that perceived uncertainty had a significant negative impact on attitudes in three of the countries. suggesting: Hypothesis 2: The greater a person’s uncertainty avoidance attitude. 2003) found high uncertainty-avoidant people were more rigid and had a need to control their environment and situations in which they found themselves. 1363-0539 Journal of Financial Services Marketing Vol. it was seen as important to determine whether this result held true in a stock market investment context. Therefore. Reisinger and Turner. suggesting: Hypothesis 1: The greater a person’s risk avoidance attitude. as was the case with risk and uncertainty avoidance. Uncertainty avoidance Researchers have examined the difference between high uncertainty-avoidant people and low uncertainty-avoidant people and the behaviours they exhibit. Again. with risk-averse people being more likely to find ways to reduce their risk. suggesting: Hypothesis 3: The riskier a person considers the stock market to be. the less willing that person will be to invest in the stock market. while lowering the proportion of assets invested in the stock market. Weber and Milliman (1997) found that people who perceived a behaviour as less risky were likely to have a more positive attitude towards that behaviour.Lim et al Hsee (1998) and Weber and Milliman (1997) found support for a relationship between risk attitude and perceived risk. On the other hand. 304 Perceived risk and perceived uncertainty Consumer researchers have examined people’s perceptions of risk and uncertainty. Yoo and Donthu. 2002. It was expected that predispositional risk avoidance would positively influence people’s perceptions of the risk of investing in the stock market. 1991. uncertainty-avoidant people were more likely to search for solutions to reduce their uncertainty. For example. Hofstede (1980. The impact of perceived uncertainty has not been as widely examined compared with that of perceived risk. Studies have shown that risk perceptions (that is. 4. Cho and Lee (2006) found that perceived risk increased the amount of information search and transaction frequency. It was expected that risk perceptions about investing in the stock market would have direct negative effects on people’s intentions to invest in the stock market. the greater will be that person’s perceptions of the uncertainty involved in investing in the stock market. Perceived uncertainty is a subjective expectation of uncertainty about © 2013 Macmillan Publishers Ltd. 301–315 . and did not welcome explicit norms (Yoo and Donthu. However. whereas directional support was found in the remaining three countries. 2010b) found that they had differential impacts on consumers’ purchase intentions in a tourism context. few researchers have examined perceptions of risk and uncertainty as distinct constructs. Some studies have examined the distinction between perceived risk and perceived uncertainty.

1980). 1990). 4. the greater will be their perception of risk. as enduring involvement is a long-term product concern. Consumer researchers have found that knowledge influences different phases of the decision-making process (Bettman and Park. 2006). 1984) and increases their confidence in their ability to make good decisions (Bearden et al. it is likely that product knowledge and product involvement will impact on people’s intentions to invest in the stock market. suggesting: Hypothesis 5: The more uncertain a person considers the stock market to be. 2001). knowledgeable consumers are likely to make better choices than are their less knowledgeable counterparts (Blackwell et al. Indeed. 301–315 305 . She found that © 2013 Macmillan Publishers Ltd. 1987). Category-specific ability constructs A wide range of category-specific and general abilities constructs have been examined in consumer behaviour studies across a variety of product and service contexts. Chaudhuri. Hypothesis 7: The better a person’s knowledge of financial matters. whereas perceived risk is contextual. the less willing that person will be to invest in the stock market. Indeed. and may determine the final choice. leading to more positive intentions. perceived risk has been seen as a consequence of product involvement. Specific knowledge about a product is likely to influence people’s decision-making processes. Product knowledge decreases people’s dependence on information (Johnson and Russo. As probabilities cannot be attached to uncertain outcomes. the lower will be that person’s perceptions of the riskiness of investing in the stock market. enduring involvement precedes risk. the riskier that person will consider the stock market to be. 1363-0539 Journal of Financial Services Marketing Vol. Dholakia. the lower will be that person’s perceptions of the uncertainty of investing in the stock market. it is likely that the greater a person’s perceived uncertainty. 1948). people with less perceived uncertainty are likely to have a more positive attitude towards a particular behaviour. whereas they can be attached to an outcome of a risky outcome.Factors affecting investment intentions a potential loss. 2000). 1999. Product involvement Product involvement has been related to perceptions of risk (Dowling. which suggests: Hypothesis 6: The better a person’s knowledge of financial matters. 18. suggesting: Hypothesis 8: The better a person’s knowledge of financial matters. Srinivasan and Ratchford. Bansal and Voyer. perceived risk increases (Oglethorpe and Monroe. 2000. It was expected that uncertainty perceptions about investing in the stock market would have direct negative effects on people’s intentions to invest in the stock market. suggesting: Hypothesis 4: The more uncertain a person considers the stock market to be. 1964. Venkatraman (1989) suggested that. 1991. the more willing that person will be to invest in the stock market. It has also been shown that. As was the case with perceived risk. whereby probabilities cannot be attached to outcomes (Knight. Mitchell. 1986. as uncertainty and the chance of a negative consequence increase. Product knowledge Several studies have found support for a negative relationship between product knowledge and perceived risk and uncertainty (Cox and Rich. especially as retail investors are likely to have a wider variation in their product knowledge and involvement than institutional investors. Among these.

Hypothesis 10: The greater a person’s involvement in financial matters. the lower will be that person’s perceptions of the riskiness of investing in the stock market. 1993). it was decided to use multiple-item latent variables to measure the constructs. 1980). 1363-0539 Journal of Financial Services Marketing Vol. Product involvement has also been studied in relation to product choice (Laurent and Kapferer. Risk reduction is also linked to involvement. 1993. 301–315 . which has been shown to be a major risk reducer (Roselius. 1986. 1985). resulting in such consumers accepting fewer alternatives (Petty and Cacioppo. Mittal.Lim et al consumers with high enduring involvement perceived less risk and that enduring involvement increased people’s risk-handling capabilities. such as the extent of decision-making and information processing (Robertson. Hypothesis 11: The greater a person’s involvement in financial matters. Chandrashekaran and Grewal. 1989). 2003). Involvement The 11 hypotheses led to a stock market investment intentions model. 1971). 1985. and thus they have a greater ability to evaluate quality and price (Richins and Bloch. 1976. © 2013 Macmillan Publishers Ltd. 4. Zaichkowsky. The estimation of the model was most easily done by using a structural equation modelling (SEM) approach. Product Knowledge H6 (-) H7 (-) H8 (+) H9 (-) Involvement Perceived Risk H3 (-) H10 (-) H11 (+) H1 (+) Risk Avoidance Investment Intentions H4 (+) Perceived Uncertainty H5 (-) H2 (+) Uncertainty Avoidance Figure 1: 306 An investment intentions model. Product involvement increases the frequency of product purchase and product use (Laurent and Kapferer. as high involvement with a brand is commonly known as brand loyalty. the more willing that person will be to invest in the stock market. leading to more purchases. Consequently. Youngdahl et al (2003) found that people’s confidence in making product choices was influenced by their involvement with the product. as outlined in the next section. Consumers with high product involvement also have better knowledge of products and attributes than less involved consumers. 1981). the lower will be that person’s perceptions of the uncertainty of investing in the stock market. Consumers who have high involvement with a particular product have the essential information in greater detail than consumers who have lower involvement with that product (Chaiken. suggesting: also leads to different behaviours. Kapferer and Laurent. suggesting: Hypothesis 9: The greater a person’s involvement in financial matters. 18. which is shown in Figure 1. 1985. Flynn and Goldsmith.

who were recruited by email and paid by the panel provider in ‘points’ that can be used for online purchases. THE STUDY The population and the sample The population of interest was public retail investors in Singapore who had investments outside their pension schemes in the stock market and who had held such investments in the stock market during the 6 months before the data was collected. The structural model was estimated using the AMOS SEM programme. © 2013 Macmillan Publishers Ltd. These composites can be created from empirically identified sub-dimensions of an overall latent construct or. construct reliability was assumed if the composite reliability score was 0. the types of assets owned and the dollar value of the respondent’s portfolio. 1363-0539 Journal of Financial Services Marketing Vol. 1994). 1981). which was done here. multiple-item scales that had good measurement properties were chosen. which is acceptable (Tanaka. 4.70 or higher. more commonly. Singapore was chosen to undertake such a study as it is one of the more established markets in the Asia-Pacific region. Background information about the respondents.Factors affecting investment intentions which describes the study undertaken to examine the suggested model.50 or greater suggested that convergent validity could be assumed (Fornell and Larcker. A partial disaggregation approach (Bagozzi and Edwards. whereas an AVE score of 0. where possible. the third most competitive financial centre in the world (Yeandle et al. including age. 2009) and has many retail investors (Singapore Exchange Limited. The data used was obtained from members of an online panel. 1998). as it required fewer parameters to be estimated. 2010). Partial disaggregation is undertaken by creating two or more composite variables for each construct. 1981). by allocating indicator items randomly to the various composite variables (Bagozzi and Heatherton. including years of investment experience. 1987). more stable estimates can often be obtained. was then used to estimate the SEM models. 301–315 307 . as was additional investment information. Discriminant validity was assessed by comparing the shared variances (squared correlations) of the various construct pairs with their respective AVE scores (Fornell and Larcker. The partial disaggregation approach enables complex models to be assessed with reasonable sample sizes and with less random error than would be the case if a totally disaggregated approach were used. which included the items used to measure the constructs of interest. Items with low loadings were removed to improve the constructs’ goodness of fit before their measurement properties were assessed. by examining their unidimensionality. gender and education. Consequently. A sample of about 250 respondents was obtained to ensure that there was sufficient data to estimate the suggested model (Bentler and Chou. 18. which is a compromise between a totally aggregated approach and a totally disaggregated approach. questions were modified to fit the current stock market investment intentions context and. which was seen as desirable as the sample size was not large. Data analysis An initial examination of the data was undertaken. A Confirmatory Factor Analysis was then estimated for each of the seven latent variables using the AMOS SEM programme. This process led to a sample size to estimated parameter ratio of approximately 4 to 1. where possible. a common scaling option (a 7-point Likert-type scale) was used to ensure consistency. When necessary. reliability and convergent and discriminant validity. A summary of the study’s constructs can be found in Table A1 of the appendix. was obtained. On the basis of commonly used criteria. 1987). was developed. The measures A questionnaire. Scales were adapted from past research and. with descriptive statistics being computed for the constructs’ individual items and the background variables. using the SPSS programme.

55. 18.88) 2.82 0.20 (0.95 0. as it may change the nature of the construct being measured.54. 1363-0539 Journal of Financial Services Marketing Vol.37) NA 3. The constructs’ measurement properties The constructs’ measurement properties were examined in a variety of ways after a revision process in which items with low loadings were removed.43 (0. which had the lowest AVE score of 0. 301–315 .85 0.88 0.03. 4. the other goodness of fit indexes suggested that the model was a good fit to the data ( χ2/df = 1.86 0. AGFI = 0.19) 2.72 0.01).90.62.85 to 0. As the constructs had good measurement properties.Lim et al THE RESULTS The sample A total of 257 responses were obtained from Singaporean panel members who answered the online questionnaire over a period of 2 weeks.82) 0.54 0.56.97 (0. Furthermore.91 NA 0. The most common educational achievement was a college degree (41 per cent).84 This is the correlation between the summed scale based on the initial items and the summed scale based on the finally retained items. the correlations ranged from 0. One way to test this concern is to correlate a composite variable that includes the original set of items from the survey with a composite variable that includes the reduced set of items (Thomas et al. The measurement and structural models Following Anderson and Gerbing (1988).94 0.02 to 0. Table 1: The constructs’ measurement properties Construct Product knowledge Product involvement Risk avoidance Uncertainty avoidance Perceived risk Perceived uncertainty Investment intentions a 308 Initial number of items Final number of items Correlation a χ2 (probability) Construct reliability AVE score 7 11 7 5 6 4 6 6 5 4 5 4 2 4 0. the structural model was estimated.05). making it clear that the revised constructs contained almost all of the information in the originally suggested construct and that their meanings had not been altered.99.65 0. all of the constructs had discriminant validity. © 2013 Macmillan Publishers Ltd.88 0. While the χ2 statistic was significant ( χ2 = 134. All of the revised constructs fitted the data and had acceptable reliability and convergent validity. and the other constructs ranged from 0.98.95 0. CFI = 0. RMSEA = 0.98 0. the measurement model was estimated before estimating the structural model. 2001).99 0. As the squared correlations between the risk-avoidance construct. Consequently. with the largest group having a portfolio value of between S$10 000 and S$25 000 (28 per cent).75 (0. the squared correlations between the various constructs ranged from 0. As can be seen in Table 1.01 to 0. A high correlation between the original and refined composite variables suggests that the refinement process has not resulted in a substantial loss of information or a change in the nature of the measured construct.94.59 0. all were used in the subsequent analysis. the squared correlations for most of the pairs of constructs were lower than either of their AVE scores.56 0. GFI = 0. SRMR = 0. About half of the respondents were male (51 per cent).12.78 0.01 (0.02 (0. As the lowest AVE score was 0. There was also an even distribution of the value of the portfolios. The removal of items can be a concern. Close to half of the respondents were aged 35 and 44 years (44 per cent) and almost one-third had more than 15 years of investment experience.54.99 12.22) 0.98 0. P < 0.62) 1.

31).01 <0. suggesting that the model was a good predictor of people’s willingness to invest in the stock market. 2 Standardised coefficient P-value 0.58 0.25 −0. as can be seen in Table 2.29).12) and perceived uncertainty (0. This suggests that as people become more knowledgeable about the stock market’s products they are more likely to invest.05 <0. SRMR = 0. the other goodness of fit indexes suggested that the revised model was a good fit to the data ( χ2/df = 2. suggesting that the obtained result was due to the mediated relationship between perceived uncertainty. As was expected.84.05 0. supporting Hypothesis 8. 1363-0539 Journal of Financial Services Marketing Vol. As expected. whereas 18 per cent of the variation in perceived uncertainty was explained.25). supporting Hypothesis 1.63). supporting Hypothesis 3. which was contrary to Hypotheses 6 and 7. perceived risk and intention. 18. Perceived risk had a significant direct negative effect on investors’ investment intentions (−0. CFI = 0.18). the revised model’s fit was very similar to the original model.58).93. the relationship between perceived uncertainty and intention was examined in isolation and it was found that the path was not significant (β = −0.15.07). GFI = 0.90.01 >0. the relationship between perceived uncertainty and stock market investment intentions was not in the expected direction.01 <0.98. GFI = 0.24). and hence they have a higher perception of the riskiness and uncertainty of investing in the stock market. supporting Hypothesis 9.01 <0. the χ2 statistic was significant ( χ = 162.63 −0. A possible explanation could be that the better a person’s knowledge of the financial matters. Furthermore.18 0. as did risk avoidance ( All of the standardised regression coefficients were in the same direction as the original model. although not all were significant.37 −0.83. © 2013 Macmillan Publishers Ltd.12 0.06).83.01 <0. Product involvement also had a significant direct positive impact on investors’ investment intentions (0. the relationship between knowledge and perceived risk and uncertainty was not in the expected direction. Product involvement had the expected significant negative impact on perceived risk (−0.05 <0.97. supporting Hypothesis 11. While the χ2 statistic was still significant ( χ2 = 188. the more they are aware of the risk involved in the investment. AGFI = 0. all of the other goodness of fit indexes suggested that the model was a good fit to the data ( χ2/df = 1.31 <0. 301–315 309 . All of the hypothesised paths were significant (P < 0. In order to further examine this issue.24 0. Consequently.29 0.05). RMSEA = 0.05 <0. However. Product knowledge had a significant direct positive impact on investors’ investment intentions (0.88. whereas product knowledge was positively related to perceived risk (0. perceived uncertainty had a significant direct positive effect on perceived risk (0. A total of 62 per cent of the variation in investment intentions was explained by the antecedents.01). supporting Hypothesis 4. AGFI = 0.04.Factors affecting investment intentions Table 2: The alternative structural model’s standardised path coefficients Hypothesis Relationships Hypothesis 1 Hypothesis 2 Hypothesis 3 Hypothesis 4 Hypothesis 6 Hypothesis 7 Hypothesis 8 Hypothesis 9 Hypothesis 10 Hypothesis 11 Risk avoidance→Perceived risk Uncertainty avoidance→Perceived uncertainty Perceived risk→Investment intentions Perceived uncertainty→Perceived risk Product knowledge→Perceived risk Product knowledge→Perceived uncertainty Product knowledge→Investment intentions Product involvement→Perceived risk Product involvement→Perceived uncertainty Product involvement→Investment intentions Once again. 56 per cent of the variation in perceived risk was explained.01 >0. 4. P < 0. Furthermore. CFI = 0.01 RMSEA = 0. P < 0. However. SRMR = 0. the direct path was removed and the revised model re-estimated.06).

product involvement and perceived risk.001 Standardised indirect effects (bias-corrected) Perceived — — uncertainty Perceived risk 0.21 −0. 310 Perceived uncertainty was expected to mediate the relationships between product knowledge and perceived risk. but the standardised direct effects are not significant. product involvement and investment intentions.27 0. suggesting that the estimated model provided good insights into people’s stock market investment intentions.001 0.07 −0. full mediation cannot be assumed for any of the suggested mediating relationships. after 2000 bootstrapping iterations had been estimated to ensure stability.078 0.001 intentions Standardised direct effects (bias-corrected) Perceived 0.599 0.00 −0.00 0.14 0.001 — uncertainty Perceived risk — 0. Mediating effects A bootstrapping approach was used to examine the mediating roles played by perceived risk and perceived uncertainty (Shrout and Bolger (2002).29 −0.001 0.620 0. Table 3 provides a summary of the total. If a value is greater than 0. the relationship is not significant.Lim et al Table 3: Direct. although partial mediation can be assumed for the knowledge – perceived risk – intentions and © 2013 Macmillan Publishers Ltd.05 0.05 −0. The direct effects were also significant.001 — Investment 0.00 0.002 — 0.18 0. The results obtained in this phase of the analysis can be seen in Table 4. indirect and total effects of the alternative model Construct Perceived uncertainty Perceived risk Stock market investment intentions Uncertainty avoidance Risk avoidance Product involvement Product knowledge Perceived uncertainty Perceived risk 0.097 0. direct and indirect effects of the constructs in the estimated model. Hypothesis 5 was not examined in the revised model and Hypotheses 6 and 10 were not supported. 18. 1363-0539 Journal of Financial Services Marketing Vol.00 0. 4.37).001 Investment — — intentions Uncertainty avoidance had a significant impact on perceived uncertainty (0.58 0.24 Table 4: Standardised indirect and direct effects (probabilities) Uncertainty avoidance Risk avoidance Product involvement Product knowledge Perceived uncertainty Perceived risk — — — — 0. Perceived risk was expected to mediate the relationships between product knowledge and investment intentions.001 0. as the effect cannot be assumed to be different to zero. All of the antecedent variables had significant indirect effects on stock market investment intentions.001 — — 0.083 — — 0. which shows the standardised bias-corrected results for the indirect and direct effects among the various relationships in the alternative structural model.37 0. 301–315 .001 0.05. Investment intentions were significantly impacted by all the antecedent constructs. supporting Hypothesis 2.37 0.58 −0. Full mediation can be assumed if the standardised indirect effects are significant.002 0.002 — — 0. Consequently.22 0.

as it emphasises the importance of including risk and uncertainty as separate constructs. Howcroft et al. such as a person’s risk tolerance. Bansal and Voyer. 2006). However. suggesting that increasing such abilities will increase the likelihood that people will invest in the stock market. © 2013 Macmillan Publishers Ltd. product knowledge and product involvement) had the greatest impact on people’s investment intentions. 2001. Most previous studies that examined people’s stock market investment intentions did so with little reference to the ways in which an investor would approach such an investment decision. 4. and this would also likely make them more involved in their investment decisions. 2000). The nature of this training is important as it needs to provide information and a sense of connection to build involvement. people who are new to stock market investments are likely to have less familiarity or knowledge about financial products including their risk exposure. practitioners need to develop a better understanding of the factors that impact on their clients’ intentions to invest in the stock market. For example. An interesting relationship was found between product knowledge and perceived risk and uncertainty. this was not the case here. However. From a practical point of view. On the other hand. This study is the first to include a set of consumer behaviour constructs in an investment intentions model. This result is significant. 2003). This suggests that the relationship between product knowledge and perceived risk and uncertainty may be dependent on other factors in financial contexts. Previous studies have suggested that greater knowledge reduces people’s perceived risk and perceived uncertainty (Srinivasan and Ratchford. The present study found that the category-specific ability constructs (that is. as they had different impacts on people’s stock market investment intentions. 1363-0539 Journal of Financial Services Marketing Vol. Youngdahl et al. 1991. Kapferer and Laurent. perceived uncertainty did not. 1996. 301–315 311 . The model fitted the data and yielded results that increased our understanding of the impact of these predispositional constructs on people’s stock market investment intentions. This result is important. 1995. Hofstede. A financial advisor could suggest that clients undergo financial training to equip them with more knowledge before they invest. Furthermore. A major contribution of the present research came from the development of an investment intentions model to examine retail investors’ investment decision-making processes from a different (consumer behaviour) perspective. This was not surprising as these constructs have been found to influence purchase intentions in many contexts (for example. and this issue needs further research. suggesting that perceived uncertainty was not a mediating variable in these relationships. 1993. Cho and Lee. as many researchers have used these constructs interchangeably (Gronhaug and Stone. the standardised indirect effect between product knowledge and perceived risk and the standardised indirect effect between product involvement and perceived risk were not significant. 18.Factors affecting investment intentions the involvement – perceived risk – intentions relationships. The current study supported earlier studies (for example. March. Bettman and Park. 1980. whereas perceived risk had a mediating effect. 2007) that suggested that product knowledge and product involvement were important influences on people’s investment intentions. Perceived risk was the only construct that had a mediating effect and this was a partially mediating effect. the present study highlighted the applicability of these constructs in financial contexts. This is especially important as financial service practitioners deal with people from a variety of investment backgrounds. CONCLUSIONS AND IMPLICATIONS Product knowledge and product involvement both impacted on investment intentions.

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18.Factors affecting investment intentions APPENDIX Table A1: The constructs used in the study Construct Product knowledge Product involvement Risk avoidance Items 7 11 7 Scale Source of the items Likert-type scale Semantic differential Likert-type scale Laroche et al (2003) Laroche et al (2003) Quintal et al (2006) Quintal et al (2010a) Zhou et al (2002) Quintal et al (2010a) Laroche et al (2003) Stone and Gronhaug (1993) Bstieler (2005) Ellis and Shpielberg (2003) Dodds et al (1991) Soderlund and Ohman (2003) Uncertainty avoidance Perceived risk 5 6 Likert-type scale Likert-type scale Perceived uncertainty 4 Likert-type scale Investment intentions 6 Likert-type scale © 2013 Macmillan Publishers Ltd. 1363-0539 Journal of Financial Services Marketing Vol. 4. 301–315 315 .