Chapter-1 OpsMaBuGa

ANALYZING THE INVESTMENT BEHAVIOR OF EMPLOYEES IN
THE PROVINCIALGOVERNMENT OF BATANGAS
A Thesis
Presented to the Faculty of
College of Business and Accountancy
University of Batangas – Batangas City
Batangas City, Batangas
In Partial Fulfilment
of the Requirements for the Degree
Bachelor of Science in Business Administration
Major in Financial Management
By:
Buenviaje, Jenny Rose M.

Gabotero, Jeanella D.
Maramot, Criselda Mae B.
Opano, Trini Margaret A.
May 2021
Campuses: Hilltop | MH del Pilar | Pallocan East | Pallocan West | Lipa

Telephone Numbers: +63 43 723 1446 | 980 0041
Website: www.ub.edu.ph
CHAPTER 1
THE RESEARCH PROBLEM
This chapter deals with the presentation of the problem. Specifically, it
presents the introduction, the theoretical framework, the conceptual framework
the statement of the problem, the hypothesis of the study, the scope,
delimitations, and limitations of the study, the significance of the study, and the
definition of terms.
Introduction
“Never depend on a single income. Make investment to create a second
source (Buffet, W.).” An investment is an acquired asset with the expectation of
appreciation over time. This can be in any form such as real estate property,
stocks, insurance, business, and the like. Through investment, the money is not
intended to be consumed but rather to increase its value and create wealth. It
uses a persons’ money to make more money. Investment is well-known for
bringing financial stability in the long run, however, feared by most people due to
its high risk. Most people prefer to save their money in a savings bank account,
as an investment does not always guarantee a return, and possibilities of loss
are always present.

Investors are the player in every investment. They are the backbone of the
market. With proper management and guidance in investment plan goals, the
investment can provide financial stability and security in the long run. The higher
the risk, the higher the return. Cliché as it seems, however, though risks always
stick with investment, it has more potential to lead to the creation of monetary
wealth and growth. Moreover, an investment allows a person to meet their
financial goals by leading one’s money in the right direction in the right manner.
In addition to this, the investment allows an investor to increase their financial
value and assets. It allows investors to have more sources of income which is of
big help to attain a safer and better financial life. According to Sigerson, engaging
in investment improves personal relationships. Being a good and skilled investor
knows how to maintain good healthy relationships with other people, be
sympathetic, and pays attention to details, essential for decision making.
In today's dynamic culture, financial literacy is an unavoidable criterion.
Financial literacy aims to educate people about the benefits of healthy investing
and other investment options. This increased sensitivity would result in healthier
financial behavior in terms of investing, budgeting, and using credit responsibly
and affordably. Investment decisions consist of choices of funds commitment in a
specific asset in a predefined period with a high expectation to yield a high rate of

return (Mishkin & Eakin, 2007). According to Reilly and Brown (2006), investors
have a tendency of making investment decisions based on their expected utilities
because they are rational and competent. Popescu (2008) defines an investment
decision as involving selection on how to currently commit funds with an
expectation of future flow of benefits.
Decision-making is significant for every investor. The ability to make
effective decisions is important for effective management. Investment choices
have a long-term impact on a company's income power and growth rate. These
judgments determine an organization's status in the future. A large flow of funds
can result from proper investment planning. Investors need to judge, predict,
analyze and review the procedures for decision making, which includes
investment psychology, information gathering, defining and understanding,
research and analysis. This process is “Investment Behavior” (Vicente et. al.,
2010). Furthermore, investment behavior investigates the role of competitive
demographic causes, personal awareness, and risk perceptions in influencing
individual investors' stock market behavior.
People who invest are faced with making a variety of decisions about
which investments to choose and how much risk to take on to achieve their
objectives. The Global Investor Survey 2017 explores the perspectives,

understanding, and behaviors of more than 22,000 people who invest from
around the world to identify their confidence and expectations when investing in
the current global climate. The results show a significant knowledge gap and a
level of contradiction and confusion between how people are thinking about their
investments and what they’re actually doing to achieve their investment goals.
They conducted an independent online survey of 22,100 investors from 30
countries around the world in June 2017. Australia, Brazil, Canada, China,
France, Germany, India, Italy, Japan, the Netherlands, Spain, the United
Kingdom, and the United States were among the countries represented. The
people we polled are all committed investors who have made improvements to
their portfolios in the last ten years and will continue to do so in the future.
Globally, 88% of people believe they need to develop their investment
skills in at least one region on a global scale. Surprisingly, 27% believe they need
to develop their skills, awareness, and comprehension of various asset classes
and their position in a portfolio of investments with 24% wishing to learn more
about the main topic. Investing methods Tax-advantaged investments (31%) and
investments with a positive social/environmental impact on the climate. These
responses reveal a strong desire for more information to aid in personal financial
decision-making. Europe is the most optimistic country, with 16 percent of

respondents believing they do not need to develop their investment knowledge.
Just 5% of Asian respondents, on the other hand, do not feel the need to know
more. The most confident in their knowledge, by far, are respondents from the
Netherlands, where 32% do not feel the need to improve, followed by Belgium at
25%.
Investments behavior is the attitude of the investors towards the choices
about the purchasing of stocks even in a small or large amount of securities.
Many investors are using different decision tools to support their choices in
buying stocks. The information given on those decision tools can affect the
behavior of the investor. The Filipino investor’s behavior in making investment
decisions as well as market outcomes.
Filipino investor’s behavior in making investment decisions as well as
market outcomes. Filipino adults struggle with their daily money management,
including their ability to budget, live within their means, refrain from overspending
and monitor their expenses. More specifically, regarding people’s ability to track
their expenses, there are planning for old age expenses(29%), monitoring
expenses(38%), not overspending(42%), living within means(43%), controlled
budgeting(44%), saving(46%), choosing financial products(51%),
farsightedness(64%), achievement orientation(66%), and last is planning for the

unexpected expense which is 67%. In terms of living within means, the results
suggest that 20 percent of the participants ran short of money due to their
overspending. Alarmingly, 19 percent of those who tend to overspend borrow
money regularly to cover their food expenses.
Covid-19 created a crisis situation where market volatility intensified.
Investment began to decline as the virus progressed from an isolated problem in
China to a global challenge. When measures were taken to prevent further
spread, these severely limited economic activity. As Filipinos continue to be
afraid of going out, businesses and establishments will continue to be closed or
operate in a skeletal force. The investments continue to remain down and there’s
a chance it’ll dip lower. To weather this storm, some investors were forced to sell
their stocks at a loss to have cash. Employees experiencing significant pressures
on their financial security with almost half having either their hours of work
reduced or their pay cut. Investors can only make objective judgments if they are
mindful of and consciously resist behavioral biases. Behavioral finance is a new
area that seeks to shed light on true financial behavior. Investors always have
complete and accurate information at their disposal. Investors have a reasonable
tolerance for risk, and that tolerance does not change. Furthermore, they will

always seek to make the most money at the greatest value. Investors will always
make the most rational choices.
Theoretical Framework
The theoretical context is the framework that holds or supports a scientific
study's hypothesis. The theoretical structure discusses and presents the
hypothesis that explains why the research topic under investigation occurs.
The field of finance has evolved over the past few decades based on the
assumption that people make rational decisions and that they are unbiased in
their predictions about their investment (Nofsinger, 2001). Potential investors are
distinguished as a rational individual who weights economic decisions every
single time. This kind of investor is normally perceived as someone who makes
decisions that are rationally acceptable for the investment and properly changes
his beliefs on receiving new relevant information (Thaler, 2005). According to
traditional finances, investors receive unlimited knowledge, data, and information
that are perfect. The investor carefully processes this information, therefore
there's complete rationality. Traditional finance states that the market is efficient
and is a representation of the financial market's true value. This argument is
based on the fact that traditional finance believes that investors have self-control.

Traditional finance assumes that an investor is a rational person who can
process all information unbiased. (Reporter, 2020)
According to Sewell (2007), “Behavioral finance is the study of the
influence of psychology on the behavior of financial practitioners and the
subsequent effect on markets.” Science deals with theories and experiments
focused on what happens when investors make decisions based on hunches or
emotions. Behavioral finance is a relatively recent discipline that seeks to bring
together behavioral and social psychological theories with traditional economics
and finance to explain why people make poor financial choices. Modern financial
philosophy is challenged by behavioral finance, which claims that various biases
influence individual investing decisions. Heuristic biases such as anchoring,
representativeness, gamblers fallacy, and others, as well as regret aversion,
framing, and disposition effect, as defined by prospect theory, are among them.
Prospect theory was developed by Kahneman and Tversky (1979). In its basic
form, it is interested in the behavior of decision-makers who have to choose
between two alternatives. The definition in the original text is: ―Decision making
under risk can be viewed as a choice between prospects or gambles.". Decisions
liable to risk signify a choice between alternative actions, which are associated
with particular probabilities (prospects) or gambles. Later, the model was

modified and elaborated. Goldberg and von Nitzsch (2001, p. 62) mentioned that
the Prospect theory has probably done more to bring psychology into the heart of
economic analysis than any other approach. Many economists still utilize the
expected utility theory paradigm when approaching problems; however, prospect
theory has gained much fame in recent years, and now certainly occupies an
essential place on the research agenda for even some prominent economists.
According to prospect theory, losses and benefits are priced differently,
because people make choices based on expected profits rather than losses. The
general principle behind the "loss-aversion" hypothesis is that if a person is faced
with two equivalent options, one with potential benefits and the other with
potential losses, the former alternative would win. Prospect theory assumes that
losses and gains are valued differently, and thus individuals make decisions
based on perceived gains instead of perceived losses. Also known as the "loss-
aversion" theory, the general concept is that if two choices are put before an
individual, both equal, with one presented in terms of potential gains and the
other in terms of possible losses, the former option will be chosen.

Conceptual Framework
The study's main thrust is represented in the philosophical context. It is the
researchers' position on the issue after they have been exposed to different
hypotheses that are important to the case. For this study, the researchers
decided to use the Input-Process- Output (IPO) Model.
Figure 1 describes the conceptual framework of the study. The inputs of
the study include the profile of the respondents, the extent of investment literacy,
and the factors affecting the investment decision. The process includes data
gathering and data analysis. Lastly, the intended output will be the proposed
analysis of the investment behavior of employees in the Provincial Capitol of
Batangas.

INPUT PROCESS OUTPUT
Demographic Profile:
Age
Sex
Civil Status
Highest Educational
Attainment
Monthly Income
Proposed
Length of Service Data Gathering Analysis of
the
Data Analysis Investment
Investment Literacy: Behavior of
Employees in
Investment Knowledge the Provincial
Government
Investment Behavior of Batangas
Investment Planning
Factors Affecting the Investment

Decision Figure 1
Risk Tolerance
Conceptual Paradigm
Return Needs
Investment Horizon
Market Trends
Statement of the Problem
Dependents
This study aims to determine the investment behavior among the
employees in provincial government of Batangas. Specifically, this seeks
answers for the following questions:
1. What is the profile of the respondents in terms of:

1.1 Age;
1.2 Sex;
1.3 Civil Status;
1.4 Highest Educational Attainment;
1.5 Monthly Income;
1.6 Length of Service?
2. How does the investment behavior of the respondents be assessed in
terms of:
2.1 Investment Knowledge;
2.2 Investment Behavior; and
2.3 Investment Planning?
3. How does the investment behavior of the respondents be assessed in
terms of:
3.1 Risk Tolerance;
3.2 Return Needs;
3.3 Investment Horizon;

3.4 Market Trends; and
3.5 Dependents?
4. Is there a significant relationship between the respondents’ investment
behavior and financial literacy?
5. Is there a significant relationship between the respondents’ investment
behavior and behavioral finances?
6. What is the analysis of investment behavior may be proposed to help
the respondents achieve their goals?
Hypotheses
Ho1: There is a significant relationship between investment
behavior and financial literacy among the employees in the provincial
government of Batangas.
Ho2: There is a significant investment behavior among the
employees in the provincial government of Batangas.
Scope, Delimitations and Limitation

This study is conducted to determine the investment behavior of the
employees of the provincial government of Batangas City. The demographic
aspects that were looked into were the respondents’ age, sex, civil status,
highest educational attainment, monthly income, and length of service. At the
same time, the respondents’ assessment of the investment behavior in terms of
financial knowledge, financial behavior, and financial attitude will also be
gathered. Also, the assessment of the investment behavior in terms of risk
tolerance, return needs, investment horizon, market trends, and dependents will
likewise be collected.
Although the research has reached its goals, there were some
unavoidable limitations. First, the results of this study limits to the gathered
information and data from the respondents’ responses to the survey and pieces
of literature that were cited and reviewed. Second, this study had its weaknesses
specifically the respondents’ reliability, integrity, and honesty in answering the
research questionnaires; which are beyond the researchers’ control. Lastly, the
COVID-19 pandemic also brought its impact of limiting the conduct of the study
due to the difficulties encountered in gathering the significant information needed.
These difficulties include local pandemic restrictions, differences in the

researchers’ location, the use of technology in answering the survey, and the
like.
The target respondents of the study are the employees in the provincial
government of Batangas City only. The study will be conducted from the second
semester of AY 2020-2021 to the first semester of AY 2021-2022. The study was
also delimited to the analysis of their investment behavior based on their
knowledge, behavior, and plan only. Other variables or factors that may affect
their investment behaviors will be excluded.
Significance of the Study
The value of this study is lies on the knowledge, benefits that can help and
guide the following persons below:
To the Future Researchers, this study will provide the future researchers as a
guide or a good source of reference for their upcoming research. This can be the
guide in doing a similar study and will serve as their basis for determining the
concepts that will be included in the study.

To the Investors, this study can help the investors to gain knowledge that can
be used to make investment decisions. The quality of knowledge, therefore,
determines the quality of their decisions.
To the Students, this study can provide the students an idea of what investment
is and what will be the process of investing, and what will be the risk and return
from it.
To the Employees, this study can help the employees to come up with a new
idea that they can get from the study that they can use when the time comes that
they want to invest.
To the Researchers, this study provided an opportunity to enhance their
knowledge and skills. Throughout the process, it provided additional knowledge
and gain of this research to future researchers.
Definition of Terms
For clarity and thorough understanding of this study, the following terms
were herein defined conceptually and operationally.
Behavioural finance. Behavioral finance, a branch of behavioral economics,
theorizes that psychological pressures and prejudices influence investors' and

financial practitioners' financial decisions. In the study, A relatively new
discipline that attempts to understand why people make bad financial
decisions by combining behavioral and social psychology theories with
conventional economics and finance.
Investment. An investment is an asset or item acquired with the goal of
generating income or appreciation. In this study, An investment is an asset or
item that is purchased with the hope that it will generate income or appreciate
in value at some point in the future.
Investment Behaviour. Investment behavior is based on uncertainty about
the future and is thus risky. News and rumors and speed and availability of
information play important roles in investment markets.In the study,
Investment behaviors are defined as how the investors judge, predict,
analyze and review the procedures for. decision making, which
includes investment psychology, information gathering, defining and
understanding, research. and analysis.
Investment Horizon. Investment horizon is the term used to describe the
total length of time that an investor expects to hold a security or a portfolio. In

the study, Investment horizon is the term used to describe the total length of
time that an investor expects to hold a security or a portfolio.
Investment Planning. The process of defining financial targets and
translating them into a strategy is known as investment planning. In the study,
Investment planning is the process of matching your financial goals and
objectives with your financial resources.
Financial Goals. Financial goals are objectives or milestones that you want
your money to cover at a specific time. In this study, when it comes to money
management, a financial objective is a target to aim for. It can include things
like saving, spending, earning, and even investing. That means your
objectives must be measurable, precise, and time-bound.
Financial Literacy. Financial literacy is the ability to understand and
effectively use various financial skills, including personal financial
management, budgeting, and investing. The lack of these skills is called
financial illiteracy. In the study, financial literacy is to educate people about
the benefits of healthy investing and other investment options.

Financial Security. Financial security refers to the peace of mind felt when
we aren’t worried about money. Often, this means having enough income to
comfortably cover expenses, being debt-free, and having savings to cover
emergencies. In the study, financial security means having enough money to
fund your lifestyle, as well as work toward your financial goals.
Financial Stability. Financial stability is paramount for economic growth, as
most transactions in the real economy are made through the financial system.
In this study, financial instability also means dependence upon others for
daily, basic needs and colossal loans and credit due to spending beyond limit.
Financial instability also means a general unwillingness to rise out of such
situation.


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ANALYZING THE INVESTMENT BEHAVIOR OF EMPLOYEES IN

THE PROVINCIALGOVERNMENT OF BATANGAS

Buenviaje, Jenny Rose M.

Campuses: Hilltop | MH del Pilar | Pallocan East | Pallocan West | Lipa

THE RESEARCH PROBLEM

This chapter deals with the presentation of the problem. Specifically, it

presents the introduction, the theoretical framework, the conceptual framework

“Never depend on a single income. Make investment to create a second

source (Buffet, W.).” An investment is an acquired asset with the expectation of

uses a persons’ money to make more money. Investment is well-known for

as an investment does not always guarantee a return, and possibilities of loss

are always present.

Campuses: Hilltop | MH del Pilar | Pallocan East | Pallocan West | Lipa

wealth and growth. Moreover, an investment allows a person to meet their

In addition to this, the investment allows an investor to increase their financial

in investment improves personal relationships. Being a good and skilled investor

knows how to maintain good healthy relationships with other people, be

sympathetic, and pays attention to details, essential for decision making.

In today's dynamic culture, financial literacy is an unavoidable criterion.

financial behavior in terms of investing, budgeting, and using credit responsibly

and affordably. Investment decisions consist of choices of funds commitment in a

Campuses: Hilltop | MH del Pilar | Pallocan East | Pallocan West | Lipa

have a tendency of making investment decisions based on their expected utilities

decision as involving selection on how to currently commit funds with an

expectation of future flow of benefits.

Decision-making is significant for every investor. The ability to make

effective decisions is important for effective management. Investment choices

judgments determine an organization's status in the future. A large flow of funds

investment psychology, information gathering, defining and understanding,

2010). Furthermore, investment behavior investigates the role of competitive

demographic causes, personal awareness, and risk perceptions in influencing

individual investors' stock market behavior.

objectives. The Global Investor Survey 2017 explores the perspectives,

Campuses: Hilltop | MH del Pilar | Pallocan East | Pallocan West | Lipa

They conducted an independent online survey of 22,100 investors from 30

Globally, 88% of people believe they need to develop their investment

to develop their skills, awareness, and comprehension of various asset classes

investments with a positive social/environmental impact on the climate. These

decision-making. Europe is the most optimistic country, with 16 percent of

Campuses: Hilltop | MH del Pilar | Pallocan East | Pallocan West | Lipa

Investments behavior is the attitude of the investors towards the choices

about the purchasing of stocks even in a small or large amount of securities.

behavior of the investor. The Filipino investor’s behavior in making investment

decisions as well as market outcomes.

Filipino investor’s behavior in making investment decisions as well as

expenses(38%), not overspending(42%), living within means(43%), controlled

budgeting(44%), saving(46%), choosing financial products(51%),

farsightedness(64%), achievement orientation(66%), and last is planning for the

Campuses: Hilltop | MH del Pilar | Pallocan East | Pallocan West | Lipa

overspending. Alarmingly, 19 percent of those who tend to overspend borrow

money regularly to cover their food expenses.

Covid-19 created a crisis situation where market volatility intensified.

Investment began to decline as the virus progressed from an isolated problem in

China to a global challenge. When measures were taken to prevent further

spread, these severely limited economic activity. As Filipinos continue to be

afraid of going out, businesses and establishments will continue to be closed or

their stocks at a loss to have cash. Employees experiencing significant pressures

mindful of and consciously resist behavioral biases. Behavioral finance is a new

complete and accurate information at their disposal. Investors have a reasonable

Campuses: Hilltop | MH del Pilar | Pallocan East | Pallocan West | Lipa

make the most rational choices.

The theoretical context is the framework that holds or supports a scientific