Minh Man CAO, Nhu-Ty NGUYEN, Thanh-Tuyen TRAN / Journal of Asian Finance, Economics and Business Vol 8 No 3 (2021)

0845–0853 845

Print ISSN: 2288-4637 / Online ISSN 2288-4645

doi:10.13106/jafeb.2021.vol8.no3.0845

Behavioral Factors on Individual Investors’ Decision Making and

Investment Performance: A Survey from the Vietnam Stock Market

Minh Man CAO1, Nhu-Ty NGUYEN2, Thanh-Tuyen TRAN3

Received: November 05, 2020 Revised: January 30, 2021 Accepted: February 16, 2021

Abstract
The stock market shows the current health of an economy, and investment performance represents it. This study aims to clarify the
relationship between financial behavior and investment decisions as well as its impact on investment results. Determine the influence
of behavioral factors on individual investors’ investment decisions and investment performance on the Vietnam stock market. The study
surveyed 250 investors. The main analytical methods used are Exploratory Factor Analysis (EFA), Confirmatory Factor Analysis (CFA),
and Structural Equation Modeling (SEM). Research results show that Heuristic, Prospect, Market, and Herding directly and positively
affect investment decision-making. Besides, the above factors have a direct and positive effect on investment performance. In particular, the
Prospect factor has the strongest influence on investment decision-making and investment performance. The major findings of this study
suggested that the important role of Heuristic, Prospect, Market, and Herding on Investment Decision-making and Investment Performance.
Prospect had the strongest impact on Investment decision-making (β = 0.275). Heuristic had the second strongest impact (β = 0.257), then
Herding (β = 0.202), and finally Market (β = 0.189) had the weakest effect. Regarding Investment Performance, the Prospect factor has a
higher degree of impact than Heuristic Herding and Market.

Keywords: Behavioral Finance, Heuristic, Prospect, Herding, Investment Decision Making, Investment Performance

JEL Classification Code: M3, M14, M37

1. Introduction been exploited for decades, behavioral finance is still a new

The study of behavioral finance, particularly the
behavioral factors affecting individual investment decisions
in Asia, has many practical implications; therefore, the study
of behavioral determinants of personal investment offers
individual investors strategies to adjust their behaviors
(Dang & Tran, 2019; Nguyen & Tran, 2019). Although it has
First Author. Lecturer, [1] School of Business, International University
1
- Ho Chi Minh City, Vietnam [2] Vietnam National University Ho Chi
Minh City, Vietnam. Email: cmman@hcmiu.edu.vn
Lecturer, [1] School of Business, International University - Ho Chi
2
Minh City, Vietnam [2] Vietnam National University Ho Chi Minh City,
Vietnam. Email: nhutynguyen@gmail.com
Corresponding Author. Scientific Research Office, Lac Hong
3
topic and has not received much attention from analysts and
investors. This study aims to clarify the relationship between
financial behavior and investment decisions as well as its
impact on investment results.
The study research questions are as follows: What are
the main factors of behavioral finance that affect investment
decision-making and investment performance? How strongly
do they affect investment decision-making and investment
performance?
Individual investors on the Vietnam Stock Exchange
are the subjects of this study. Determine the influence of
behavioral factors on individual investors’ investment
decisions and investment performance on the Vietnam
stock market.

University, Vietnam [Postal Address: No. 10, Huynh Van Nghe, Bien
Hoa City, Dong Nai Province, Vietnam]
2. Literature Review
Email: copcoi2@gmail.com ; thanhtuyentran@lhu.edu.vn
2.1. Heuristic variables
© Copyright: The Author(s)
This is an Open Access article distributed under the terms of the Creative Commons Attribution
Non-Commercial License (https://creativecommons.org/licenses/by-nc/4.0/) which permits Many studies reported that heuristics is an important
unrestricted non-commercial use, distribution, and reproduction in any medium, provided the
original work is properly cited. component of decision making based on the rules of thumb
846 Minh Man CAO, Nhu-Ty NGUYEN, Thanh-Tuyen TRAN / Journal of Asian Finance, Economics and Business Vol 8 No 3 (2021) 0845–0853
(Jay & Perkins, 1997). However, there are many studies
asserting that heuristics creates various biases in complex
situations. Heuristics plays a critical role when having to
make urgent decisions in a limited time (Chand & Runco,
1993). The following biases have been reported by Benartzi
and Thaler (2007): representativeness bias, overconfidence,
availability bias, anchoring bias, and gamblers’ fallacy.
2.1.1. Representativeness
According to Tversky and Kahneman (1974),
representativeness bias involves judging the probabilities
based on stereotypes rather than analyzing the essential
characteristics of a decision task. Representativeness can
also impact the purchase of new stock. Mokoaleli-Mokoteli
et al. (2009) stated that financial analysts are weighing both
behavioral bias and potential conflicts of interest in their new
buy-stock recommendation decisions.
2.1.2. Overconfidence
According to Russo and Schoemaker (1992),
overconfidence occurs when someone believes in their
knowledge and judging abilities without any recommendations
from other people. Overconfidence refers to overestimating
the probability of being right. It is the tendency for individuals
to overestimate the correctness of their initial assessment of a
particular situation and are reluctant in reviewing their initial
assessment as a result of overconfidence Overconfidence bias
is a combination of both individual and related factors like
individual age external equity (Bhutta & Shah, 2015).
2.1.3. Anchoring
Anchoring bias, as heuristic-driven bias is an assessment
method. Anchoring bias occurs when people rely too much
on pre-existing information or the first information they find
when making decisions. The investor first considers initial
existing values, a result of some partial calculation or the
thought of itself, before making a final decision (Tversky
& Kahneman, 1974). Many experiments showed that the
combination of anchoring bias and representative bias will
help investors focus on more observations, experiences,
and financial behaviors to adjust decisions when there is
any change in the market (Kudryavtsev & Cohen, 2010).
Anchoring bias has been in the studies conducted by Shefrin
(2002), Kudryavtsev and Cohen (2010), Bucchianeri and
Minson (2013), and Leung and Tsang (2013).
2.1.4. Gambler’s fallacy
Gambler’s fallacy is heuristics behavioral bias where
someone uses the frequency of past events to predict future
outcomes. The Gambler’s fallacy stems from our tendency
to assume that if a random event has occurred many times
in the past that it will occur more or less often in the future
(Boynton, 2003). The investors believe that market events
that occurred often in the past will be rarer in the future
(Matthews, 2010).
2.1.5. Availability Bias
Tversky and Kahneman (1974) reported that in
availability heuristics, the probability of an event is based on
cognitive decision-making abilities as well as knowledge of
similar historical events.
2.2. Prospect variable
The significance of the prospect variable in making
investment decision process was emphasized by two
psychologists, Kahneman and Tversky, and published in the
Econometrica in 1979. Prospect theory continually develops
variably in diverse perspectives; one such evolution is
the Prospect Theory and Expected Utility Theory (EUT).
Prospect theory is an analysis of uncertain changes and
risks that can be applied in many fields of economics such
as finance, insurance, an industry organization, and more.
Risks and changes are unique to each area (Frazzini, 2006).
Prospect theory explains one of the major elements affecting
individual decisions (Benartzi & Thaler, 2007).
2.2.1. Loss Aversion
Generally, loss aversion is a “build-in” to valuable
function in prospect theory (Thaler, 1980). Elster (1992)
reported that the feelings of people will change when
they must make an important decision in their life. While
making a significant decision, they usually experience the
endowment effect, where they consider gaining something
and losing the same thing in alternative choices.
2.2.2. Regret Aversion
The EUT literature stated that Regret Theory (RT)
is also a basic behavioral decision theory. In 1982,
findings by Loomes and Sugden (1982) confirmed regret
theory as an essential part of Prospect Theory (Ben-elia
et al., 2013).
Before making a decision, the investors must collect all
sources of information and update their knowledge via a
network (Cascetta & Cantarella, 1991) to avoid regretful,
wrong decision. Many repeated experiments by Barron
and Erev (2003) showed that the investors used feedbacks
from other participants to avoid risk when facing loss and
accepted more challenges when pursuing prospective gains.
 Minh Man CAO, Nhu-Ty NGUYEN, Thanh-Tuyen TRAN / Journal of Asian Finance, Economics and Business Vol 8 No 3 (2021) 0845–0853
2.2.3. Mental Accounting
Mental accounting is a psychology theory that explains
financial reporting issues in evaluation reporting and
disclosure investments (Thaler, 1980). Mental accounting
converts financial activities such as gains and losses into
various mental accounts. These mental accounting studies
showed that where the money is made and the stakes for
gambles are higher, mental accounting theory plays an
essential role in evaluating financial reports to manage and
develop the portfolio of these investors (Heath, 1995).
2.3. Herding variable
Banerjee (1992) states herding as “everybody doing what
everyone else is doing even when their private information
suggests doing something else”. Herding is likely to imitate
past actions, rational or irrational (Devenow & Welch, 1996).
Fernández et al. (2011) found evidence that investors tend to
adopt the ideals and decisions of others when they rely on
inaccurate information. Herding usually affects individual
investors when collecting information and analyzing
financial issues. They lack the ability to evaluate the market.
Herding presumes that institutional financial specialists
are individual speculators, who can incite the variance of
grouping on the objective market (Ouarda et al., 2013).
2.4. Market variable
Hamilton and Lin (1996) demonstrated that economic
recessions are key to stock market volatility. Besides,
investor behavior is influenced by market variables such as
the changes in price, news from politics, society, predictions
for future trends, information from others, and the vital
of stock (Waweru et al., 2008). Investors must pay close
attention to stock information (Epstein, 1994). Krishnan and
Brooker (2002) likewise advised that investors must consider
market information to make rational decisions.
2.5. Investment Decisions and Stock Performance
Nodsinger (2014) stated that investors must gather and
analyze a lot of information on various alternative stocks on
the market. The accessible financial resources for investors
are outdated. Their use is not recommended to analyze and
evaluate information and behavioral finance (Shiller, 2006).
According to Nodsinger (2014), all investors are affected by
psychological biases. Ricciardi and Simon (2000) reported
that speculators should claim the entire market instead of
endeavoring to outflank the market. To be successful in owning
the market, investors must face more difficulties and risks to
make strong, rational decisions (Nguyen & Nguyen, 2020).
847
They need special acknowledgment in the investment
decision-making process (Nguyen, 2020; Pattiruhu & Paais,
2020; Nguyen et al., 2020; Tran & Nguyen, 2020).
They need to streamline assumptions and information,
which decreases pragmatic complexities. The securities’
expected returns require them to accept risky challenges.
This risk is influenced by the non-diversifiable future revenue
stream unpredictability. Therefore, the modern finance
theory states that behavioral finance (psychology biases and
market variables) has two critical components for settling
on venture choice (Andrikopoulos, 2007; Hirshleifer, 2001).
As stated by Barber and Odean (1999), numerous financial
specialists with predispositions for their organization’s
stock, local stocks, and blue-chip stocks will harm their
portfolio, exchanging consistently and acknowledging loss
(misfortune aversion). The primary objective of the conduct
fund was to acknowledge how speculation choices are made
in a diversifiable market (DeBondt et al., 2010).
Regarding stock performance, Reinganum (1988) stated
that value stocks perform better than growth stocks. The
stock performance defined by Levine and Zervos (1998) is
a complicated concept that encompasses the size, liquidity,
degree of international assimilation, and volatility.
2.6. Research Model
Hypotheses for Research are as follows:
H1: Heuristic variable profoundly affects the investment
decision making.
H2: Prospect variable profoundly affects the investment
decision making.
H3: Market variable profoundly affects the investment
decision making.
H4: Herding variable profoundly affects the investment
decision making.
H5: Heuristics variable favorably affects investment
performance.
H6: Prospect variable favorably affects investment
performance.
H7: Market variable favorably affects investment
performance.
H8: Herding variable favorably affects investment
performance.
3. Research Methodology
This study analyzes data from Vietnamese investors who
participate in the Ho Chi Minh Stock Exchange (HOSE)
and Hanoi Stock Exchange (include HNX and Upcom). The
sample size is 250 investors.
848 Minh Man CAO, Nhu-Ty NGUYEN, Thanh-Tuyen TRAN / Journal of Asian Finance, Economics and Business Vol 8 No 3 (2021) 0845–0853

Table 1: Questionnaire for the research

HEURISTIC

Representative
3 REP1 You buy ‘hot’ stocks and avoid stocks that have
performed poorly in the recent past.
4 REP2 You use trend analysis of some representative
stocks to make investment decisions for all
stocks that you invest in.
Overconfidence
5 OV1 You believe that your skills and knowledge of
the stock market can help you to outperform
Figure 1: Theoretical Framework for the Effects of the market.
Behavioral Factors on Financial Specialists’ Decision 6 OV2 You are confident in your analytical abilities and
Making and Relative Investment Results market forecasting experience
Anchoring
7 AN1 You rely on your previous experiences in the
Questionnaires are sent to the respondents through market for your next investment.
social networks. The survey question examines the financial
8 AN2 You forecast the changes in stock prices in the
behavior of 250 investors that can be seen through 34
future based on the recent stock prices.
observed questions. The use of Heuristics which includes
questions of representativeness, overconfidence, anchoring, Gambler’s Fallacy
gambler’s fallacy, and ability bias; the use of Prospect 9 GA1 You are normally able to anticipate the end of
theory which covers loss aversion, regret aversion, mental good or poor market returns at the Ho Chi Minh
accounting; the use of Market factors that cover change Stock Exchange.
prices, market information, past trends of a stock, funda­
10 GA2 Assuming a coin is tossed 10 times and results
mentals of underlying stocks, customer preference, and in a “backstroke”, you would expect the next roll
reaction to price changes; the use of Herding theory to result in a “face”.
includes only 1 factor which is following the others’
trading actions, use of investment decision-making cover Ability Bias
Factor Investment Decision Making process and last factor 11 AB1 You prefer to buy local stocks than international
- investment performance cover return rate and satisfaction stocks because the information about local
of investment decisions stocks is more available.
The 5-point Likert is applied through 5 levels of scale: 12 AB2 You consider the information from your close
Totally disagree, Disagree, Neutral, Agree, totally agree. friends and relatives as a reliable reference for
The survey questionnaire was finalized after consulting ten your investment decisions.
experts; five from academics, three from high-net-worth
PROSPECT
clients, and two from industry professionals.
SPSS and AMOS software packages were used in this Loss Aversion
study to process and analyze the collected data. The answers
13 LO1 After a prior gain, you are more risk-seeking
with incomplete information or partial opinions were
than usual.
removed before analysis. The following statistical tests were
used: Descriptive Statistics, Cronbach’s Alpha test, Factor 14 LO2 After a prior loss, you become more risk-
analysis, and Structural Equation Modeling (SEM). averse.
Regret Aversion
4. Results and Discussion 15 REG1 You avoid selling shares that have decreased
in value and readily sell shares that have
The main data resources come from the measurement
increased in value.
scales as shown in Table 1. Questionnaires are sent to the
respondents through social networks. The survey question 16 REG2 You feel more sorrow about holding losing
examines the financial behavior of 250 investors that can be stocks too long than about selling winning
seen through 34 observed questions. stocks too soon.
 Minh Man CAO, Nhu-Ty NGUYEN, Thanh-Tuyen TRAN / Journal of Asian Finance, Economics and Business Vol 8 No 3 (2021) 0845–0853 849

Mental Accounting
4.1. Cronbach’s Alpha
17 ME1 You tend to treat each element of your From the data, this study found the Corrected item-total
investment portfolio separately. correlation and Cronbach’s Alpha. Most of the values are
18 ME2 You ignore the connection between different > 0.6, which means that the observed variables are linked
investment possibilities. together and measured for one factor (Heuristic). Only
Cronbach’s Alpha of the OV variable (0.474) was < 0.6,
MARKET which means OV is not suitable for evaluating the Heuristic
19 MA1 You consider carefully the price changes of factor. Cronbach’s Alpha for the remaining variables ranges
stocks that you intend to invest in. from 0.686 to 0.892, indicating that these observational
20 MA2 You have the over-reaction to price changes of variables reflect the Heuristic properties. Corrected Item-
stocks. Total Correlation is from 0.311 to 0.808, indicating that the
observed variables contribute to the reliability of the scale.
21 MA3 Market information is important for your stock
investment.
The MA has Cronbach’s Alpha > 0.6, but the item MA5
has a Corrected item-total Correlation < 0.3. Item MA5
22 MA4 You put the past trends of stocks under your contributes little to the scale.
consideration for your investment.
23 MA5 You analyze the companies’ customer 4.2. Exploratory Factor Analysis
preference before you invest in their stocks.
24 MA6 You study the market fundamentals of The EFA exploratory factor analysis was used to test the
underlying stocks before making investment scale. Thirty-four observational variables were designed in
decisions. the study. After reliability testing by the Cronbach Alpha
coefficient, the OV factor and item MA5 were rejected.
HERDING
The results show that KMO = 0.618 > 0.5; Barlett’s Sig
25 HE1 Other investors’ decisions about choosing value is 0.000 < 0.05 (5%). Observed variables are correlated
stock types have an impact on your investment in terms of the overall range, indicating that factor analysis
decisions. is appropriate. The factor analysis showed that the Heuristic
26 HE2 Other investors’ decisions of the stock factor scale was at Eigenvalue = 1,030 with the Principle
volume have an impact on your investment Axis Factoring extraction method and the non-perpendicular
decisions. Promax rotation, which allowed four factors to be extracted
27 HE3 Other investors’ decisions of buying and selling from the eight variants. The total variance of the data was
stocks have an impact on your investment 73,087%.
decisions. Of the four factors extracted, we observed:
28 HE4 You usually react quickly to the changes of
Group 1, Variables GA1 and GA2: The loading factor of
other investors’ decisions and follow their each variable was larger than 0.5, so no item was rejected
reactions to the stock market. from the model. The two GA1 and GA2 observed variables
were combined with relatively high loading factors (0.903
INVESTMENT DECISION MAKING and 0.897). These observed variables correlate with the
29 IDM1 Macroeconomic information at local and abroad investors’ bets, their reflections, and their beliefs that they
30 IDM2 Report on profit and performance of listed
“have the ability to prediction the finale of good or poor
companies. market returns at the Vietnam Stock Exchange”.
Group 2, Variables AB1 and AB2: These variables have
31 IDM3 History of stock price trends loading factors greater than 0.5 (0.923 and 0.838), so they
INVESTMENT PERFORMANCE were not rejected from the model. Observed variables AB1
and AB2 correlate to familiarity with information about the
32 IP1 The return rate of your recent stock investment
domestic and foreign stock as well as about trust in relatives,
meets your expectation.
friends, and colleagues.
33 IP2 Your rate of return is equal to or higher than the Group 3, Variables REP1, REP2: In this group of
average return rate of the market. observed variables, the loading factors (0.889 and 0.748) are
You feel satisfied with your investment greater than 0.5 and were included in the research model.
decisions in the last year (including selling, This group of variables correlates to investments in stocks
34 IP3
buying, choosing stocks, and deciding the stock that are “hot” in the market and investment decisions for all
volumes). stocks based on trend analysis of some representative stocks.
850 Minh Man CAO, Nhu-Ty NGUYEN, Thanh-Tuyen TRAN / Journal of Asian Finance, Economics and Business Vol 8 No 3 (2021) 0845–0853
Group 4, Variables AN1, AN2: Observed variables of
this group had loading factors (0.848 and 0.756) greater
than 0.5. This observation group correlates to the investors’
assessment of problems in the present based on similar
problems in the past.
The KMO and Barlett’s test in the EFA factor analysis
were 0.680 and 0.000, respectively, resulting in EFA 3
components at Eigenvalues = 1,009. The covariance value
is 55.305%, which indicates that the three components are
explained by a 55,305% variance of the data. From the above
results, this study concludes that the scale is accepted and the
observed variables in the three components are correlated in
the sample. Based on the results of the EFA discovery factor
analysis, this study concludes that the scale was acceptable.
Of the three factors extracted, we observed:
Factor 1, Variables LO1 and LO2: Their loading factors
are 0.786 and 0.776, respectively, showing that these
variables are statistically and significantly different from the
Prospect. LO1 and LO2 represent fear of loss that outweighs
incentives for profit.
Factor 2, Variables REG1 and REG2: These variables
have loading factors 0.797 and 0.654, respectively, and were
not removed from the model. REG1 and REG2 correlate to
crowd psychology through aversion due to aversion to regret.
Factor 3, Variables ME1 and E2: With loading factors of
0.755 and 0.661, neither of these variables were eliminated
from the model. This variable group is defined as a trend
to divide money into different accounts according to their
purpose, such as the source of money or usage for each type
of account.
EFA conformity test: 0.5 ≤ KMO = 0,822 ≤ 1. Factor
analysis was appropriate for actual data. Verification of the
correlation between observed variables was as follows: Sig. =
0,000. The observed variables were correlated in each factor.
Testing variance extract yielded Eigenvalues of 57,240%.
Market factors included MA1, MA2, MA3, MA4, and MA6.
Herding elements included HE1, HE2, HE3, and HE4. The
Investment Decision Making factor included IDM1, IDM2,
and IDM3. Investment Performance factors included IP1,
IP2, and IP3.
Market factor group: The factor loadings were 0.760,
0.758, 0.753, 0.689, 0.552. Since all values were larger than
0.5, all items had practical meaning for the Market factor and
were kept in the model.
The herding factor group was measured by observed
variables HE1, HE2, HE3, and HE4 and analyzed according
to the Principal Axis Factoring method with Promax rotation.
Observed variables with factor loading greater than 0.5 were
rejected because they ensured sufficient convergence with
the remaining variables in the scale.
IP factor group was measured by observed variables IP1,
IP2, and IP3 and analyzed by the Principal Axis Factoring
method with Promax rotation. The observed variables with
loading factors were 0.820, 0.780, 0.639. They were not be
eliminated because they ensured sufficient convergence with
the remaining variables in the scale.
IDM factor group was measured by observed variables
IDM1, IDM2, and IDM3 and analyzed by Principal Axis
Factoring method with Promax rotation. The observed
variables with loading factors of 0.798, 0.777, and 0.634, all
greater than 0.5, were not eliminated because they ensured
sufficient convergence with the remaining variables in the
scale.
4.3. Confirmatory Factor Analysis
As a result of the EFA, the study had six key concepts in
the research model:
• Heuristic is measured by REP, AN, GA, AB
• Prospect is measured by the variables LO, REG, ME
• Market is measured by MA1, MA2, MA3, MA4, MA6
• Herding is measured by variables HE1, HE2, HE3,
HE4
• Investment Decision Making is measured by the
IDM1, IDM2, IDM3
• Investment Performance is measured by variables
IP1, IP2, IP3
The results of the CFA analysis showed a CMIN value
of 429.793 with 355 degrees of freedom and p = 0.000,
indicating significance. Although the GFI (0.894) was
lower than the recommended level (greater than 0.9), other
values suggested that this model is appropriate for market
data (CFI = 0.974; TLI = 0.970; CMIN / DF = 1.211 and
RMSEA = 0.029). The CFA results for the measurement
of factors affected the investment decision-making for the
first CFA application, showing that the correlation between
the GA and the Heuristic factor was low because the weight
factor was less than the permissible standard of > 0.5. To
measure the convergent validity, this variable was rejected
and the second CFA was performed.
The results of the CFA showed that the observed
variables are equal to the allowable standard (≥ 0.5)
and statistically significant. The p-values were equal to
0.000 (the lowest was the MA3 rating of 0.569). It can
be concluded that the observed variables used to measure
the six elements of the scale attained convergent validity.
The second model showed that the model had 303 degrees
of freedom: Chi-square = 373.388 with p-value = 0.000
and fit coefficients chi-square / df = 1.232. The values of
GFI = 0.903, TLI = 0.969, CFI = 0.973 were all greater
than 0.9. RMSEA = 0.031 ≤0.05 met the requirement of
Convergent validity.
 Minh Man CAO, Nhu-Ty NGUYEN, Thanh-Tuyen TRAN / Journal of Asian Finance, Economics and Business Vol 8 No 3 (2021) 0845–0853
In addition to the consideration of values in model
fit, Discriminant validity and Convergent validity should
be required in the CFA process. Since CR and AVE were
greater than 0.5 (Heuristic and Prospect have AVEs that
were close to but still less than 0.5; moreover, they are the
second-order factor), they satisfied the convergent validity.
All scales had aggregate reliability values within the range of
very good, ranging from 0.707 to 0.870. Besides, most of the
AVE values were greater than 0.5. This result shows that the
scale used is highly reliable. Since the relative coefficients
of the concepts (scales) were less than 1 (unit), they were
distinguished by their value.
4.4. Structural Equation Modelling
The SEM results showed that the model has Chi-square
= 374,737 (p = 0.000), CMIN/df = 1,233, TLI = 0.969,
CFI = 0.973, RMSEA = 0; thus, the model is well-matched
with market information (Nguyen Dinh Tho & Nguyen Thi
Mai Trang, 2002).
The research was conducted to test established
relationships. The estimated results of the main
parameters in the study model show that all relationships
were statistically significant (p < 0.05), meaning that the
proposed correlation of H1, H2, H3, H4, H5, H6, H7, and
H8 to concepts in the research model were accepted. H1,
H2, H4, H5, H6, H7, and H8 achieved statistical value at
1% significance level (p = 0.00 < 0.01). H3 (correlated
to the effect of Market variables on investment decision)
had 5% significance level (p = 0.019 < 0.05). The
unstandardized estimated results of the main parameters
in the theoretic model showed whether the relationship
between independent and dependent variables is
statistically significant. The standardized coefficient
showed the degree of impact between the independent and
the dependent variables.
5. Conclusions
Research results show that:
H1: Heuristic variable profoundly affects investment
decision-making There is a positive relationship between
the Heuristic factor and investment decision-making factor
at the significance level p = 0.005 < 0.05 (r = 0.211). This
relationship has a value of 0.211, showing that Heuristic
has a positive impact on investment decision-making. More
specifically, Heuristics is an important factor in creating
investors’ decision-making investment.
H2: Prospect variable profoundly affects the investment
decision-making at a significant level p = 0.004 < 0.05
(r = 0.313) and 95% confidence level. This relationship is
valued at 0.313, which shows that prospect theory positively
851
impacts investment decisions. Thus, Prospect theory is an
important factor in making investment decision-making.
H3: (market variable profoundly affects the investment
decision-making) is accepted at a significant level
p = 0.019 < 0.05 (r = 0.169) and 95% confidence level. This
relationship is valued at 0.169, which means that the Market
factor is highly valued in making investment decisions and
vice versa.
H4: Herding variable profoundly affects the investment
decision making. There is a positive relationship between
Herding factor and investment decision-making factor,
which is accepted at the significance level p = 0.006 < 0.05
(r = 0.211). This relationship has a value of 0.154, showing
that Herding has a positive impact on investment decision-
making. More specifically, Herding is an important factor in
creating investors’ decision-making investment.
H5: Heuristic variable favorably affects investment
performance. There is a positive relationship between
Heuristic factor and the factor of investment performance,
which is accepted at a significant level p = 0.009 < 0.05
(r = 0.19). This relationship is valued at 0.19, showing
that Heuristic has a positive impact on the investment
performance of investors. More specifically, Heuristics is an
important factor in investment performance.
H6: Prospect variable favorably affects the relative
investment result. It is acceptable at the significance level
p = 0.002 < 0.05 (r = 0.344) and 95% confidence level. This
relationship, valued at 0.344, shows that prospect theory
has a positive impact on investment performance and is an
important factor in investment performance.
H7: Market variable favorably affects the relative
consumption performance. It is accepted at the significance
level p = 0.007 < 0.05 (r = 0.192). There is a positive
relationship between the Heuristic factor and the dependency
factor of investment performance. This relationship has
a value of 0.192, indicating that the Market has a positive
impact on investment performance. More specifically, the
Market is an important factor that creates the investment
performance of investors.
H8: Herding variable favorably affects the relative
investment performance. It is acceptable at the significance
level p = 0.001 (r = 0.178). There is a positive relationship
between the Herding factor and the dependency factor
of performance. This relationship has a value of 0.178,
indicating that Herding has a positive impact on investment
performance. More specifically, Herding is an important
factor in creating investment performance.
Hypotheses H1, H2, H3, H4, H5, H6, H7, and H8 are
accepted at 95% confidence level, indicating the important
role of Heuristic, Prospect, Market, and Herding on
Investment Decision-making and Investment Performance.
Prospect had the strongest impact on Investment decision-
852 Minh Man CAO, Nhu-Ty NGUYEN, Thanh-Tuyen TRAN / Journal of Asian Finance, Economics and Business Vol 8 No 3 (2021) 0845–0853
making (β = 0.275). Heuristic had the second strongest
impact (β = 0.257), then Herding (β = 0.202), and finally
Market (β = 0.189) had the weakest effect. Regarding
Investment Performance, the Prospect factor has a higher
degree of impact (β = 0.298) than Heuristic (β = 0.228),
Herding (β = 0.230), and Market (β = 0.212)
Pearson Sig of independent variables PA, CP, CR, EX,
MU, ME, and dependent variable BP is below 0.05, thus,
there is a linear relation among independent variables and
BP. Specifically, two factors PA and EX have a strong
correlation to BP, with a coefficient value of 0.599 and 0.530
respectively while EX and ME have the weakest correlation
with r of 0.136. Simultaneously, four other factors, including
Celebrity Credibility (CR), Match-up (MU), and Popularity
(CP), Multiple Endorsements (ME) have a medium
correlation to BP.
References
Andrikopoulos, P. (2007). Modern finance versus behavioral
finance: An overview of key concepts and major arguments.
SSRN Electronic Journal, 44, 1–21. http://dx.doi.org/10.2139/
ssrn.746204.
Banerjee, A. V. (1992). A simple model of herd behavior. The
Quarterly Journal of Economics, 107(3), 797–817. http://www.
jstor.org/stable/2118364
Barber, B. M., & Odean, T. (1999). The courage of misguided
convictions. Financial Analysts Journal, 55(6), 41–55. https://
doi.org/10.2469/faj.v55.n6.2313
Barron, G., & Erev, I. (2003). Small feedback-based decisions and
their limited correspondence to description-based decisions.
Journal of Behavioral Decision Making, 16(3), 215–233.
https://doi.org/10.1002/bdm.443
Benartzi, S., & Thaler, R. (2007). Heuristics and biases in retirement
savings behavior. Journal of Economic Perspectives, 21(3),
81–104. https://doi.org/10.1257/jep.21.3.81
Ben-Elia, E., Ishaq, R., & Shiftan, Y. (2013). “If only I had taken
the other road...”: Regret, risk, and reinforced learning in
informed route-choice. Transportation, 40(2), 269–293. https://
doi.org/10.1007%2Fs11116-012-9426-5
Bhutta, N. T., & Ali Shah, S. Z. (2015). Do behavioral biases impact
corporate entrepreneurship, agency cost, and firm performance:
Evidence from developed and developing economies? Pakistan
Journal of Commerce and Social Sciences, 9(3), 761–798. https://
www.econstor.eu/bitstream/10419/188222/1/pjcss261.pdf
Boynton, D. M. (2003). Superstitious responding and frequency
matching in the positive bias and gambler’s fallacy effects.
Organizational Behavior and Human Decision Processes, 91(2),
119–127. https://doi.org/10.1016/S0749-5978(03)00064-5
Bucchianeri, G. W., & Minson, J. A. (2013). A homeowner’s
dilemma: Anchoring in residential real estate transactions.
Journal of Economic Behavior & Organization, 89, 76–92.
https://doi.org/10.1016/j.jebo.2013.01.010
Cascetta, E., & Cantarella, G. E. (1991). A day-to-day and within-
day dynamic stochastic assignment model. Transportation
Research Part A: General, 25(5), 277–291. https://doi.
org/10.1016/0191-2607(91)90144-F
Chand, I., & Runco, M. A. (1993). Problem finding skills as
components in the creative process. Personality and Individual
Differences, 14(1), 155–162. https://doi.org/10.1016/0191-
8869(93)90185-6
Dang, H. N., & Tran, D. M. (2019). Relationship between accrual
anomaly and stock return: The case of Vietnam. The Journal of
Asian Finance, Economics, and Business, 6(4), 19–26. https://
doi.org/10.13106/jafeb.2019.vol6.no4.19
DeBondt, W., Forbes, W., Hamalainen, P., & Gulnur Muradoglu,
Y. (2010). What can behavioral finance teach us about finance?
Qualitative Research in Financial Markets, 2(1), 29–36. https://
doi.org/10.1108/17554171011042371
Devenow, A., & Welch, I. (1996). Rational herding in financial
economics. European Economic Review, 40(3–5), 603-615.
https://doi.org/10.1016/0014-2921(95)00073-9
Elster, J. (1992). Local justice: How institutions allocate scarce
goods and necessary burdens. New York, NY: Russell Sage
Foundation.
Epstein, M. J., & Freedman, M. (1994). Social disclosure
and the individual investor. Accounting, Auditing &
Accountability Journal, 7(4), 94–109. https://doi.org/10.1108/
09513579410069867
Fernández, B., Garcia-Merino, T., Mayoral, R., Santos, V., &
Vallelado, E. (2011). Herding, information uncertainty,
and investors’ cognitive profile. Qualitative Research in
Financial Markets, 3(1), 7–33. https://doi.org/10.1108/1755417
1111124595
Frazzini, A. (2006). The disposition effect and underreaction to the
news. The Journal of Finance, 61(4), 2017–2046. https://doi.
org/10.1111/j.1540-6261.2006.00896.x
Hamilton,J.D.,&Lin,G.(1996).Stockmarketvolatilityandthebusiness
cycle. Journal of Applied Econometrics, 11(5), 573–593. https://
doi.org/10.1002/%28SICI%291099-1255%28199609%2911
Heath, C. (1995). Escalation and de-escalation of commitment
in response to sunk costs: The role of budgeting in
mental accounting. Organizational Behavior and Human
Decision Processes, 62(1), 38–54. https://doi.org/10.1006/
obhd.1995.1029
Hirshleifer, D. (2001). Investor psychology and asset pricing.
The Journal of Finance, 56(4), 1533–1597. https://doi.
org/10.1111/0022-1082.00379
Jay, E., & Perkins, D. N. (1997). Creativity’s compass: A review of
problem finding. Creativity Research Handbook, 1, 257–293.
https://doi.org/10.1037/aca0000036
Krishnan, R., & Booker, D. M. (2002). Investors’ use of analysts’
recommendations. Behavioral Research in Accounting, 14(1),
129–156. https://doi.org/10.2308/bria.2002.14.1.129
Kudryavtsev, A., & Cohen, G. (2010). Anchoring and pre-existing
knowledge in economic and financial settings. American
 Minh Man CAO, Nhu-Ty NGUYEN, Thanh-Tuyen TRAN / Journal of Asian Finance, Economics and Business Vol 8 No 3 (2021) 0845–0853
Journal of Social and Management Sciences, 1(2), 164-180.
https://doi.org/10.5251/ajsms.2010.1.2.164.180
Leung, T. C., & Tsang, K. P. (2013). Anchoring and loss aversion
in the housing market: Implications on price dynamics.
China Economic Review, 24, 42-54. https://doi.org/10.1016/j.
chieco.2012.10.003
Levine, R., & Zervos, S. (1998). Stock markets, banks, and
economic growth. American Economic Review, 537-558.
https://www.jstor.org/stable/116848
Loomes, G., & Sugden, R. (1982). Regret theory: An alternative
theory of rational choice under uncertainty. The Economic
Journal, 92(368), 805-824. https://doi.org/10.2307/2232669
Matthews, W. J. (2010). The gambler’s fallacy in retrospect: A
supplementary comment on Oppenheimer and Monin (2009).
Judgment and Decision Making, 5(2), 133. http://journal.sjdm.
org/10/10319/jdm10319.html
Mokoaleli-Mokoteli, T., Taffler, R. J., &Agarwal, V. (2009). Behavioral
bias and conflicts of interest in analyst stock recommendations.
Journal of Business Finance & Accounting, 36(3–4), 384–418.
https://doi.org/10.1111/j.1468-5957.2009.02125.x
Nguyen, N. T. (2020). Performance evaluation in strategic alliances:
A case of the Vietnamese construction industry. Global Journal
of Flexible Systems Management, 21(1), 85–99. https://doi.
org/10.1007/s40171-019-00230-9
Nguyen, N. T., & Tran, T. T. (2019). Optimizing mathematical
parameters of Grey system theory: an empirical forecasting case
of Vietnamese tourism. Neural Computing and Applications,
31(2), 1075–1089. https//doi.org/10.1007/s00521-017-3058-9
Nguyen, P. H., Tsai, J. F., Kumar G, V. A., & Hu, Y. C. (2020).
Stock investment of agriculture companies in the Vietnam
Stock Exchange Market: An AHP Integrated with GRA-
TOPSIS-MOORA approaches. The Journal of Asian Finance,
Economics, and Business, 7(7), 113–121. https://doi.org/
10.13106/jafeb.2020.vol7.no7.113
Nguyen, P., & Nguyen, N. T. (2020). Using optimization algorithms
of DEA and Grey system theory in strategic partner selection:
An empirical study in Vietnam steel industry. Cogent Business
& Management, 7(1), 1832810. https://doi.org/10.1080/233119
75.2020.1832810
Nodsinger, J. R. (2014). The Psychology of investing (5th ed.).
Englewood Cliffs, NJ: Pearson Education
853
Ouarda, M., El Bouri, A., & Bernard, O. (2013). Herding behavior
under markets condition: Empirical evidence on the European
financial markets. International Journal of Economics and
Financial Issues, 3(1), 214. http://www.econjournals.com/
index.php/ijefi/article/view/229/pdf
Pattiruhu, J. R., & Paais, M. (2020). Effect of Liquidity, Profitability,
Leverage, and Firm Size on Dividend Policy. The Journal
of Asian Finance, Economics, and Business, 7(10), 35–42.
https://doi.org/10.13106/jafeb.2020.vol7.no10.035
Reinganum, M. R. (1981). Misspecification of capital asset pricing:
Empirical anomalies based on earnings’ yields and market
values. Journal of Financial Economics, 9(1), 19–46. https://
doi.org/10.1016/0304-405X(81)90019-2
Ricciardi, V., & Simon, H. K. (2000). What is behavioral finance?
Business, Education & Technology Journal, 2(2), 1–9. http://
www.smallake.kr/wp-content/uploads/2016/07/SSRN-
id256754.pdf
Russo, J. E., & Schoemaker, P. J. (1992). Managing overconfidence.
Sloan Management Review, 33(2), 7–17. https://doi.org/10.1057/
978-1-349-94848-2_323-1
Shefrin, H. (2002). Beyond greed and fear: Understanding
behavioral finance and the psychology of investing. New York,
NY: Oxford University Press
Shiller, R. J. (2006). Tools for financial innovation: Neoclassical
versus behavioral finance. Financial Review, 41(1), 1–8. https://
doi.org/10.1111/j.1540-6288.2006.00129.x
Thaler, R. (1980). Toward a positive theory of consumer choice.
Journal of Economic Behavior & Organization, 1(1), 39–60.
https://doi.org/10.1016/0167-2681(80)90051-7
Tran, S. H., & Nguyen, L. T. (2020). Financial development,
business cycle, and bank risk in Southeast Asian Countries.
The Journal of Asian Finance, Economics, and Business, 7(3),
127–135. https://doi.org/10.13106/jafeb.2020.vol7.no3.127
Tversky, A., & Kahneman, D. (1974). Judgment under uncertainty:
Heuristics and biases. Science, 185(4157), 1124–1131. https://
doi.org/10.1126/science.185.4157.1124
Waweru, N. M., Munyoki, E., & Uliana, E. (2008). The effects of
behavioral factors in investment decision-making: A survey of
institutional investors operating at the Nairobi Stock Exchange.
International Journal of Business and Emerging Markets, 1(1),
24-41. https://doi.org/10.1504/IJBEM.2008.019243