TITLE:
Analyzing Information Dynamics within Trading Companies: Evidence from Indian Market
AUTHORS:
Shraddha Mishra, Dilip Kumar
KEYWORDS:
Psychological Biases, Behavioural Finance, Financial Investment Decision Behavior, Exploratory Study, Qualitative Research
JOURNAL NAME:
Theoretical Economics Letters,
Vol.8 No.6,
April
30,
2018
ABSTRACT: The motive of the research
is to assess the practices adopted by investors to counter total risk and
profit with the criteria for the investment decision and to know that if
insider information is providing better returns from investments. The research
is a cross-sectional study of descriptive nature. Moreover, it is a causal
research because of various causative influences being studied among the
variables. In our study, there are often deeper psychological considerations
(such as; profit earning capacity, forecasting capabilities, risk bearing
attitude and several others) that even the respondent (brokers) may not be
aware of. The researcher has consulted 767 share brokers, investors, and
transfer agents of the equity shares. After applying content analysis over the
feedback provided by them, the study has originated a questionnaire based on
their interviews. The 382 respondents filled the final constructed instruments,
and further were analyzed with the help of the Confirmatory factor analysis
(CFA) and Exploratory factor analysis (EFA) to measure the model. The model
suggests that the insider information always depends upon the profit earning
capacity, forecasting capabilities, risk bearing attitude and investment
decisions. The results assimilated with the theory of efficient market
hypothesis (Fama; 1965) which suggests that no investor will be able to beat
the market with either public or private information if the market is in the
strong form of efficient. The outcome complied after the survey did propose the
same concept that insider information very soon converts into the public
information.