Factors influencing investment decision in equity stocks at the Nairobi securities exchange among teachers in Kisumu municipality, Kenya
This study focused on the factors influencing investment decision in equity stocks at the Nairobi stock exchange among teachers in Kisumu Municipality. The study employed a descriptive survey design. The target population was two thousand five hundred and thirty teachers. A sample of two hundred and fifty three (representing ten percent)of the target population was selected. Data was collected using questionnaires and subsequently analyzed using descriptive statistics and factor analysis techniques. The study revealed that teachers in Kisumu Municipality have a low financial literacy. Although many of them rate equity stocks as an investment just like others, a majority of them would prefer investing in other asset classes such as real estate. Only a small percentage (28%) of the target population had invested in the stock market. The results indicated that decisions to invest in equity stocks are influenced by economic and behavioral factors. The key economic factors influencing decisions to invest in equity stocks were found to be expected dividends, capital appreciation and affordability of shares. Among behavioral factors were herd behavior, depicted by decision to invest based on popular opinion or shares in high demand and friends and co-workers recommendation, and overconfidence depicted in the respondents belief that they are better than others; forming the basis of self attribution bias.