An Evaluation of Relationship between Risk, Return and Social Structure and their Impact on Individual Investor’s Behaviour at Pakistan Stock Exchange

Sumair Farooq, Syed Shabib ul Hassan, Khalid Mehmood Iraqi

Abstract


This research paper focusing on two fold purposes: where the first part focuses on providing positive evidence on the nature of relationship between risk and return. Moreover, the second part of the paper deals with analysing the role of risk and return and social structures on the investor’s behaviour in specific consideration with Pakistan Stock Exchange (PSX) (formerly Karachi Stock Exchange; KSE). This research paper has employed a quantitative approach for the purpose of collection of data and analysis of the results in order to fulfil the aim and objectives of the study. The data for risk and return has been collected from secondary sources. The risk and return for 50 companies that are listed on Pakistan Stock Exchange and at least once paid dividend have been calculated for 11 years which is from 2007 to 2017. Moreover, in order to collect the data for social structure and investor behaviour the researcher has used survey questionnaire as the research instrument. The questionnaire was filled by 558 individual investors who have invested their capital in the stock of companies listed on Pakistan Stock Exchange. The sampling method that was used for the purpose of selecting respondents for getting the questionnaires filled was non-probability method. For all the independent variables the null hypotheses are rejected thus showing significance of relationship. The results from the regression analysis has shown that among all the predicting variables social structure explains the lowest amount of variation in investor’s behaviour. Thus, overall it can be said that the results of this study are in alignment with the previous researches.

Keywords: Risk, Return, Investor’s Behaviour, Stock Exchange.

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References


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