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


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.

Full Text:



Ajzen, I. (1985). From intentions to actions: A theory of planned behavior. In Action control (pp. 11-39). Springer, Berlin, Heidelberg.

Ajzen, I. (1988). Attitudes, traits and behaviour.

Ajzen, I. (1991). The theory of planned behavior. Organizational behavior and human decision processes, 50(2), 179-211.

Baker, H. K., & Haslem, J. A. (2015). The impact of investor socioeconomic characteristics on risk and return preferences.

Baker, H. K., Hargrove, M. B., & Haslem, J. A. (1977). An empirical analysis of the risk-return preferences of individual investors. Journal of Financial and Quantitative Analysis, 12(3), 377-389.

Barber, B. M., Lee, Y. T., Liu, Y. J., & Odean, T. (2004, July). Who gains from trade? Evidence from Taiwan. In 12th conference on the theories and practices of securities and financial markets, Kaohsiung, Taiwan.

Bryman, A. (2016). Social research methods. Oxford university press.

Etikan, I., Musa, S. A., & Alkassim, R. S. (2016). Comparison of convenience sampling and purposive sampling. American Journal of Theoretical and Applied Statistics, 5(1), 1-4.

Fishbein, M., & Ajzen, I. (1975). Belief, attitude, intention and behavior: An introduction to theory and research.

Fishbein, M., & Ajzen, I. (1980). Understanding attitudes and predicting social behavior.

Hirshey, M., & Nofsinger, J. (2008). Investments: Analysis and Behaviour.

Hoffmann, A. O., & Post, T. (2017). How return and risk experiences shape investor beliefs and preferences. Accounting & Finance, 57(3), 759-788.

Hoffmann, A. O., Post, T., & Pennings, J. M. (2015). How investor perceptions drive actual trading and risk-taking behavior. Journal of Behavioral Finance, 16(1), 94-103.

Hughes, J. A., & Sharrock, W. W. (2016). The philosophy of social research. Routledge.

Moser, C. A., & Kalton, G. (2017). Survey methods in social investigation. Routledge.

Sekaran, U., & Bougie, R. (2016). Research methods for business: A skill building approach. John Wiley & Sons.

Shanmugham, R., & Ramya, K. (2012). Impact of Social Factors on Individual Investors’ Trading Behaviour. Procedia Economics and Finance, 2, 237-246.

Shiller, R. (2000). Irrational Exuberance, Princeton Univ.


  • There are currently no refbacks.