Skip to main content

Stocks Investment Decision-Making: A Theoretical Model

  • Conference paper
  • First Online:
HCI in Games (HCII 2023)

Part of the book series: Lecture Notes in Computer Science ((LNCS,volume 14046))

Included in the following conference series:

  • 771 Accesses

Abstract

With the proliferation of technology, equity investors have more access to financial information that enables them to make investment decisions independently. However, this decision-making process is mostly ignored by the HCI and IS literature. Therefore, this study seeks to address this gap by investigating individual users’ intention to invest in stocks by developing a Value-Cost model. The model is based on the Transaction Cost Economics Theory (TCE) and the concept of perceived value. The study model argues that as long as the users’ perceptions of benefits are higher than the endured costs, users will perceive stocks investment as a valuable endeavor, forming positive intentions towards investment. The model is presented, and hypotheses are proposed.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 69.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 89.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

References

  1. Fernández-López, S., Rey-Ares, L., Vivel-Búa, M.: The role of internet in stock market participation: just a matter of habit? Inf. Technol. People 31(3), 869–885 (2018). https://doi.org/10.1108/ITP-06-2017-0191

    Article  Google Scholar 

  2. Lee, M.-C.: Predicting and explaining the adoption of online trading: an empirical study in Taiwan. Decis. Support Syst. 47(2), 133–142 (2009). https://doi.org/10.1016/j.dss.2009.02.003

    Article  Google Scholar 

  3. Liao, Z., Cheung, M.T.: Internet-based e-banking and consumer attitudes: an empirical study. Inf. Manage. 39(4), 283–295 (2002). https://doi.org/10.1016/S0378-7206(01)00097-0

    Article  Google Scholar 

  4. Rotchanakitumnuai, S., Speece, M.: Modeling electronic service acceptance of an e-securities trading system. Ind. Manag. Data Syst. 109(8), 1069–1084 (2009). https://doi.org/10.1108/02635570910991300

    Article  Google Scholar 

  5. Hirschey, M., Nofsinger, J.: Investments: analysis and behavior (2009)

    Google Scholar 

  6. Shanmugham, R., Ramya, K.: Impact of social factors on individual investors’ trading behaviour. Procedia Econ. Finance 2, 237–246 (2012). https://doi.org/10.1016/S2212-5671(12)00084-6

    Article  Google Scholar 

  7. Ali, A.: Predicting individual investors’ intention to invest: an experimental analysis of attitude as a mediator. World Acad. Sci. Eng. Technol. 50, 994–1001 (2011). https://www.researchgate.net/publication/269168739

  8. de Bondt, W.F.M., Thaler, R.: Does the stock market overreact? J Finance 40(3), 793–805 (1985). https://doi.org/10.1111/j.1540-6261.1985.tb05004.x

    Article  Google Scholar 

  9. Malz, A.M.: The GameStop episode: what happened and what does it mean? J. Appl. Corp. Financ. 33(4), 87–97 (2021). https://doi.org/10.1111/jacf.12481

    Article  Google Scholar 

  10. Choi, J.J., Robertson, A.Z.: What matters to individual investors? Evidence from the horse’s mouth. J. Finance 75(4), 1965–2020 (2020). https://doi.org/10.1111/jofi.12895

    Article  Google Scholar 

  11. Gompers, P., Kaplan, S.N., Mukharlyamov, V.: What do private equity firms say they do? J. Financ. Econ. 121(3), 449–476 (2016). https://doi.org/10.1016/j.jfineco.2016.06.003

    Article  Google Scholar 

  12. Graham, J.R., Harvey, C.R.: The theory and practice of corporate finance: evidence from the field. J. Financ. Econ. 60(2–3), 187–243 (2001). https://doi.org/10.1016/S0304-405X(01)00044-7

    Article  Google Scholar 

  13. Cheung, Y.-W., Chinn, M.D., Marsh, I.W.: How do UK-based foreign exchange dealers think their market operates? Int. J. Financ. Econ. 9(4), 289–306 (2004). https://doi.org/10.1002/ijfe.252

    Article  Google Scholar 

  14. Cheung, Y.-W., Chinn, M.D.: Currency traders and exchange rate dynamics: a survey of the US market. J. Int. Money Financ. 20(4), 439–471 (2001). https://doi.org/10.1016/S0261-5606(01)00002-X

    Article  Google Scholar 

  15. Gompers, P.A., Gornall, W., Kaplan, S.N., Strebulaev, I.A.: How do venture capitalists make decisions? J financ econ 135(1), 169–190 (2020). https://doi.org/10.1016/j.jfineco.2019.06.011

    Article  Google Scholar 

  16. Akhtar, F., Das, N.: Predictors of investment intention in Indian stock markets: extending the theory of planned behaviour. Int. J. Bank Market. 37(1), 97–119 (2019). https://doi.org/10.1108/IJBM-08-2017-0167

    Article  Google Scholar 

  17. Hasan, N., Bao, Y., Chiong, R.: A multi-method analytical approach to predicting young adults’ intention to invest in mHealth during the COVID-19 pandemic. Telemat. Inf., 68 (2022). https://doi.org/10.1016/j.tele.2021.101765

  18. Nugraha, B.A., Rahadi, R.A.: Analysis of young generations toward stock investment intention: a preliminary study in an emerging market. J. Account. Invest. 22(1), 80–103 (2021). https://doi.org/10.18196/jai.v22i1.9606

    Article  Google Scholar 

  19. Ramya, K., Kalpana, M.: Relationship between personality related factors and individual investors trading behaviour. J. Contemp. Res. Manage. 12(3), 27–41 (2017)

    Google Scholar 

  20. Zuravicky, O.: The Stock Market: understanding and applying ratios, decimals, fractions, and percentages. Rosen Publishing Group, Incorporated (2005). https://books.google.com/books?id=tIKSswEACAAJ

  21. Ritter, J.R.: Behavioral finance. Pac. Basin Financ. J. 11(4), 429–437 (2003). https://doi.org/10.1016/S0927-538X(03)00048-9

    Article  Google Scholar 

  22. Waweru, N.M., Munyoki, E., Uliana, E.: The effects of behavioural factors in investment decision-making: a survey of institutional investors operating at the Nairobi stock exchange. Int. J. Bus. Emerg. Markets 1(1), 24–41 (2008)

    Article  Google Scholar 

  23. Kahneman, D., Tversky, A.: On the interpretation of intuitive probability: a reply to Jonathan Cohen. Cognition 7(4), 409–411 (1979). https://doi.org/10.1016/0010-0277(79)90024-6

    Article  Google Scholar 

  24. Lai, E.L.-C.: Competition for foreign direct investment in the product cycle. Japan World Econ. 13(1), 61–81 (2001). https://doi.org/10.1016/S0922-1425(00)00044-X

    Article  MathSciNet  Google Scholar 

  25. Tan, L., Chiang, T.C., Mason, J.R., Nelling, E.: Herding behavior in Chinese stock markets: an examination of A and B shares. Pac. Basin Financ. J. 16(1–2), 61–77 (2008). https://doi.org/10.1016/j.pacfin.2007.04.004

    Article  Google Scholar 

  26. Sondari, M.C., Sudarsono, R.: Using theory of planned behavior in predicting intention to invest: case of Indonesia article information (2015)

    Google Scholar 

  27. Qureshi, S.A.: Psychological factors and investment decision making: a confirmatory factor analysis working on the financial reform and different industries analysis of Paksitan view project (2017). https://www.researchgate.net/publication/314284307

  28. Putu, L., Hartini, Y., Suarmanayasa, N., Sinarwati, N.K.: The influence of internal and external factors on investment decisions with financial literature as moderate variables. Int. J. Soc. Sci. Bus. 6, 91–102 (2022). https://doi.org/10.23887/ijssb.v6i1

    Article  Google Scholar 

  29. Williamson, O.E.: The Economic Institutions of Capitalism: Firms, Markets, Relational Contracting. Free Press, New York (1985)

    Google Scholar 

  30. Coase, R.H.: The nature of the firm. Economica 4(16), 386 (1937). https://doi.org/10.2307/2626876

    Article  Google Scholar 

  31. Williamson, O.E.: Transaction-cost economics: the governance of contractual relations. J Law Econ 22(2), 233–261 (1979). https://doi.org/10.1086/466942

    Article  Google Scholar 

  32. Williamson, O.E.: Transaction cost economics. Handbook New Inst. Econ., pp. 41–65 (2005). https://doi.org/10.1007/0-387-25092-1_4

  33. Teo, T.S.H., Yu, Y.: Online buying behavior: a transaction cost economics perspective. Omega (Westport) 33(5), 451–465 (2005). https://doi.org/10.1016/j.omega.2004.06.002

    Article  Google Scholar 

  34. Williamson, O., Ghani, T.: Transaction cost economics and its uses in marketing. J. Acad. Mark Sci. 40(1), 74–85 (2012). https://doi.org/10.1007/s11747-011-0268-z

    Article  Google Scholar 

  35. Kim, Y.G., Li, G.: Customer satisfaction with and loyalty towards online travel products: a transaction cost economics perspective. Tour. Econ. 15(4), 825–846 (2009). https://doi.org/10.5367/000000009789955125

    Article  Google Scholar 

  36. Zauner, A., Koller, M., Hatak, I.: Customer perceived value—Conceptualization and avenues for future research. Cogent Psychol. 2(1). Cogent OA, Dec. 31 (2015). https://doi.org/10.1080/23311908.2015.1061782

  37. Holbrook, M.B., Schindler, R.M.: Age, Sex, and Attitude toward the past as predictors of consumers’ aesthetic tastes for cultural products. J. Mark. Res. 31(3), 412–422 (1994). https://doi.org/10.1177/002224379403100309

    Article  Google Scholar 

  38. Zeithaml, V.A.: Consumer Perceptions of Price, Quality, and Value: A Means-End Model and Synthesis of Evidence (1988)

    Google Scholar 

  39. Dodds, W.B., Monroe, K.B., Grewal, D.: Effects of price, brand, and store information on buyers’ product evaluations. J. Mark. Res. 28(3), 307–319 (1991). https://doi.org/10.1177/002224379102800305

    Article  Google Scholar 

  40. Kim, H.W., Chan, H.C., Gupta, S.: Value-based adoption of mobile internet: an empirical investigation. Decis. Support Syst. 43(1), 111–126 (2007). https://doi.org/10.1016/j.dss.2005.05.009

    Article  Google Scholar 

  41. Bolton, R.N., Drew, J.H.: A multistage model of customers’ assessments of service quality and value. J. Cons. Res. 17(4), 375 (1991). https://doi.org/10.1086/208564

    Article  Google Scholar 

  42. To, P.L., Liao, C., Lin, T.H.: Shopping motivations on internet: a study based on utilitarian and hedonic value. Technovation 27(12), 774–787 (2007). https://doi.org/10.1016/j.technovation.2007.01.001

    Article  Google Scholar 

  43. Sanchez-Fernandez, R., Iniesta-Bonillo, M.Á.: Consumer perception of value: literature review and a new conceptual framework. J. Cons. Satisfaction, Dissatisfaction Comp. Behav. 19(3), 40–58 (2006)

    Google Scholar 

  44. Pandža Bajs, I.: Tourist perceived value, relationship to satisfaction, and behavioral intentions. J. Travel Res. 54(1), 122–134 (2015). https://doi.org/10.1177/0047287513513158

  45. Slack, N., Singh, G., Sharma, S.: Impact of perceived value on the satisfaction of supermarket customers: developing country perspective. Int. J. Retail Distrib. Manage. 48(11), 1235–1254 (2020). https://doi.org/10.1108/IJRDM-03-2019-0099

    Article  Google Scholar 

  46. Liang, T.P., Lin, Y.L., Hou, H.C.: What drives consumers to adopt a sharing platform: an integrated model of value-based and transaction cost theories. Inf. Manage. 58(4) (2021). https://doi.org/10.1016/j.im.2021.103471

  47. Davis, F.D.: Perceived usefulness, perceived ease of use, and user acceptance of information technology. MIS Q. 13(3), 319–339 (1989). https://doi.org/10.2307/249008

    Article  Google Scholar 

  48. Ajzen, I.: The theory of planned behavior ICEK. Organ. Behav. Hum. Decis. Process. 50, 179–211 (1991). https://doi.org/10.1080/10410236.2018.1493416

    Article  Google Scholar 

  49. Hong, J.-C., Lin, P.-H., Hsieh, P.-C.: The effect of consumer innovativeness on perceived value and continuance intention to use smartwatch. Comput. Hum. Behav. 67, 264–272 (2017). https://doi.org/10.1016/j.chb.2016.11.001

    Article  Google Scholar 

  50. Li, Y., Shang, H.: Service quality, perceived value, and citizens’ continuous-use intention regarding e-government: empirical evidence from China. Inf. Manage. 57(3), 103197 (2020). https://doi.org/10.1016/j.im.2019.103197

    Article  Google Scholar 

  51. Gan, C., Wang, W.: The influence of perceived value on purchase intention in social commerce context. Internet Res. 27(4), 772–785 (2017). https://doi.org/10.1108/IntR-06-2016-0164

    Article  Google Scholar 

  52. Hamari, J., Hanner, N., Koivisto, J.: ‘Why pay premium in freemium services?’ A study on perceived value, continued use and purchase intentions in free-to-play games. Int J Inf Manage. 51, Apr. (2020). https://doi.org/10.1016/j.ijinfomgt.2019.102040

  53. Lin, K.Y., Wang, Y.T., Huang, T.K.: Exploring the antecedents of mobile payment service usage: perspectives based on cost–benefit theory, perceived value, and social influences. Online Inf. Rev. 44(1), 299–318 (2020). https://doi.org/10.1108/OIR-05-2018-0175

    Article  Google Scholar 

  54. Yang, H., Yu, J., Zo, H., Choi, M.: User acceptance of wearable devices: An extended perspective of perceived value. Telematics Inform. 33(2), 256–269 (2016). https://doi.org/10.1016/j.tele.2015.08.007

    Article  Google Scholar 

  55. Amihud, Y., Mendelson, H.: Asset pricing and the bid-ask spread. J. finance. Econ. 17(2), 223–249 (1986). https://doi.org/10.1016/0304-405X(86)90065-6

    Article  Google Scholar 

  56. Camilleri, S.J., Galea, F.: The determinants of securities trading activity: evidence from four European equity markets. J. Capital Market. Stud. 3(1), 47–67 (2019). https://doi.org/10.1108/jcms-02-2019-0007

    Article  Google Scholar 

  57. Holden, C.W., Jacobsen, S.E., Subrahmanyam, A.: The empirical analysis of liquidity. SSRN Electron. J. (2014). https://doi.org/10.2139/ssrn.2402215

    Article  Google Scholar 

  58. Ng, L., Wu, F.: Revealed stock preferences of individual investors: evidence from Chinese equity markets. Pacific Basin Finance J. 14(2), 175–192 (2006). https://doi.org/10.1016/j.pacfin.2005.10.001

    Article  Google Scholar 

  59. Covrig, V., Lau, S.T., Ng, L.: Do domestic and foreign fund managers have similar preferences for stock characteristics? A cross-country analysis. J. Int. Bus. Stud. 37(3), 407–429 (2006). https://doi.org/10.1057/palgrave.jibs.8400195

    Article  Google Scholar 

  60. Gao, L.: Understanding consumer online shopping behaviour from the perspective of transaction costs. EKP 13(3), 1576–1580 (2015)

    Google Scholar 

  61. Duncan, R.B.: Characteristics of organizational environments and perceived environmental uncertainty. Adm. Sci. Q. 17(3), 313 (1972). https://doi.org/10.2307/2392145

    Article  Google Scholar 

  62. Gordon, L.A., Narayanan, V.K.: Management accounting systems, perceived environmental uncertainty and organization structure: an empirical investigation. Acc. Organ. Soc. 9(1), 33–47 (1984). https://doi.org/10.1016/0361-3682(84)90028-X

    Article  Google Scholar 

  63. Milliken, F.J.: Three types of perceived uncertainty about the environment: state, effect, and response uncertainty. Acad. Manag. Rev. 12(1), 133–143 (1987). https://doi.org/10.5465/amr.1987.4306502

    Article  Google Scholar 

  64. Ajibolade, S.O., Arowomole, S.S.A., Ojikutu, R.K.: Management accounting systems, perceived environmental uncertainty and companies’ performance in Nigeria (2010)

    Google Scholar 

  65. Rasi, R.E., Abbasi, R., Hatami, D.: The effect of supply chain agility based on supplier innovation and environmental uncertainty. Int. J. Supply Oper. Manage. 6(2), 94–109 (2019). www.ijsom.com

  66. Chen, J.: Environmental uncertainty in encyclopedia of management theory, 2455 Teller Road, Thousand Oaks, California 91320: SAGE Publications, Ltd., (2013). https://doi.org/10.4135/9781452276090.n85

  67. Featherman, M.S., Pavlou, P.A.: Predicting e-services adoption: a perceived risk facets perspective. Int. J. Hum. Comput. Stud. 59(4), 451–474 (2003). https://doi.org/10.1016/S1071-5819(03)00111-3

    Article  Google Scholar 

  68. Abramova, S., Böhme, R.: Perceived benefit and risk as multidimensional determinants of bitcoin use: a quantitative exploratory study. In: 2016 International Conference on Information Systems, ICIS 2016, no. Zohar 2015, pp. 1–20 (2016)

    Google Scholar 

  69. Huang, W.: The impact on people’s holding intention of bitcoin by their perceived risk and value. Econ. Res.-Ekonomska Istrazivanja 32(1), 3570–3585 (2019). https://doi.org/10.1080/1331677X.2019.1667257

    Article  Google Scholar 

  70. Park, D.H.: Virtuality changes consumer preference: the effect of transaction virtuality as psychological distance on consumer purchase behavior. Sustainability (Switzerland) 11(23) (2019). https://doi.org/10.3390/su11236618

  71. Yang, Y., Liu, Y., Li, H., Yu, B.: Understanding perceived risks in mobile payment acceptance. Ind. Manag. Data Syst. 115(2), 253–269 (2015). https://doi.org/10.1108/IMDS-08-2014-0243

    Article  Google Scholar 

  72. Hoffmann, V.H., Trautmann, T., Hamprecht, J.: Regulatory uncertainty: a reason to postpone investments? Not necessarily. J. Manage. Stud. 46(7), 1227–1253 (2009). https://doi.org/10.1111/j.1467-6486.2009.00866.x

    Article  Google Scholar 

  73. Rindfleisch, A., Heide, J.B.: Transaction cost analysis: past, present, and future applications. J Mark 61(4), 30–54 (1997). https://doi.org/10.2307/1252085

    Article  Google Scholar 

  74. Wang, Y.S., Wu, S.C., Lin, H.H., Wang, Y.M., He, T.R.: Determinants of user adoption of web ATM: an integrated model of TCT and IDT. Serv. Ind. J. 32(9), 1505–1525 (2012). https://doi.org/10.1080/02642069.2010.531271

    Article  Google Scholar 

  75. Gao, L., Waechter, K.A.: Examining the role of initial trust in user adoption of mobile payment services: an empirical investigation. Inf. Syst. Front. 19(3), 525–548 (2015). https://doi.org/10.1007/s10796-015-9611-0

    Article  Google Scholar 

  76. Abooleet, S., Fang, X.: The role of transaction cost in the adoption of mobile payment technology. In: 27th Annual Americas Conference on Information Systems, AMCIS 2021, pp. 0–10 (2021)

    Google Scholar 

  77. Teo, T.S.H., Wang, P., Leong, C.H.: Understanding online shopping behaviour using a transaction cost economics approach. Int. J. Internet Market. Adv. 1(1), 62 (2004). https://doi.org/10.1504/IJIMA.2004.003690

    Article  Google Scholar 

  78. Li, C.Y., Fang, Y.H.: The more we get together, the more we can save? A transaction cost perspective. Int. J. Inf. Manage. 62 (2022). https://doi.org/10.1016/j.ijinfomgt.2021.102434

  79. Yen, C., Hsu, M.H., Chang, C.M.: Exploring the online bidder’s repurchase intention: a cost and benefit perspective. ISEB 11(2), 211–234 (2013). https://doi.org/10.1007/s10257-012-0201-0

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Saeed Abo-oleet .

Editor information

Editors and Affiliations

Rights and permissions

Reprints and permissions

Copyright information

© 2023 The Author(s), under exclusive license to Springer Nature Switzerland AG

About this paper

Check for updates. Verify currency and authenticity via CrossMark

Cite this paper

Abo-oleet, S., Zhao, F., Fang, X. (2023). Stocks Investment Decision-Making: A Theoretical Model. In: Fang, X. (eds) HCI in Games. HCII 2023. Lecture Notes in Computer Science, vol 14046. Springer, Cham. https://doi.org/10.1007/978-3-031-35930-9_1

Download citation

  • DOI: https://doi.org/10.1007/978-3-031-35930-9_1

  • Published:

  • Publisher Name: Springer, Cham

  • Print ISBN: 978-3-031-35929-3

  • Online ISBN: 978-3-031-35930-9

  • eBook Packages: Computer ScienceComputer Science (R0)

Publish with us

Policies and ethics