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Identifying and ranking the factors influencing the decision of shareholders in the purchase of ordinary shares in the Tehran Stock Exchange (using multi-criteria decision making techniques)

Number of pages: 140 File Format: word File Code: 31193
Year: 2013 University Degree: Master's degree Category: Economics
Tags/Keywords: Buy shares - Capital market - decision making - Decision making techniques - Financial management - Hierarchical analysis process - Human thinking - Multi-criteria decision making techniques - Public administration - stock - stock exchange - TOPSIS technique
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  • Summary of Identifying and ranking the factors influencing the decision of shareholders in the purchase of ordinary shares in the Tehran Stock Exchange (using multi-criteria decision making techniques)

    Dissertation for Master's Degree in Public Administration

    Financial Orientation

    Abstract:

    Basically, investors should do extensive research when buying or selling common stocks. Because they convert their most liquid assets into stocks and if they do not pay attention to certain things, they will not receive favorable results from that investment. Therefore, this research aims to determine the degree of importance of the mentioned factors such as financial factors at the company level, political factors, economic factors and psychological factors of the market in order to help novice investors to make decisions based on the indicators that experienced investors use and on the other hand to show an appropriate reaction to the psychological factors of the market such as market rumors that lead to short-term fluctuations. In this study, two groups of people were examined. In the first part, after sampling the shareholders of the Tehran Stock Exchange who visited the stock market during the one-month period of the research, 262 complete questionnaires were used as the basis of the analysis, and after confirming the validity and reliability of the 37-question questionnaire, the significant effect of all dimensions on the purchasing decision of the shareholders was proven, and on the other hand, the results of the variance analysis showed that there is a significant difference between the importance of these dimensions. The results of the TOPSIS technique indicated that according to the shareholders, indicators such as (confidence in the published financial data of companies), (belief in following the future flow and returns from past performance), (following quarterly reports and data published by companies), (news published from company meetings) and (following political news and its effect on the stock market) are the most important in shaping their decision making, but indicators such as (recommendation of friends and acquaintances), (influence) political developments outside the stock market indices) and (knowledge of the average inflation rate and its flow) are of the least importance in this decision-making. As can be seen, the first three factors are all among the financial factors at the company level. In order to obtain more accurate results, the questionnaire of paired comparisons was also distributed among stock market experts. For this purpose, in this research, we used the opinions of 11 top and middle managers of stock brokerage companies, including Mofid, Parsian, Ariabours, Etemad Soroush, Agha and Apadana, which based on pairwise comparisons, financial factors at the company level, economic, political and psychological factors of the market are the most important, respectively. The results of this research show that the disclosure of financial information has a high impact on the purchasing decisions of shareholders, and this result is in line with the results of previous researches, and researchers have proven in previous researches that all three dimensions of transparency, i.e. disclosure of financial information, transparency of the ownership structure, and transparency of the board structure, have an effect on the behavior of investors in the stock market, although investors value the disclosure of financial information above all else. Tehran Stock Exchange, decision making techniques

    Chapter One

    General research

    1-1- Introduction

    The existence of a strong capital market is one of the important pillars of economic growth and development. This market uses its internal mechanisms to determine the fair price of shares and the optimal allocation of capital, and its progress and expansion is considered a criterion for ranking countries in terms of economic development (Gamlil and Herstin [1], 2010). Nowadays, due to the limited economic resources in the countries of the world, all the efforts of managers and officials are to achieve the maximum desired results by spending the least amount of resources. The practitioners and decision-makers of the international financial arena are always facing the risk of being busy solving minor problems and neglecting to solve their national key problems, which will result in a waste of resources and will weaken the hope and belief in improvement in societies (Saadi and Mokhtarian, 2018). Therefore, the prioritization of factors affecting investment in each sector of the economy is one of the most key issues of every country and has become an undeniable matter. The main role of the stock exchange is to attract and direct the savings and liquidity scattered in the economy towards its optimal paths. In a way that leads to the optimal allocation of scarce financial resources, which is important, depends on the identification of investment priorities (Daniel et al. [2], 2002).. On the other hand, the closer the amount of these priorities is to the reality of the market in the long term, the more investors' confidence in the stock market will increase and their desire to invest will increase (Al-Tamimi [3], 2006). In recent years, suitable measures have been taken to improve, develop and increase the transparency of the Tehran Stock Exchange, which has been able to improve the stock ownership culture of the people. Also, determining the priority reasons for an investment can have a double effect on identifying existing limitations and correcting the future development path of the stock exchange. This research aims to take a step towards improving the incentives for buying shares by identifying and ranking the factors influencing the decision of shareholders to buy common shares. 1-2- The importance of the issue (definition of the problem, the purpose of the implementation and application of the research results) According to the research, about 41% of the people in developed countries have direct investment in shares, and 20% directly own shares and 34% indirectly. It includes the percentage of total investments in the world (Clarke-Murphy, Suter[4], 2004). Although this figure is less than 20% in Iran, this trend is increasing, and when we consider the investment in Qarza-ul-Hasna funds, we will come across a figure of 54% (Saedi and Mokhtarian, 2008). Today, investors have a very wide scope to choose investments, but until now, limited research has been done on the method of choosing among different investments. People's financial decisions are becoming more complicated and risky day by day, while the results of these decisions are very effective on people's lifestyle (Saltana, [5] 2010). Most financial theories assume that investors think logically about increasing their capital and pay attention to financial signals. When choosing an investment, investors initially compare its risk and return with other potential investments that they can make. In addition, the level of risk that investors are willing to bear depends on their characteristics and psychological characteristics (Merikas et al. [6], 2004). However, a rational investor will not choose the investment with lower risk if the risk of two investments is similar. Most recent research on financial psychology has stated that investors' decisions may be influenced by internal behavioral factors such as self-knowledge and external behavioral factors such as how to choose an investment (Lee et al. [7], 2008). Basically, investors should do extensive research when buying or selling common stocks. Because they convert their most liquid assets into shares and if they do not pay attention to certain things, they will not receive favorable results from that investment. Therefore, this research aims to determine the degree of importance of the aforementioned factors, such as market psychological factors, economic, political, etc., in order to help novice investors to make decisions based on the indicators used by experienced investors, and on the other hand, to react appropriately to market psychological factors such as market rumors that lead to short-term fluctuations. 1-3- Research Objectives. can be examined in two general and specific dimensions. The general objectives of this thesis are:

    Identifying the most important financial and non-financial indicators affecting the decision to buy common shares in the Tehran Stock Exchange

    Ranking these indicators using the TOPSIS technique

    Ranking the general dimensions using the AHP technique

    And the most important specific goal of this research is:

    Inspecting financial and non-financial (psychological) factors. Influencing investors' decisions when buying and choosing stocks in the stock exchange and ranking the importance of these factors. Finally, this research seeks to provide solutions to stock supply companies so that they can affect the important factors from the point of view of investors that influence their stock selection and promote them in their company.

  • Contents & References of Identifying and ranking the factors influencing the decision of shareholders in the purchase of ordinary shares in the Tehran Stock Exchange (using multi-criteria decision making techniques)

    List:

    Abstract.. 1

    Chapter One: General Research

    1-1- Introduction. 2

    1-2- The importance of the subject (definition of the purpose of the implementation and application of the research results). 3

    1-3- Research objectives. 4

    1-4- Assumptions (or research questions). 4

    1-4-1- The main research questions. 4

    1-4-2- research assumptions. 5

    1-5- Research area. 5

    1-5-1- Subject area. 5

    1-5-2- spatial territory. 5

    1-5-3- Time domain. 6

    1-6- research limitations. 6

    1-7- Research method. 6

    1-8- Description of the words and terms used in the research. 7

    Chapter Two: An overview of the conducted research

    2-1- Introduction. 8

    2-2- Stock Exchange. 9

    2-2-1- Causes of the stock exchange. 9

    2-2-2- History of stock exchange in Iran. 11

    2-2-3- The position of the stock exchange in the capital market of Iran. 12

    2-2-4- Criteria for identifying the extent and manner of activity of a stock exchange. 12

    2-2-5- Benefits of investing in the stock market. 13

    2-2-6- The benefits of entering the stock market for companies. 14

    2-2-7- The main components of the stock exchange. 14

    2-2-8- Methods of entering the stock exchange. 16

    2-2-9- Securities analysis methods. 16

    2-2-10- Regulations governing the stock exchange market. 18

    2-3- Ordinary shares. 25

    2-3-1- The concept of shares and ordinary shares. 25

    2-3-1-1- Concepts related to ordinary shares. 25

    2-3-1-1-1- Ownership right. 25

    2-3-1-1-2- Maturity of ordinary shares. 26

    2-3-1-1-3- The right to vote. 26

    2-3-1-1-4- book value. 27

    2-3-1-1-5- Preemptive right to purchase shares. 27

    2-3-1-1-6- Determining the value of ordinary shares. 28

    2-3-2- How to make decisions for buyers of ordinary shares in the stock exchange. 29

    2-3-2-1- stock selection. 29

    2-3-2-1-1- Types of fundamental analysis. 30

    2-3-2-2- Determining the value of ordinary shares. 35

    2-3-2-2-1- based on profit. 35

    2-3-2-2-2- Based on dividends paid. 36

    2-4- Factors affecting the choice of stocks by investors. 38

    2-4-1- The concept of investment. 38

    2-4-2- Investment strategies. 38

    2-4-3- Decision-making models of investors. 39

    2-4-3-1- Rational economic decision making model. 39

    2-4-3-2- behavioral economic model. 39

    2-4-3-3- New financial model. 39

    2-4-3-4- perspective model/theory. 40

    2-4-4- Theories influencing the behavior of investors. 42

    2-4-4-1- Complementary strategic factors in the financial market. 42

    2-4-4-2- Population theories and educational models. 42

    2-4-4-3- Theory of coordinated games. 42

    2-4-5- Factors affecting stock investment. 42

    2-4-5-1- Characteristics of investors. 49

    2-4-5-2- Features of the capital market. 51

    2-4-5-6- Examining basic financial statements. 60

    2-4-5-7- Examining financial ratios. 61

    2-5- Research background. 66

    2-5-1- Research conducted in Iran. 66

    2-5-2- The research done in the world. 72

    2-6- The conceptual model of research. 75

    2-7- Conclusion. 76

    Chapter Three: Materials and Methods

    3-1- Introduction. 77

    3-2- Research method. 78

    3-3- Research process. 78

    3-3-1- Identification of factors affecting the decision of shareholders in buying common shares. 78

    3-3-1-1- extracting primary indicators based on research history. 78

    3-3-2- Collection of research data. 80

    3-3-3- Analysis of research data. 80

    3-4- Statistical population. 81

    3-5- Statistical sample. 82

    3-6- Data collection method. 82

    3-7- Questionnaire validity. 82

    3-7-1-factor analysis. 83

    3-8- Questionnaire reliability. 85

    3-9- Data analysis methods and techniques. 85

    3-9-1- Tapsis technique. 86

    3-9-2- Analysis Hierarchy Technique (AHP). 88

    3-9-2-1- Principles of hierarchical analysis process. 88

    3-10- The final hypotheses of the research. 89

    3-11- Conclusion. 89

    Chapter Four: Results

    Introduction.. 90

    4-1- The first part: Sampling and descriptive statistics. 91

    4-1-1- Sampling of Tehran Stock Exchange shareholders. 91

    4-1-2- Statistical description related to the statistical sample. 91

    4-2- The second part: Reliability measurement and. 91

    4-2- The second part: measuring the reliability and validity of the research tool. 96

    4-2-1- Reliability of the research questionnaire. 96

    4-2-2- The validity of the research questionnaire. 97

    4-3- The third part: statistical analysis of the importance of indicators questionnaire. 100

    4-3-1- Analysis of the importance of indicators questionnaire. 100

    4-4- The fourth part: prioritizing dimensions and indicators. 106

    4-5- Conclusion. 109

    Chapter Five: Discussion and Conclusion

    - Introduction. 110

    5-1- Description of statistical analysis and research results. 110

    5-2- Answers to research questions and assumptions. 113

    5-3- Suggestions for future research. 114

    Appendix. 116

    Sources and sources. 122

    English abstract. 130

     

    Source:

    Azer, Adel (1373). Statistical explanation of assumptions in managerial-behavioral researches, Management Science, University of Tehran Faculty of Management publications, number 26, autumn 2013.

    Azer, Adel, Rajabzadeh, Ali (2011). Applied Decision Making, Tehran, Negah Danesh Publications, Tehran.

    Aghaei, Mohammad Ali and Mokhtarian, Omid (2004). Investigating factors influencing investors' decisions in Tehran Stock Exchange. Accounting and Auditing Quarterly, 11th year, number 36, pages 3-25.

    Ebrahimi, Mohammad and Saeedi, Ali (2009), the effect of accounting variables and company characteristics on the stock price of companies listed on the Tehran Stock Exchange, Accounting and Auditing Reviews, volume 17, number 62, pp. 1-16.

    Abzari, Mehdi et al. (2008), review Factors affecting investment in shares in the stock exchange (case study: Isfahan Regional Stock Exchange), Economic Surveys, Year 5, Number 10, pp. 162-137.

    Asgharpour, Mohammad Javad (2014). Multi-criteria decision-making, Tehran University Press, third edition.

    Amirshahi, Ahmad and Shirazi, Mahmoud and Siah Tei, Vida (2006), Determining the influencing factors on the decision of investors of the Tehran Stock Exchange, Iranian Management Sciences Quarterly, Year 2, Number 8, pp. 179-159.

    Amiri, Mojtabi et al. Tehran securities using the TOPSIS method, financial research, volume 10, number 26, pp. 76-61.

    Badri, Ahmad and Ramzanian, Maryam (2009), the effect of changing the price limit on the volume of transactions and stock price volatility in the Tehran Stock Exchange, Accounting Knowledge Magazine, year 1, number 3, pp. 58-31.

    Hassanzadeh brothers, Rasoul and Nejad Irani, Farhad and Lotf Elahi, Maherkh (2008), comparative study of the impact of financial performance criteria on the decision making of bank managers (government and non-government) using the Hierarchy Analysis (AHP) technique, Farsowi Management, Year 3, No. 11, pp. 211-185.

    Bidekhti, Abbas and Alishahi, Samia (2010), study of factors affecting stock valuation according to the existence of accounting disorders (empirical evidence using margin profit) in companies listed on the Tehran Stock Exchange, Journal of Management Accounting, Year 4, Number 8, pp. 77-87.

    Torabi, Taghi and Homan, Taghi (2009), the effects of macroeconomic variables on the performance indicators of the Tehran Stock Exchange, Economic Modeling Quarterly, Year 4, Number 1, pp. 144-121.

    Tehrani, Reza and Khosnoud, Mehdi (1384), identifying and ranking the groups influencing the decision to buy and sell shares of individual investors in the Tehran Stock Exchange, Farhang Management, year 3, number 10, pp. 219-203.

    Hajiha, Zohreh (1389), a model for predicting the level of politicization of financial managers of companies covered by the Tehran Stock Exchange using financial performance indicators, Industrial Management Quarterly, No. 12, pp. 87-79.

    Khadmigrashi, Mehdi and Ghazizadeh, Mostafa (2016), the investigation of the factors affecting the decisions of shareholders in the Tehran Stock Exchange based on the structural equation model, Daneshwar Behavat, year 14, number 23, pp. 1-12.

    Khaki, Gholamreza (2014). Research method in management, Tehran, Islamic Azad University Publishing Center.

    Doab, Roksana (2018), investigation of specific behavioral factors on the decision of investors to purchase common stock (comparative study of Terhan and Mashhad Stock Exchanges), Journal of Financial Engineering and Portfolio Management, No. 3, pp. 154-135.

    Rajabi, Ruhollah and Ganji, Azizullah (2019), investigation of the relationship between governance system and financial performance Companies, financial accounting researches, number 4, pp. 23-34.

    Roodpashti's guide, Fereydoun et al. (2007), the function of behavioral finance in explaining the scientific base of stock analysis, Production of Science, Islamic Azadeh University, number 70, pp. 21-35.

Identifying and ranking the factors influencing the decision of shareholders in the purchase of ordinary shares in the Tehran Stock Exchange (using multi-criteria decision making techniques)
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