Factors Affecting Selection of Equity Shares: The Case of Retail Investors in Bangladesh

Abstract

This study attempts to determine principal factors considered important by retail investors in choosing an equity share traded in Dhaka Stock Exchange (DSE) and to examine whether there are any significant differences in these factors across demographic characteristics of respondents. To achieve the objectives, this study collected a data from a sample of 351 retail investors in the city of Khulna in Bangladesh through convenience sampling and analyzed it using factor analysis, independent sample t-test and a number of ANOVA. The findings of the study reveal that the most important principal factors influencing retail investors are company specific attributes/reputation, net asset value, and accounting information. The next five principal factors ranked fourth, fifth, sixth, seventh, and eighth were trading opportunity, publicity, ownership structure, influence of people, and personal financial needs respectively. Findings also suggest that extent of importance given to each of the factors excluding ownership structure significantly differs with at least one demographic characteristics of sample respondents like gender, age, occupation, income, education, and experience.

Keywords: Equity share selection factors, Retail investors, Demographic characteristics, Dhaka Stock Exchange (DSE), Bangladesh