Vellore Institute of Technology (VIT) is a private university located in&nbsp;Tamil Nadu, India. Founded in 1984, as Vellore Engineering College, the institution offers 20 undergraduate, 34 postgraduate, four integrated and four research programs. It has campuses in Vellore, Amravati, Bhopal and Chennai.

VIT is one of the top ranked private universities in India according to NIRF, THE and QS Rankings.&nbsp;Govt. of India has recognized&nbsp;VIT, Vellore as an&nbsp;Institution of Eminence. This has allowed VIT to take independent quality initiatives and move up in world ranking.

&nbsp;

&nbsp;

VIT University

Behavioural Finance is a psychological study in finance, with a special focus on individual level cognitive biases. It emerged over a period of time; Behavioural Portfolio Theory acts as a base for behavioural finance concept. The behavioural portfolio theory was formulated by Hersh Shefrin and Meir Statman (2000) via the theory of needs from Maslow (1943). This alternative formulation called Maslowian Portfolio Theory (MAPT).The origin of Behavioural finance is divided into Psychological, Financial and Economic. Current study is based on reviewing empirical, conceptual and literature based studies focused mainly on Behavioural Portfolio Theory and the author used Emerald insight database which compiles specifically the reputed Investment Journals for the time period 1960-2017.This paper helps in better understanding about the emergence and evolution of Behavioural Finance and how it helps to understand the orientation of investors towards their portfolio construction and investment decisions. © 2020 by Advance Scientific Research.

World University root node

Department of Technology Management

School of Mechanical Engineering

Vellore Campus

Journal of Critical Reviews

Role of behavioural finance in portfolio selection and investment decision-making

Investors usually rely on the first-hand information to take their investment decisions. Investors are prone to many types of heuristics and bias which can lead to indecisive situations or irrational behavior and affect their performance. Indecisive state of mind of investors is attributed due to cognitive dissonance as it differs from their belief and the facts they come in reality. Mental accounting has its own advantages of meeting the investor’s goal on time and allocating resources effectively to achieve each of their investment objectives, on the contrary it can also lead to poor portfolio management and performance. The current study is conducted in order to understand the influence of availability heuristic influence on cognitive dissonance and rational behavior through mental accounting bias as a mediating factor exclusively on Fast Moving Consumer Goods (FMCG) investor’s decision making in stock market. Data was collected by purposive sampling method using self-administered questionnaire from 614 FMCG investors through 15 stock broking firms registered in Hyderabad city, tools like correlation, analysis of variance, Cronbach Alpha test, linear regression and mediation are used for data analysis. The results reveal that availability bias, cognitive dissonance and rational behavior are highly correlated to one another. Availability bias influence on cognitive dissonance and rational behavior of FMCG investors through mental accounting bias is negligible. Though many studies have accepted the major role played by mental accounting bias and few against it in our study it is proved to be negligible in case of defensive sectors of FMCG investors.

VIT Unitversity

Fulltext

International Journal of Financial Research

Does Availability Bias Have Influence on FMCG Investors? An Empirical Study on Cognitive Dissonance, Rational Behaviour and Mental Accounting Bias

The impact of news on individual investor decision is explicit as investors need to update, adapt and forecast returns with constraints of time, uncertainty and resources to be successful. The aim is to understand and review the influence of news on individual investor's decision making in stock markets and identify the impact of different type of news on individual investor's decision making in stock markets, assess the behavioral reaction and investment decisions made by investors before and after there is news item, identify the linking effect on behavioral theories and biases, develop a generalized decision making conceptual model to understand the impact of news on investor's reaction, decision and its linkages along with the behavioral bias. Theoretical basis/methodology for processing of news by investors is assumed to be based on Broadbent's filter theory (1958) and due to cognitive informational inefficiency of investors it assesses the attention and the investor's reaction of overreaction and underreaction, which do not comply with efficient market hypothesis theory. The reasons for its noncompliance are found by relating it with behavioral theories. The results explain how investor screens with filters and give attention to news only when it affects their portfolio or investment objective and strategies. It is concluded that investor's decision making depends on degree of information penetration, information content, information influence, specific internal factors and generic external and on investors prevailing at that given circumstances. This gives us the solution to comprehend the investor's reaction, decision and unresolved reversals, short- and long-term overreaction.

Investment Management and Financial Innovations

Influence of news on rational decision making by financial market investors

Firms face bankruptcy risk when they are unable to meet the principal and interest obligations towards the bondholders. The bankruptcy costs arising out of this risk put pressure on the firm value and also affect the stockholders. To predict the corporate bankruptcy, Altman Z Score, which is based on firms’ liquidity, profitability, earnings ability, market value and asset turnover is considered appropriate. The current study is an evaluation of relationship between corporate strategy adopted and bankruptcy risk experienced by the firms, categorized as concentrated and diversified firms. Since corporate strategy applied alters asset composition, which in turn influence their financial leverage thus allowing management understand the choice of strategy and its influence on bankruptcy risk. Hence, Altman Z score methodology is applied on select large manufacturing firms that earned more than 100 million in revenue during the financial years 2009-10 through 2015-16 categorized as concentrated and diversified firms based on Herfindahl index. Results show that concentrated firms face slightly lower bankruptcy risk than diversified firms. This may be because concentrated firms fare better than diversified firms on performance, sales and profitability. © IAEME Publication.

Department of Social Sciences

School of Social Sciences & Languages

International Journal of Mechanical Engineering and Technology

Link between corporate strategy and bankruptcy risk: A study of select large Indian firms

Purpose Fast moving consumer goods industry is moving fast on the secondary markets across the globe. However, diversified segments of the sector have varied performance at different countries. In India, this sector is growing rapid and is grabbing attention of all types of investors in the market. Hence, it is felt necessary to understand whether stocks listed in this segment are really defensive for long term investors or not and do they influence the whole indices or not. Methodology Current study is an exploratory study for which data is collected from eight personal care stocks listed on National Stock Exchange from 1stJanuary, 2015 till 18thSeptember, 2017 considering daily closing prices. A sample of 672 is considered for which statistical tools such as Pearson’s correlation coefficient, covariance, price variance analysis, and augmented dickey fuller unit root test are applied. Further, to do a thirty week forecasting, to understand the quality of forecasting and seasonality, auto-regressive integrated moving average method and exponential smoothing process are applied. Findings Results indicate that two of the eight companies' stocks are highly divergent in nature and doesn’t influence the indices movement. However, these two stocks are good for long term investors as they are traded at consistent price and deviation in price is also nominal during the study period. It is also observed that, there is no seasonality influence amongst selected stocks and trend is present for six out of eight stocks with some showing additive trend while others multiplicative. Value Advantageous for prospective investors to understand and select an appropriate company’s stock for investment, based on the historical data assessment. © IAEME Publication.

An empirical study on comparison &amp; forecast of FMCG personal care stocks vs FMCG nifty

Indian mutual fund industry experiences a tremendous growth due to savings and investment behaviour of individuals as well as growth in infrastructure, habit of saving and investing. In current day market, mutual funds act as an important savings vehicle for most people in developed countries. Present research helps to identify the critical gap to understand the mutual fund investor's behaviour towards various investment avenues with the help of demographic factors. The study was conducted among BHEL employees of various departments by using structured questionnaire to know and understand whether there is any significant influence of investor's towards mutual fund investment or not. For this the researcher applied stratified random sampling technique to select the sample and data is collected. After understanding the demographic diversity of the sample, their relationship to investing on mutual funds is tested applying statistical tools such as correlation and Pearson's regression analysis and inferences are drawn. © IAEME Publication.

Does demographic factors affect investment on mutual funds? - A study of employees of Bhel, Ranipet Unit

This paper proposes to find out the differences in Debt Capacity of diversified and concentrated firms in the Indian context, from FY 2009-10 to FY 2015-16. Sales based Hirfindahl Index is used to differentiate firms as diversified and concentrated firms. The factors that determine the debt capacity such as Asset tangibility, Firm size, Market to book ratio and Profitability are used to find the differences in leverage of diversified and concentrated firms and applied Cross sectional regression analysis. The results confirm the earlier findings on debt capacity and diversified firms have 1 to 2 percent more to explain the variation in leverage than the concentrated firms. © Serials Publications Pvt. Ltd.

Department of Commerce

International Journal of Applied Business and Economic Research

Does debt capacity differ between concentrated and diversified firms? An analysis of large Indian firms

Domestic savings of a nation determine the strength of an economy. Over a decade, savings behaviour of individuals in small cities and towns has influenced the gross domestic savings of nations across the globe. This changing savings pattern has an influence on the investment patterns as well. Hence, to understand this, a study was conducted in a Z category city - Vellore, Tamil Nadu. The study aimed to understand the drift in savings and investment patterns, awareness about the modern means of savings and investment options, and how effective is the role of investment advisors in instrument selection. The data were collected through a structured questionnaire that was administered to the residents of Vellore city. The results were tested with statistical tools like analysis of variance (ANOVA) and chi-square. The results revealed that individuals of the city were quite aware of the difference between savings and investments, irrespective of their demographic aspects. However, proper guidance is needed, for which investment advisors need to take measures. In addition, similar studies need to be conducted at several places across India, and effective measures, such as implementation of Pradhan Mantri Jan Dhan Yojana and such others need to be promoted to improve the general public's financial inclusion process in the Indian money market.

Indian Journal of Finance

Awareness of Savings and Investment Options in Z Category Cities of India: A Study with Reference to Vellore City

This paper reports on an exploratory research work carried out aiming to identify the barriers in the usage of traditional medicines by the holders of the knowledge. The focus is on the usage of the traditional medicines by the homogenous people, Malayali tribe community at Shervaroy hills of Eastern Ghats. Semi-structured interviews were conducted among the tribe community of the area. Where the knowledge has been passed on from generations making the traditional medicinal knowledge strongly imbibed in their culture, the research findings divulged the reasons as to why in spite of having immense knowledge on traditional medicines these tribe community are opting for codified from of medicines. This report also explored the understanding of older generation in the context of holders of the traditional medicinal knowledge among the Malayali tribe community. The conclusion supports the implementation of existing policies stringently with recommendations so as to draw closer towards the three objectives enshrined in the Convention of Biodiversity and Biological Diversity Act, 2002. This paper contributes to the policy makers, pharmaceutical companies, non-governmental organizations and the holders of traditional medicinal knowledge so as to collaborate, in the process, protecting and promoting the traditional knowledge in medicinal plants.