According to the Thoery of Planned Behaviour (TPB, see Figure 1), people act in accordance with their intentions and perceptions of control over a particular behaviour, while intentions in turn are influenced by attitudes towards the behaviour, subjective norm and perceptions of behavioural controls. In mapping the TPB to the context of the current study, individual investors’ attitudes towards share trading may be strong as they are making decisions to achieve a desired level of financial stability, whereas family and peers’ recommendations and behaviours in share trading may form the ‘subjective norm’ variable. In addition, the ‘perceived behavioural control’ conceptualized as an antecedent to ‘intention’ within the TPB is defined as an individual’s perception of the easiness of performing a particular behaviour. In the present study, investors may be interested in investing in a particular company only when they have time and skill to evaluate the company and have money to invest. Therefore, for an intention to trade to be formed, individual investors normally begin with the evaluations of companies’ financial positions based on objective measures such as return on equity, dividend payout ratio and beta. Next, their emotional perceptions of such evaluations may come into effect as they are trying to weigh the ‘correctness’ of their trading decisions in the companies’ shares. As this study assumes that financial evaluation is a ‘bread and butter’ activity of most individual investors, it is only interested to examine the effect of their subjective measures of companies’ risk and returns on trading decisions. In addition, the role of trust, familiarity and the mediating role of attitude towards companies’ images also form the research model of the present study, as depicted in Figure 2. As indicated in Figure 2, this study conceptualizes the ‘attitude towards brand’ (AT_BR) as having the full mediation effect on intention to trade, while ‘perceived risk’ (RISK), ‘perceived returns’ (RTN), ‘trust’ (TRS) and ‘brand familiarity’ are the antecedents of AT_BR. Therefore, the main hypothesis of this study is given as H1 while the hypotheses of antecedent variables are explained in the following sections.
Figure 1: Theory of Planned Behaviour
Figure 2: Research Model