Abstract

This paper uses the theory of behavioral finance to examine the factors of individual investors’ psychology as
well as their effects on investment decisions in the Vietnam Stock Exchange (VSE). This is an empirical study
which based on a survey of 422 investors. All of them have had the deep knowledge about finance investment
and worked many years in VSE. The final results show that five factors of psychology which are overconfidence,
optimism, herd behavior, psychology of risk and pessimistic have influence on investment decisions. To be more
detailed, excessive optimism, psychology of risk and excessive pessimistic affect positively on long-term
investment of investors while overconfidence and herd behavior have the negative impact. Based on the theory
of behavioral finance, this study explains factors of individual investors’ psychology. However, one of the
limited of this paper is that it does not mention about negative outcomes of psychology factors on investment
decisions. This is considered as a new path to do research in the future for emerging markets like Vietnam.

This work is licensed under a Creative Commons Attribution 4.0 License.