Thesis Compilation

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LEVEL OF STOCK TRADING ACTIVITY AND INVESTMENT DECISION

FACTORS OF STOCK TRADERS IN DAVAO CITY
An Undergraduate Thesis
Presented to the Faculty of the
College of Accounting Education
John Felix T. Mamites
Queen Nicole S. Manliguez
Rosemarie O. Hambala
November 2018
18-124
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Abstract
As the need for investment of individual investors arises, the need for
understanding on how individual investors make their investment decisions
become more and more important. The purpose of this study is to investigate
whether investment decision factors—dividend income, minimizing risk,
published source of information, annual reports and financial statements,
financial advices from experts, past performance of the firm, reputation of the
firm, feeling of a firm’s product or services, and growth rate— relates to their
stock trading activity. To achieve this, we gathered information from thirty (30)
respondents, which were computed using Roscoe’s Rule of the Thumb, through
simple random sampling. The statistical tools used was frequency and
percentage, mean and Pearson’s r. The results have revealed that there is a
significant relationship between the levels of importance of investment decision
factors to the level of stock trading activity of the stock traders in Davao City.
Investors considers all the factors important in before and after investing on a
corporations stocks. Of the aforementioned factors, one factor stand out on the
eyes of the investors, they consider it the most of importance, the reputation of
the firm.
Keywords: Accounting, stock trading activity, investment decision factors,

stock traders, Pearson’s r, Davao City.
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Acknowledgement
To the people who become a part, not just for guidance but they've joined
the researchers in the path that they took throughout the thesis journey, they
would like to express their humble thanks to you:
First of all, our ALMIGHTY GOD, for always blessing and protecting the
researchers in this wonderful journey they had. For always hearing our prayers
from the very start. Not letting the researchers be a disappointment toward
others and blessing them with healthy body to continue with the journey.
To their thesis adviser, Prof. Cedric Ian Carlo E. Petalcorin, for imparting
his knowledge, for continuously guiding the researchers in the process, the
paper quality, the lapses and do’s and don’ts. For encouraging them by listening
and giving valuable lesson to the researchers. And also helped them gather the
sufficient respondents.
To their panel and expert validators, Prof. Yolanda S. Barcelona, Prof.
Myra T. Miraflores, and Prof. Joel Tan, their panel, for evaluating the
researcher’s papers to be the best paper as it can be. For the effort they extend
and not losing patience in tending to the researchers’ concerns.
To their statistician, Prof. Melvin B. Manayon, for he not only give the
researchers the results but also discussed it well to provide better
understanding to the tables to be presented to be in line with the research
objectives.
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To their assistant statistician, Sir Alpon Logrono, for tending patiently for
our concerns and run the software again. He showed humbleness towards us
despite our constant plead to him regarding our data results.
To the respondents, for the positive response, for allocating time to
answer the survey questionnaires. For making advices on the study they are
conducting.
To Prof. Lord Eddie Aguilar, for helping them in gathering the research
respondents who answered the survey questionnaires.
To Dean Esterlina Gevera, dean of College of Accounting Education, for
supporting us with this journey, allowing us to go outside our comfort zone and
gaining this experiences beyond what the four corners of the room can have.
To the family of the researchers, who’s always there to support them
emotionally and financially. For cheering them up after an exhausting day and
gave them motivations to do what is best and right. For making efforts to check
up on their children. Thank you to the researchers’ mama, papa, and their
siblings, for the undying support and love.
To the researchers, for they remain friends until now. For helping each
other, hand in hand, to achieve the goal of this journey. For not losing
patience instead, they slowly-but-surely making improvements on the study by
their constant follow up. And for never giving up on this journey to success.
The Researchers
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TABLE OF CONTENTS
Title i
Acceptance and Approval ii
Approval and Endorsement iii
Abstract iv
Acknowledgement v
Table of Contents vii
List of Figures and Tables viii
Chapter Page
I. INTRODUCTION 1
II. REVIEW OF RELATED LITERATURE 10
III. METHOD 24
IV. RESULTS AND DISCUSSION 29
V. FINDINGS, CONCLUSION AND RECOMMENDATIONS 33
REFERENCES
APPENDICES
A. Permission to Conduct the Study

B. Appointment Letter of Adviser
C. Appointment Letter of Statistician
D. Grammarly Report
E. Certification from Statistician
F. Originality Report Sheet
G. Survey Questionnaire/Checklist/Guide Questions
H. Questionnaire Validation Sheets
I. Curriculum Vitae
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LIST OF FIGURES AND TABLES
Page
Figures
1 Conceptual Framework of the Study 23
Tables
1 Level of Stock Trading Activity 29
2 Level of Importance of Investment Decision Factors 31
3 Significant Relationship of the Level of Importance of 32

Decision Factors and Investor’s Level of Stock Trading
Activity
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Chapter 1
Introduction
The Rationale of the Study
Nowadays, investing has become one of the sources of income. With
proper knowledge and understanding of the investment most probable result
would be higher return. As the need for investment arises, the need for
understanding how each investor makes their investment decisions more and
more important.
Globally, during the summer of 2007 to the spring of 2009, US stocks
have experienced lost as it had greatly declined to more than half of their value
where it affected many markets around the world (Gitman, Joehnk, & Smart,
2011). Those declining stock values have reflected the state of the world
economy wherein country after country experienced a deep recession in 2008.
However, despite this steep decline, the majority of individual and institutional
investors still choose common stocks as an investment choice (Gitman et al.,
2011).
Nationally, the Philippine stock market was one of the many who
excellently performed in the Asian region. Driven by positive perspectives, and
particularly supported by good macroeconomic factors, the Philippine stock
market is advancing (Sicat, 2017). Experts statements are all favorable and
even forecasted that the Philippine Stock Exchange would impressively grow
for the coming years together with the wonderful performance of the currency
and the economy (Dungo, 2017). However, only a few Filipino are actively
involved in the stock market according to the survey conducted by the

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Philippine Stock Exchange. Out of the total Philippine population, only less than
1% of the Filipinos are involved in the stock market (Go, 2016). Filipino
investors were known as conservative, for they prefer guaranteed returns and
low-level risk. Though risk appetite is now improving for Filipino investors, still,
being conservative remains (Dumlao, 2017). This small percentage, despite
the open opportunity and willingness to trade, is caused primarily by negative
perception, lack of knowledge and some other underlying factors. Perceptions,
as stated, include "only wealthy people could afford to invest" and "it takes too
much risk to invest" (Tiongson, 2017).
In the local arena, despite the difficulties of local investors to invest in
Davao City because of the country's regulations (maritime regulations, tariffs,
and customs) and the martial law undertaking after the Marawi siege, Davao
City has drawn investors from other parts of the globe looking for investment
opportunity. Stock trading is a good example for the government to draw more
investors and is one of the most encouraging things that came about as a result
of the recent fast-growth cycle in the stock market. It regained investors'
confidence to set up a business in Davao City, in particular, and in the
Philippines, in general. (Daval, 2013).
Investment opportunities vary from one investor to another hence both
investors consider different information on their investment. As one investor
receives new information that might probably affect their portfolio, they will
probably trade to balance the effect on their portfolio. Stock trading and price
changes are highly correlated. Investors buy shares when prices are at its
lowest and then sell it later on above purchase price to realize returns. Stock
prices must decrease to lure investors to buy a certain number of shares of

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stock in case the selling investors want to rebalance his portfolio (Wang, 2016).
A study in China on the Shanghai stock exchange by Song, Tan, and Wu (2005)
highlighted how the China Stock market's special features could be influential
on the volatility-volume relation of Chinese Stocks. They have confirmed that
information on the number of trades, size of trades and share volume implies a
substantial role in the price volatility and volume of stocks traded. However, the
Chinese faced a challenge with the price manipulation that is certainly
noticeable and cannot be tolerated. Thus, making the investors being
speculation-oriented, leading them to find companies which are candidates for
price manipulation.
Investment decision factors vary from time to time and from one investor
to another (asymmetric information). If the investor's decision factor does not
differ from one another, there will just be a stock price adjustment as investors
receive new information. However, if both investors have different perception
about the new information, they will create different expectations in response
to those changes. Stock trading arises as investors create different responses
about the same information (Wang, 2016).
The main goal for an investor is to earn a profit. Thus, he should use a
variety of strategies in trading the stocks in the market (Huang, Yang, & Chen,
2018). Sahu and Kumari (2015) want to impart that the most favorable reward
an investment can offer is the greatest return obtained. However, the different
situation demands different behavior since there are different factors to
consider. A reason for how psychological factors such as attitude, beliefs,
perception, and values add affection to the behavior of investor when investing.
A study in Malaysia supported that investors' decision-making process involves

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more on feelings, more on subjective manner than on technical analysis. They
depend on their point of view than the third parties. They are confident that with
their own experiences, one can solve the challenges that they will meet, and
have faith on own understanding of the financial and economic setting of the
country, which is a tool for an improved investment decision making. Almost
all of them place reliance on the fundamental analysis the company offers such
as information about the company and the trends. Mostly studies it on their own
because they don't trust the third parties. Due to uneasy access to information,
investors have lacked understanding about the financial behavior that is
happening with the market. They also listen to rumors from the co-traders that
affected their expected result, which is an unfavorable actual result (Jaiyeoba
& Haron, 2016).
As stocks become a popular investment choice, the need for
understanding the investors' perceive knowledge of the stocks arises. Investors
have a lot to learn from another investor in success: how they come up with
their investment decisions, as others might say that we should learn from the
experts, which is in line with the goal of this study. Numerous investment
decision factors were taken into consideration in making stock investment
decisions. These factors were assessed by their significance in decision
making. This study would like to address the significance of the decision factors
in stock investment decisions when taken individually and as a whole.

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Objectives of the study
This study aims to determine the significant relationship of factors
affecting stock investment decision and the level of stock trading activity among
the companies in Davao City. Specifically, it attempts to:
1. Determine the level of importance of factors affecting stock investment
decision.
2. Determine the investor’s level of stock trading activity.
3. Determine the relationship of the level of importance of factors affecting
stock investment decision and the investor’s level of their stock trading
activity.
Statement of Hypothesis
H0 : There is no significant relationship between the level of importance of
factors affecting stock investment decision and the investor’s level of their stock
trading activity.
The Significance of the Study
The researchers aim to study the relationship of the investor’s
investment decision factors to the level of stock trading activity in Davao City.
Accordingly, the findings of this study are expected to benefit the following:
The City of Davao. The results of this study provide information to the city
government of Davao about the state of stock trading activity and investors'
behavior. This is to help them impose constructive regulations, create a venue
for local investors to contribute to the community, and to help them develop the
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potential of the stock market as a whole leading towards sustainable economic
growth.
The University of Mindanao. This study would help the University of Mindanao
to foster the students to become young professionals by thoughts and by deeds
through improved quality of services. Particularly to business students to
expose them to the different trends in the industry to widen their horizon. As a
result, producing an excellent and competent pool of young professionals
equipped with necessary skills and knowledge as one of the objectives of this
university.
College of Accounting Education. This study would help them create
programs that would enhance the quality of knowledge imparted to the students
under the accounting curriculum. Also, to enable them to nourish the students
better and provide them with the necessary skills and fundamental knowledge
appropriate and essential to them as a future competent professional.
Stock corporations. This study would provide the information to help them
know their investors and to help them know the factors that affect the investors'
decisions in providing the company capital in exchange for shares. Also, this
would help them know the level of stock trading activity where they are involved
in and let them know their important role in the stock market. Lastly, to let them
identify the level of competence they need to perform for the continuous
success of their company.
Potential investors. This study is aimed to provide an aide to the potential
investors to address the issue of fear and uncertainty in investing in stocks.

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Also, this would help them understand how the stock market behaves and to let
them know their important role in the stock market.
Future researchers. This study would provide future researchers with
additional information about the related subject matter to help them explore
further, discover more, and unveil facts necessary to develop the potential of
the stock market.
Definition of Terms
The researchers aim to study the relationship of the investor's
Accordingly, we opt to provide an understanding of the words that were used
operationally stated below:
Corporate investors. These are companies who are interested in trusting their
money to a stock corporation for the accretion of a company's wealth.
Dividend. This is the distribution of a portion of a corporation's earnings which
is decided by the board of directors and paid to the class of shareholders.
Industry factors. These are factors affecting the decision of investors based
on their analysis of the category of primary business activities.
Individual investors. These persons are interested in putting their money to a
trusted stock corporation for the accretion of wealth.
Investors. These are individuals who exchange money for expected future
returns.
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Investors’ perception. It is the way how investor understand or comprehend
a particular thing (i.e., stock trading) or the impression of the investor towards
stock trading.
Investments. This is putting aside of resources to earn an amount of return in
the future.
Market. It is particularly a financial market, a place where an individual and
business organization meet to borrow money or to invest.
Objective factors. These are factual factors where a decision of an investor is
based, including the company’s distribution of a portion of their earnings and
the chance that the investment may lose its value.
Philippine Stock Exchange. This is a private, not for profit and nonstock
institution aiming to provide an organized exchange of debt and equity
securities in the Philippines.
Private markets. These are markets in which transactions are involved with
the direct negotiation of two parties.
Public markets. These are market which anyone in general population can
trade company’s shares on an exchange.
Qualitative factors. These are factors which include all non-numerical data,
the position of the company in the industry and the level of competition in the
market.
Sources of Information factors. These are factors which can affect the
decision of an investor including the opinion or recommendations of experts
and the data that a company disclosed to the public or potential investors.
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Stock market. A place where companies trade their shares to the general
population.
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Chapter 2
Review of related literature
Investors’ Perception
Nowadays, the significance of managing your finances as well as your
savings and investment program are arising due to the financial and banking
crisis (Kapoor, Dlabay, & Hughes, 2016). Thus, it is desirable for an institution
which offers an investment instrument to have researched about the investor's
perception when it comes to varied investment instruments as this can affect
investors saving behavior. (Kasilingam & Jayabal, 2009). Basic objectives of
investors are to reduce risk and to obtain greater returns are basically what the
investor aims in investing. Aside from that, the knowledge about the prior
returns may affect investors’ trading activity (Khan, Afrin, & Rahman, 2015).
In recent years, there has been interested in how the perceptions of the
investors influence their perception of participation in the stock trading activity
of the companies. In a certain research conducted in Chennai City, India,
Malathy and Saranya (2017) suggest that the factors that influence the
perception of investors are, namely, company reputation, return on investment,
reputation of the board, past financial performance and dividend policy, where
return on investment gets the majority of the respondents. To people who have
surplus funds to invest, their primary objective is to earn a satisfactory rate of
return (Gitman et al., 2011). In modern economics, researchers have pointed
out the concept of human being, as an individual who prefers to maximize their
income and gains while minimizing the risks (Barber & Odean, 2011).
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Furthermore, a study conducted in Nairobi reveals that the most
important factors that influence individual investment decisions were: the
reputation of the firm, firm's status in the industry, expected corporate earnings,
profit and condition of the statement, past performance, and feeling on the
economy (Jagongo & Mutswenje, 2014).
According to scholars of behavioral finance, psychological principles
of decision making is assumed to be the reason for the investors’ market
behavior. Many theories have been developed which concerns the concept
on how and why individuals make decisions with regards to their spending,
investments, savings and the borrowing of money, and also the factors that
influence share investment decision making (Khan et al., 2015).
Stock trading
Stock trading, the buying, and selling of stocks of the company are one
of the most enjoyed activity by the investing public and well-known markets for
investing. However, some may conceive it as a complex task, but in actual
practice, the opposite is the case (Liivamagi, 2016). Transactions in stock
trading occur either in private or public market. Private market denotes the
direct negotiation between the parties of interest, and since transactions are
private, they may be made in any manner accordingly as agreed upon by both
parties. Meanwhile, the public market signifies the systematic trade of securities
through standardized contracts. A large number of investors held securities
traded in public (Brigham & Houston, 2014).
Investors' decision to be involved in the stock market are greatly affected
by their level of knowledge and amount of assets. More knowledgeable

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investors involve themselves actively on the stock market and are expected to
carry out rational investment decisions. The reason for those investors doing
more trading transactions is to gain applicable experience and somehow utilize
this experience to gain much higher risk-adjusted returns on the stock market.
Investors do pick up something from wrong judgment, and their meaningful
experience in trading certainly improves performance on the stock market
(Liivamagi, 2016).
Minimizing risk
Before involving yourself in the stock exchange market or other portfolio
investment, they should have proper understanding on the risk and return they
opt to encounter for them to do a good managing of risk (Zhang, 2016).
One of the factors found that investors are taking into account in their
financial decisions, like trading, stock investing, and risk-taking investment, is a
risk and return expectations. Because of Tverskey and Kahneman
development of the prospect theory, the management of risk and uncertainty
has been addressed to. This theory tackles how irregular the humans behave
towards assessing risk under uncertainty. Stated there that investors are not
always risk averse. Generally, they are risk averse because there is a potential
gain, and risk takers even if there is a potential loss. Another theory has been
developed, the theory of risk tolerance, wherein individuals' decision to invest
is dependent on how much they are willing to take the risk on hand in exchange
for the higher expected returns. (Khan et al., 2015).
Risk becomes an essential element of investment. Therefore, it should
be analyzed as both objective and subjective factor in making a valuable

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decision when investing. Investment, in the majority, obtain smaller or bigger
risk. A study showed that risk and uncertainty were influenced by emotions and
psychological factors which helps them in making decisions (Virlics, 2013).
However, according to Rana, Ahmed, and Murtaza (2015) investments of
financial assets in the stock market is inversely associated with perception
towards risk, whereas the former increases as the latter decreases. Also, the
greater perceived risk of an investment is one of the reasons why investors
conduct a thorough search of information.
Moreover, A recent study showed that even though internal and external
risk was disclosed it doesn't provide a substantial influence to the investor's
actions because of the generalizability of the risk given, however, if it talks about
the investment risk it can affect the investor's actions (Shaista, Yong Fook,
Sundarasen Sheela Devi, & Othman, 2018).
Dividend income
People buy and sell stocks for one main reason: they after to greater
returns compared to what they get from more conservative investment (Kapoor
et al., 2016). Theoretically, earnings are the root of all the investors considers
when making an investment, it is what influences the valuation of the investor
in the company, as well as the most important factor to consider in making a
decision about the status of the company, and above all, it influences the
investors buying behavior in the stock market. The reason why investors
purchase stocks is that of the dividends they will receive (Gad & El Din, 2013).
Furthermore, a study about the Indian investors by Baker, Kapoor, and Jabbouri
(2018) supported that they put high value in considering the dividend policy of
the company because they prefer to receive high dividend payments. Indian
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investors differ in the way they see dividends, and their major motivation for this
preference was taxes and a little liquidity.
As the company profits, the investor also can obtain gain or return on
their investment. However, dividends are not mandatory; it is dependent on the
corporate boards’ decision on whether a portion of profits will be distributed to
the stockholders. A corporation may reduce or stop dividend if it has a bad year.
Moreover, it was not only because of the earnings why investors want dividends
but also because of transaction cost (Kapoor et al., 2016).
Deslandes, Landry, and Fortin added that if firms follow the tax cut, they
will increase their dividend payouts which are a larger benefit for the
shareholders. Firms designate shareholder's tax preferences as an important
factor when considering the dividend policy to implement. Furthermore,
dividends payouts were not only caused by taxes but also government systems
across countries. They found out that in a country where there is strong
protection for the investors they pay lower cash dividends than the weak ones
(Alzahrani & Lasfer, 2012).
Financial statements/ annual reports information
Ahmad & Raza stated in their study that financial statements are the
main source of the information the investor could access to check for the
financial wellness of the organization if his preferred organization can handle
his or her investment well. However, in contrast with this, due to lack of
knowledge about investments, many investors cannot use effectively the
information in financial statements. Despite this, they still manage to achieve
returns and profits by other elements, such as their experience in investing,

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their beliefs in public rumors for taking a step in investment and their strong
relation with other investors.
During the 2008 financial crisis, the experience of investors as the events
happened there to affect their perception about the effectiveness of financial
reporting. Due to the continuing failure and bailouts of well-known institution
investors perceived this as evidence to the insufficiency of disclosures, such as
risk, uncertainties and leverages, resulting to investors losing their trust and
doubting whether to invest or not (Singh & Peters, 2013).
Published source of information:
Internet
Accessible information becomes a venue for investors for better
obtainable information and provides a helping hand as efficiently as possible
(Chang & Kwon, 2018).
It provides access to wide variety of information from journal articles,
papers, researches, etc. that allowed the scholars and academic institutions to
offer reachable information all over the world (Singh & Pant, 2013).
To extract the best information possible, the data stored on the internet
must be updated regularly and made available for the researchers and also
decision makers. Those data sources that are known to public undergo process
of survey and categorization for the searches to be faster and be more
convenient for the user. Thus, these data sources from key organizations were
run by extensive online searches and website exploration to be identified
(Nadhom & Loskot, 2018).

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According to Kapoor, et al. (2016), the internet holds thousands of
information about the personal finance topics and investment alternatives that
you can access. It is quite different from the traditional information sources
because of its features as the information greatly influence the reader, and it is
up to date and easily accessed (Park & Kwon, 2015). The internet provides an
easy way to search industries or companies of your preference, in their
company's website, which offers information about the company- investor
information, annual reports, filings, financial releases and more. Many websites
also offer a variety of information to further your knowledge and skills in
investing (Gitman et al., 2011)
However, a study showed that despite being accessible, they still look at
human sources as the top source of their information when extracting
information (Jung & Chirag, 2009).
Newspaper
The newspaper is another source of information about the stock you
need to consider before trading or investing (Kapoor, Dlabay, & Hughes, 2016).
The newspaper contains financial page which contains information about
stocks, locally and nationally, specifically, stock price quotations for major
exchanges, price quotations on stocks locally, and summary of stock market
averages and indexes (Gitman et al., 2011)
Davies (2013) suggested that you, investors should seek information
from the newspapers, but with skepticism, because to be updated with the
trends you shouldn’t ignore newspapers as a source of information. However,
in Dangol's (2016) study of Nepalese investors, he argued that neither the
information issued by the companies nor the financial information from the
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financial newspapers brings satisfaction to them. Instead, they don't depend
solely on their investment decisions on the information provided. But still, some
of them considers it reliable since this came from a skilled and resourceful
writer.
Moreover, because of the dependent use of the internet, decline on the
usage of the newspaper becomes greater causing a state of survival (Cho &
Zentner, 2016).
The financial advice of experts
Many investors think they cannot allocate time to study nor have the
expertise to analyze the financial information and cannot decide for themselves.
They seek an investment adviser regarding investments along with proper
incentives (Gitman et al., 2011). In a research study by Lei and Yao (2016),
they found out that those households who hire financial advisors have shown
better portfolio performance, supporting the statement where professional
financial planning services benefit the client. Moreover, Soderberg (2013)
added that advisor's characteristics such as its gender affect the risk perception
of its client, their extent of willingness to listen to advice and what they perceived
in the credibility of advisors' financial services.
Yang (2013) stated that investors do not fully trust media and
professional sources instead they'd seek for professional advice which is more
accessible. Son (2013) added that the factors between choosing the internet
and financial planner suggest that younger consumers who have attained a
Bachelor Degree and with less monetary support tends to use more of the
internet rather than seeking for financial advisors.

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Financial literacy is linked with the degree of confidence exerted on one's
judgment, the increase in financial literacy develop a higher degree of
confidence, thus gaining the interests of investors to use financial advice as an
option for a tool in decision making (Stopler, 2018).
However, Kramer (2016) contrasted that due to the financial literacy an
individual obtains hence, higher confidence, they would seek less for financial
advice. He suggested focusing more on the accuracy yourself can give or be
financially literate so that you won't depend on the financial advisors.
Past performance of the firm
In a research conducted by Rana & Ahmed (2015) they determined
factors that motivate the investors when selecting the type of investment to
venture, included in this was the historical data. They also cited those past
investment outcomes also in influences the behavior of an investor.
Moreover, in a research conducted by Usmani (2012) as cited by Khan et al.
(2015), they find out that investors depend on their stock purchase decisions
on the maximization of wealth in combination not only with the past
performance of the company but also the present performance.
Firm’s Reputation
Today, corporate reputation and reputation risk are become increasingly
relevant for firms and caused by its relevance for firm value (Gatzert, 2015). A
study published in Hungary reveals that in today’s transparent society Brand
name and image comprise a large portion of a firm’s intangible assets which is
especially true when a company’s good name can disappear to the push of a
button (Deal, 2013).

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Taking into account the firm’s corporate reputation and the association
between its media reputation and properties of trade payable, a sample of listed
UK firms have been investigated resulted to a document with significant positive
association between a firm’s overall media reputation and both level of its trade
accounts payable and number of days of trade credit received. The study
suggested that a favorable media reputation affects investor’s credit risk
perception (Bogaerd, 2015). Companies cease to exist in its first year of life has
been very significant because of their typical fragility. The main cause of the
fragility is the lack of reputation which hinders the acquisition of human
resources, financial and technical they need to survive (Nicolo, 2015).
Recently, researchers, Fasaei and Jansen (2018) conducted studies to
develop the behavioral perspective on the impact of reputation, by applying
theory on self-regulatory that focus in suggesting what highly reputable firms
tend to focus more of their investment strategies to prevention. This leads the
firm to choose for low-risk investments. Moreover, Haleblian, Pfarrer, and Kiley
(2017) supported that high reputation firms make more related and unrelated
acquisitions than the other firms. Also, investors bid down high reputation firm's
stock more than the other firms.
Firm’s Status
A fuzzy- hybrid methodology provided study results that investor's
perception on market conditions and global financial situation influence their
industry selection on company’s stocks (Dincer, Hacioglu, Tatoglu, & Delen,
2016). An experimental Investigation reveals that even non-professionals
investors do not concomitantly increase their investment upon learning about

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the implementation of those sophisticated continuous assurance techniques in
increasing status values (Farkas & Murthy, 2014).
The feeling of a firm's product or services
Global warming and depletion of natural resources have been increasing
that it becomes a concern for society, government, and industry. Investors have
seen growing importance on the recovery of used materials and products. A
study discovered that the resource barrier was the major obstacle that impeded
the companies in Malaysia from adopting the product return management that
ceases the investors to exist (Zailani, Govindan, Shaharudin, & Kuan, 2017).
Product sustainability is usually looked at from a business perspective with the
goal to reduce product-related risk or to differentiate the product from those of
the competition-mostly with limited effects for sustainable development. An
investor’s perception looks into how products can make a significant
contribution to sustainable development (Dyllick & Rost, 2017).
The growth rate of the firm
The study conducted a couple of years ago defined the value creation of
competence concept and found empirical evidence for its positive effects on the
firm's sales performance. The results suggest that the effect is mediated by
strategic account management and the perception of the relationship held
between buyer and seller having implications in establishing that a firm's value
creation competence translate into improved sales performance, mediated by
relationship perceptions among investors (Sullivan, Peterson, & Krishnan,
2012).
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To address the practical and theoretical deficits, a study conducted and
resulted to positively and significantly influence sales collective confidence
associated with pricing related to firm's performance, it suggested that firms
that are able to design organizational and allocate resources in a way that
maximizes pricing confidence can achieve superior financial outcomes,
promote competitive advantage and comparative firm performance that
encourages investors to invest (Liozu, 2015).
By using a large number of proxies for investment opportunities and a
variety of approaches, private firms have made the most of all types of
investment opportunities in China. Conductively, financial sector development
was found to be facilitative to the improvement of the investment efficacy of
private firms by taking better advantage of growth rate in their decision making
(Ding & Zhang, 2018).
Theoretical framework
This study is anchored on the viewpoint of Suvitsakdanont (2000) who
proposed that investors found the decision factors to have varying importance
in stock investment decisions. Such decision factors include, as broadly
classified, objective factors, sources of information factors, economic or market
factors, industry factors, company qualitative factors, and company quantitative
factors. Each of which contributes a distinct level of importance in the decision-
making process.
This study was supported by Neumann and Morgenstern (1953) as cited
in Ndiege (2012) in their expected utility model. Risks and returns as decision
22
factors play a significant role in the investors' evaluation of whether to invest or
not.
Suvitsakdanont's study was strengthened due to certain researchers
who made the related study regarding factors influencing stock investment
decisions Al-Tamimi (2004) as cited in Ndiege (2012) found that expected
corporate earnings, stock marketability, past performance of a firm stock,
dividends paid, condition of the firm's financial statement affects the investors'
decision making. Merikas et al. (2003), as cited in Ndiege (2012) also
undergone a study and found out that perceived ethics of the firm, feelings of
the firm's product, services community involvement and employee relation
along with neutral information contribute to significant factors affecting the
decision making of investors. Thus, the investors should perform a rational
analysis first and should take into consideration first the decision factors before
engaging in an investment transaction.
Conceptual Framework
The researchers desired to depict a diagram that could show the
connection between the variables. In figure 1 below, it shows the factors,
dividend income, minimizing risk, sources of information such as internet,
newspaper, and annual report/financial statements, financial advisor, past
performance of the firm, reputation of the firm, feeling of a firm's product, and
growth rate, that can significantly influence the investors perception which
results in affecting their investment behavior. Thus, might lower or higher their
engagement to stock trading activity.

23
Investment Stock Trading

Decision Factors Activity
Figure 1. Level of Stock Trading Activity and Investment Decision

Factors of Stock Traders in Davao City
24
Chapter 3
Method
This chapter shows the methods and procedures employed in this study.
It includes important details such as the research design, the instruments used
for the data gathering and statistical procedures to conduct for the analysis and
interpretation of the data.
Research design
The method used in this study was a descriptive correlational method to
determine whether or not whether investors’ perception affects the level of
stocks trading activity. Being descriptive means, you measure things as they
are, as descriptive studies primary concerns with "what is." Descriptive
research involves identification of attributes of a particular phenomenon based
on the observation done, or exploring the correlation between two or more
phenomena (Williams, 2007). As this study aims to analyze the strength of the
relationship between the two variables thus, being correlational. However, it
does not imply that between the two variables they share something in
common.
Research respondents
The respondents of the study are individual investors who invest their
money in buying and selling stocks, that is, out of the total Philippine population,
only less than 1% or 585,526 of the Filipinos are involved in the stock market
(Go, 2016). In which, the sample size of 30 was taken. The size 30 was based
on Roscoe's Simple Rules of The Thumb, in which Hill (1998) included in his
study. He said that successful research might be done by using a sample as

25
small as 10 to 20, but, in the majority of experimental research samples of 30
or more is highly suggested. Cook (2018) supported that the t-distribution is
said to be normal or the approximation tends to be good when the sample size
is 30 or larger. The respondents are selected using simple random sampling.
Simple random sampling is the most common and a convenient tool for
conducting probability sample. Which means that everybody in the population
of the research conducted has an equal chance to be selected as the test
respondents (Bryman & Bell, 2015).
Research instrument
The research instrument that was used in the study was a survey
questionnaire as the researcher’s means of collecting data that were needed in
the study to address the objectives of the study. The questionnaire consists of
two parts, the first designed to obtain about the investors level of trading activity
in stocks and the second was composed of decision factors which the literature
suggested that the individuals should consider when making investments
decisions. Each investor was requested to indicate the extent to which item was
important to him/her in making stock investment decisions by checking the
column that corresponds to his/her answer. The questionnaire was made
possible by adapting the instrument from Suvitsakdanont (2000) study of the
factors related to the individual investors stock investment decision and
modifying it to ensure the necessary data needed that can help provide the
results intended to address the research problem. In formulating the important
scale, a 5-point Likert scale was used, and the point of values employed was
as follows:
26
Point Value
5 Very important
4 Important
3 Neither important nor not important
2 Less important
1 Not important
Data gathering procedures
The following steps have been observed by the researchers in the conduct of
the study:
1. Approval of permission to conduct the study. The letter was forwarded
to the Dean of College of Accounting Education, for approval to conduct
the study entitled “Investor’s Level of Stock Trading Activity and their
Perceptions in Stock Investments in Davao City.”
2. Administration of the research instrument. The researchers have
personally administered the questionnaire to the respondents and were
responsible for giving instructions on how to answer the survey
questionnaire as well as proper orientation of the purpose and objectives
of the study. Respondents were given enough time to answer the
questionnaire which was done in some sessions by the availability of the
subjects.
3. Retrieval of the survey questionnaire. The researchers collected the
distributed survey questionnaire from the respondents after they finish
answering.
27
4. Data analysis and interpretation. The researchers have interpreted as
well as analyzed the data gathered from the respondents. All
questionnaires were checked, tallied, tabulated for statistical treatment.
The results were presented, analyzed, and interpreted in the context of
the thesis.
Scale Limit Description Interpretation
4.21-5.00 Very High When the level of importance of factors
is substantially higher than expected.
3.41-4.20 High When the level of importance of factors
is above the expected level.
2.61-3.40 Moderate When the level of importance of factors
is just at the expected level.
1.81-2.60 Low When the level of importance of factors
is lower than the expected level.
0-1.80 Very Low When the level of importance of factors
is very low from the expected level.

28
Statistical Tools
The researchers aim to study the relationship of the investor's
Accordingly, we opt to use statistical tools to interpret the results of our study
namely:
Frequency and percentage. This tool is used to measure the investor’s
level of stocks trading activity.
Mean. This tool is used to measure the level of importance of the factors
affecting stock investment decision.
Pearson’s r. This tool used to measure the relationship between the
levels of importance of the investment decision factors to the level of stock
trading activity of the stock traders.

29
Chapter 4
Results and Discussions
This chapter intends to show the results of the survey conducted, and
this also presents the statistical implications of those results. This chapter
includes three sections, starting with the independent variable represented by
the level of factors affecting stock investment decisions, followed by the
dependent variable which is represented by the investors' level of stock trading
activity, and lastly the correlation of the independent and dependent variable.
This chapter tends to present relevant information obtained in connection with
the objectives posed in this study and respond to the hypothesis formed.
Stock Trading Activity
Presented in Table 1 is that the stock traders in Davao City most of the
time buy shares of stocks (3.27). Because as Khani, Saeedi, and Khorasani
(2013) concluded, individuals are likely to invest when on the prior month prices
there is a decline. Abbott (2018) also supported that investors list stocks that
they want to own and patiently waits for the time that prices were lower.
Table 1
Investor’s Level of Stock Trading Activity
Mean SD Description
How frequently do you buy shares of
stocks? 3.27 .64 Moderate
How long do you hold your investments? 2.87 1.43 Moderate
How frequently do you sell your shares of
stocks? 3.20 .76 Moderate
Similarly, buying stocks is in parallel with selling stocks (3.20). They buy
stocks when there is price downgrade, and sell when there is a price upgrade.
30
According to Chang (2017), investors reveal that when their stocks have
unrealized capital gains, they will tend to hold their stock to realized gains. He
also noted that the investors commonly express words that "it is when you sell
that counts." Moreover, he highlighted in his study that those investors who are
experts in retail investing manifest to sell their stock as soon as possible when
it is gaining or when the stock prices are high before there is an announcement
that the stock prices will be downgraded. Also, the numerical basis is not only
to be considered but, selling behavior is also influenced by our emotions and
psychological behavior such as fear, pride, hope (desperation).
Stock traders are holding their investments within a month (2.87). Stated
in Abbott (2018), Warren Buffet once said, "When we own portions of
outstanding businesses with outstanding managements, our favorite holding
period is forever." Chang (2017) also supported, by noting that investors hold
their stock investments in anticipation that they will earn long-term gains. Also,
based on the study of Cremers and Pareek (2016), among those who have high
active share portfolios, those who are more profitable patiently hold their
investment for over two years. However, holding investment forever is
impracticable. Yes, our goal is to hold investments from companies who have
remarkable management. However, it is improbable that stocks will be
downgraded and earn you returns forever. Holding stocks for long periods is
risky (Gilbert, 2016).
Investment Decision Factors
Illustrated in Table 2, eight factors were considered to be of importance,
out of nine decision factors provided, to the stock traders regarding its
31
relevance in its decision making with regards to trading in the stock market.
Such factors were dividend income, published sources of information, annual
reports or financial statements, financial advice from experts, past performance
of the firm, the reputation of the firm, feeling of a firm's product or service, and
growth rate of the firm. Of the aforementioned important factors, one factor
stands out from the eyes of the stock traders with a mean value of 4.30, and
that is the reputation of the firm. Also included in the top 3 factors the investors
considered of importance was a tie between financial advice from experts and
the growth rate of the firm.
Table 2
Level of Importance of Decision Factors
Descriptive
Mean SD Level
Dividend income 3.83 1.26 High
Minimizing risk 3.79 1.15 High
Published source of information 3.97 1.25 High
Annual reports/ Financial Statements 3.87 1.25 High
Financial advice from experts 4.00 1.02 High
Past performance of the firm 3.97 1.07 High
The reputation of the firm 4.30 1.06 Very High
The feeling of a firm's product or services 3.69 1.17 High
The growth rate of the firm 4.00 1.02 High
Importance of factors affecting stock
investment 3.94 .76 High
A study by Gatzert (2015) would prove that reputation is of great
significance in decision making because it contributes to the firm's value as a
whole. It was further supported by a study published in Hungary which reveals
that in today's transparent society, brand name and corporate image comprises
a large portion of the firm's intangible assets (Deal, 2013). Stock traders were
32
lured with that Goodwill the company has. And it is perceived by stock traders
that if the reputation of the company is good, their investment as well will be in
a good position. A study if Nicolo (2015) shows that the fragility of the company
is the lack of reputation which hinders the acquisition of human resources.
Thus, stock traders tend to invest more in surviving and reputable companies.
Significant Relationship of the Level of Importance of Decision Factors
and Investor’s Level of Stock Trading Activity
The null hypothesis was rejected. The statistical result, as shown in
Table 3, a very high correlation of the level of factors affecting stock investment
decision and the investor's level of stock trading activity with an R-value of
0.318. This implies that all those decision factors have varying importance when
it comes to the stock traders' activity. Whether selling, buying or holding shares
of stock for a certain period, those factors matter.
Table 3
Relationship of the Level of Importance of Decision Factors and Investor’s
Level of Stock Trading Activity
Importance of factors affecting the stock
investment decision
r-value p-value Interpretation
Stock Trading Activity .318 0.038 Significant

33
Chapter 5
Findings, Conclusions, and Recommendations
This chapter presents the summary of findings, conclusions, and
recommendations based on the analysis of the data obtained.
Summary of Findings
1. The stock traders moderately buy, sell, and hold their investments.
2. The stock traders tend to considers all the investment decision factors
as important. Although among the decision factors, the reputation of the
firm is what they consider the most important, also the second and third
factors that are close to the most important factor are the financial advice
from experts and the growth rate of the firm.
3. The level of importance of the investment decision factors has a
significant relationship with their level of stock trading activity. The
decision was to reject the null hypothesis, indicating that the level of
importance of the investment decision factors has a significant
relationship with their level of stock trading activity.
Conclusion
All the investment decision factors are important to the stock traders in
formulating their investment decision. However, one investment decision factor
that stock traders consider to be of great importance above others is the
reputation of the firm. Stock traders check out the reputation because they need
to make sure that they have placed their money in a safe investment.
Investment in companies with good reputation tends to be less vulnerable.

34
It will take stock traders within a month to hold the shares of stock in their
portfolio before disposing of. Stock traders sell or buy new shares "sometimes"
regarding frequency. Such investor's activities were influenced by the
investment decision factors identified in this study.
Recommendations
The results suggest that the stock corporations should consider all
investment decision factors for the strategies they would implement to acquire
more investment from stock traders. And, should focus more on improving the
good image of the firm to a deliberate good reputation which is the one that the
stock investors consider most. As well as, they should also deploy financial
advisers since stock traders tend to trust them the most than the other factors.
The City of Davao can impose constructive regulations, create a venue for
local investors to contribute to the community, and help them develop the
potential of the stock market as a whole leading towards sustainable economic
growth.
The University of Mindanao should expose business students to the different
trends in the industry to widen their horizon. Thus, producing an excellent and
competent pool of young professionals equipped with necessary skills and
knowledge as one of the objectives of this university.
The CAE Faculty, the school, should also provide course subjects that educate
students about these stock investment, there are young investors who are
prying where to invest their money the near future thus, being more
knowledgeable with stocks, bring more stock investors.

35
CAE students also can be aware of this kind of investment which they may
see as one thing to consider what investment they will put their money to.
Future researchers can employ methodologies other than the survey or should
consider more respondents. To have a deeper grasp of the stock traders
investment decision. It can somehow substantiate the essence of having this
study.
36
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Survey Questionnaire
Good day!
We, the researchers from the College of Accounting Education, are conducting a survey for our study
entitled ‘’Investor’s Level of Stock Trading Activity and Investment Decision Factors of Stock Traders in
Davao City.” The results of this study will help companies to consider the factors that could affect
investor’s decision in investing stocks. Rest assured that we will observe confidentiality with regards to
this matter.
Name (optional) _______________________________________________________
Part I.
How frequent do you buy shares of stocks?
 Every time
 Almost every time
 Sometimes
 Almost never
 Never
How long do you hold your investments?
 Within a day
 Within a week
 Within a month
 Within a quarter
 Within a year
How frequent do you sell your shares of stocks?
 Every time
 Almost every time
 Sometimes
 Almost never
 Never
Part II.
In evaluating the level of your stock

investments, kindly rate the
following factors based on their Not Slightly Somewhat Very
Important
importance on your stock important important important important
investment’s decision:
(Put a tick mark in the boxes provided.)
Dividend income
Minimizing risk
Published source of information
Annual reports/ Financial Statements
Financial advices from experts
Past performance of the firm
Reputation of the firm
Feeling of a firm’s product or services
Growth rate of the firm
JOHN FELIX T. MAMITES
Sitio Lapuy, Barangay Mandug, Buhangin

District, Davao City, Philippines
Mobile: 0909-654-9220
Email:
john_felix_mamites@umindanao.edu.ph
EDUCATION
Bachelor of Science in Accountancy 2015 - Present
University of Mindanao
ELIGIBILITY & CERTIFICATIONS

Bookkeeping Certification January 2018
Microsoft Excel Specialist 2017
AWARDS
Dean’s Lister, University of Mindanao 2018
1st Placer, ACAD FEST MAC Cup Quizbowl 2018
3rd Placer, RMYC All Boards Quizbowl 2018
ATTENDANCE IN TRAININGS / SEMINARS /

CONFERENCES
Power Dressing and Business Etiquette 2018
Matina, Davao City
Know Your Right: Workplace Sexual Harassment 2018

Matina, Davao City
Seven Habits of Highly Effective People 2018

Matina, Davao City
Financial Literacy 2018

Matina, Davao City
Page | 1
CONFERENCES
Labor Law: Individual and Collective Labor 2018
Matina, Davao City
Government Finance 2018

Matina, Davao City
Bookkeeping Assessment January 2018

Matina, Davao City
MEMBERSHIPS AND ORGANIZATIONS
Association of Academic Awardees

Auditor
2015-Present
Junior Philippine Institute of Accountants

Member
S. Y. 2018-2019
Page | 2
QUEEN NICOLE S. MANLIGUEZ
I Talisay St., Sitio Coog,

Mandug, Davao City
Mobile: 0907-923-1393
Email: qnsmanliguez@gmail.com
EDUCATION
Bachelor of Science in Accountancy 2015 - Present

Bookkeeping Certification January 2018
Microsoft Excel Specialist January 2017

CONFERENCES
Career Fair 2018 May 2018
Matina, Davao City
Government Finance May 2018

Matina, Davao City
Labor Law: Individual and Collective Labor May 2018

Matina, Davao City
Know Your Right: Workplace Sexual Harassment April 2018

Matina, Davao City
Power Dressing and Business Etiquette April 2018

Matina, Davao City
Page | 1
CONFERENCES
Seven Habits of Highly Effective People April 2018

Matina, Davao City
Bookkeeping Assessment January 2018

Matina, Davao City
Junior Philippine Institute of Accountants

Member
S. Y. 2016-2018
Page | 2
ROSEMARIE O. HAMBALA
Purok 2, Bayugan 3
Rosario, Agusan del Sur
Mobile: 0909-789-8872
Email:
hambalarosemarie@umindanao.edu.ph
EDUCATION
Bachelor of Science in Accounting Technology 2015 - Present

Bookkeeping Certification February
2018
Microsoft Excel Bookkeeping Certificate October
2018

CONFERENCES
Bookkeeping Assessment February 2018
Matina, Davao City
College Supreme Government

Representative
S. Y. 2018-2019
Junior Association of Accounting Technicians

VP-Communication
S. Y. 2017-2018
Page | 1

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i

LEVEL OF STOCK TRADING ACTIVITY AND INVESTMENT DECISION

Presented to the Faculty of the

College of Accounting Education

John Felix T. Mamites

Queen Nicole S. Manliguez

Keywords: Accounting, stock trading activity, investment decision factors,

would like to express their humble thanks to you:

To their panel and expert validators, Prof. Yolanda S. Barcelona, Prof.

and not losing patience in tending to the researchers’ concerns.

researchers the results but also discussed it well to provide better

understanding to the tables to be presented to be in line with the research

despite our constant plead to him regarding our data results.

To the respondents, for the positive response, for allocating time to

respondents who answered the survey questionnaires.

To Dean Esterlina Gevera, dean of College of Accounting Education, for

To the family of the researchers, who’s always there to support them

siblings, for the undying support and love.

patience instead, they slowly-but-surely making improvements on the study by

Acceptance and Approval ii

Approval and Endorsement iii

Table of Contents vii

List of Figures and Tables viii

II. REVIEW OF RELATED LITERATURE 10

IV. RESULTS AND DISCUSSION 29

V. FINDINGS, CONCLUSION AND RECOMMENDATIONS 33

A. Permission to Conduct the Study

LIST OF FIGURES AND TABLES

1 Conceptual Framework of the Study 23

1 Level of Stock Trading Activity 29

2 Level of Importance of Investment Decision Factors 31

3 Significant Relationship of the Level of Importance of 32

The Rationale of the Study

Nowadays, investing has become one of the sources of income. With

proper knowledge and understanding of the investment most probable result

Globally, during the summer of 2007 to the spring of 2009, US stocks

economy wherein country after country experienced a deep recession in 2008.

investors still choose common stocks as an investment choice (Gitman et al.,

excellently performed in the Asian region. Driven by positive perspectives, and

particularly supported by good macroeconomic factors, the Philippine stock

involved in the stock market according to the survey conducted by the

being conservative remains (Dumlao, 2017). This small percentage, despite

the open opportunity and willingness to trade, is caused primarily by negative

perception, lack of knowledge and some other underlying factors. Perceptions,

much risk to invest" (Tiongson, 2017).

In the local arena, despite the difficulties of local investors to invest in

Davao City because of the country's regulations (maritime regulations, tariffs,

of the recent fast-growth cycle in the stock market. It regained investors'

confidence to set up a business in Davao City, in particular, and in the

Philippines, in general. (Daval, 2013).

Investment opportunities vary from one investor to another hence both

investors consider different information on their investment. As one investor

prices must decrease to lure investors to buy a certain number of shares of

on the volatility-volume relation of Chinese Stocks. They have confirmed that

Chinese faced a challenge with the price manipulation that is certainly

noticeable and cannot be tolerated. Thus, making the investors being

speculation-oriented, leading them to find companies which are candidates for

to another (asymmetric information). If the investor's decision factor does not

receive new information. However, if both investors have different perception

to those changes. Stock trading arises as investors create different responses

about the same information (Wang, 2016).

situation demands different behavior since there are different factors to

consider. A reason for how psychological factors such as attitude, beliefs,