Motivations for Socially Responsible Investing: The Impact of Attitudes, Subjective Norms, and Financial expectations
DOI:
https://doi.org/10.62051/IJGEM.v2n3.09Keywords:
Theory of Reasoned Action, Financial expectations, Socially responsible investmentAbstract
This study looks forward to exploring and understanding what the reasons for the desire of retail investors in might be making Socially Responsible Investments (SRI) in the Chinese stock market and to get an estimate of how valid the theory of reasoned action (TRA) could be. This is intended to look at how such factors as attitude, subjective norms, financial expectations, and risk propensity influence investors to engage in SRI in China. This research builds on previous studies that introduced financial expectations as a crucial new construct, enhancing the depth and rigor of TRA model in examining investment intentions. This assumption posits that investors comprehensively consider the investment situation, weighing not only its societal impact but also its financial returns, and only after considering these outcomes comprehensively will they make decisions on SRI. Risk propensity has been used as moderator in this research model relationship. Whether risk propensity influences the association between attitude, subjective norms, and financial expectations with investment intentions has been test in this study. The study results show risk propensity plays a significantly moderate role in relations of attitude, subjective norms, and financial expectation to intentions with the analysis indicating a positive effect. Its results will be able to provide more reference for the SRI studies and a new angle for capital market researchers, market information providers, and investors.
Downloads
References
Abdin, Syed Zain ul, Fiza Qureshi, Jawad Iqbal, and Sayema Sultana. 2022. “Overconfidence Bias and Investment Performance: A Mediating Effect of Risk Propensity.” Borsa Istanbul Review 22 (4): 780–93. https://doi.org/10.1016/j.bir.2022.03.001
Adam, Ainul Azreen, and Elvia R. Shauki. 2014. “Socially Responsible Investment in Malaysia: Behavioral Framework in Evaluating Investors’ Decision Making Process.” Journal of Cleaner Production 80 (October): 224–40. https://doi.org/10.1016/j.jclepro.2014.05.075
Ajzen, Icek. 2020. “The Theory of Planned Behavior: Frequently Asked Questions.” Human Behavior and Emerging Technologies 2 (4): 314–24. https://doi.org/10.1002/hbe2.195
Ajzen, Icek, and Martin Fishbein. 1977. “Attitude-Behavior Relations: A Theoretical Analysis and Review of Empirical Research.” Psychological Bulletin 84: 888–918. https://doi.org/10.1037/0033-2909.84.5.888
Alda, Mercedes. 2021. “The Environmental, Social, and Governance (ESG) Dimension of Firms in Which Social Responsible Investment (SRI) and Conventional Pension Funds Invest: The Mainstream SRI and the ESG Inclusion.” Journal of Cleaner Production 298 (May): 126812. https://doi.org/10.1016/j.jclepro.2021.126812
Alleyne, Philmore, and Tracey Broome. 2011. “Using the Theory of Planned Behaviour and Risk Propensity to Measure Investment Intentions among Future Investors.” Journal of Eastern Caribbean Studies 36 (January): 1–20.
Baker, Sharon A., Diane M. Morrison, William B. Carter, and Michael S. Verdon. 1996. “Using the Theory of Reasoned Action (TRA) to Understand the Decision to Use Condoms in an STD Clinic Population.” Health Education Quarterly 23 (4): 528–42.
Brzeszczyński, Janusz, Jerzy Gajdka, Piotr Pietraszewski, and Tomasz Schabek. 2022. “Has the Risk of Socially Responsible Investments (SRI) Companies Stocks Changed in the COVID-19 Period? International Evidence.” Finance Research Letters 49 (October): 102986. https://doi.org/10.1016/j.frl.2022.102986
Chen, Shu, Xiaoyan Han, Zili Zhang, and Xuejun Zhao. 2023. “ESG Investment in China: Doing Well by Doing Good.” Pacific-Basin Finance Journal 77 (February): 101907. https://doi.org/10.1016/j.pacfin.2022.101907
Du, Ning, and David Budescu. 2005. “The Effects of Imprecise Probabilities and Outcomes in Evaluating Investment Options.” Management Science 51 (December): 1791–1803. https://doi.org/10.1287/mnsc.1050.0428
East, Robert. 1993. “Investment Decisions and the Theory of Planned Behaviour.” Journal of Economic Psychology 14 (2): 337–75. https://doi.org/10.1016/0167-4870(93)90006-7
Fornell, Claes, and David F. Larcker. 1981. Structural Equation Models with Unobservable Variables and Measurement Error: Algebra and Statistics. Sage Publications Sage CA: Los Angeles, CA.
Garg, Aashish, Pooja Goel, Anuj Sharma, and Nripendra P. Rana. 2022. “As You Sow, so Shall You Reap: Assessing Drivers of Socially Responsible Investment Attitude and Intention.” Technological Forecasting and Social Change 184 (November): 122030. https://doi.org/10.1016/j.techfore.2022.122030
Gibson, Annetta Mae. 1992. “An Empirical Investigation into Ethical Decision-Making in Accounting.” (No Title).
Gopi, M., and T. Ramayah. 2007. “Applicability of Theory of Planned Behavior in Predicting Intention to Trade Online: Some Evidence from a Developing Country.” International Journal of Emerging Markets 2 (4): 348–60.
Hair, Joseph F., William C. Black, Barry J. Babin, Rolph E. Anderson, and R. L. Tatham. 2009. “Multivariate Data Analysis: Global Edition.” 7th Edition: Pearson Education.
Hayes, Andrew F. 2009. “Beyond Baron and Kenny: Statistical Mediation Analysis in the New Millennium.” Communication Monographs 76 (4): 408–20. https://doi.org/10.1080/03637750903310360
Hu, Li-tze, and Peter M. Bentler. 1999. “Cutoff Criteria for Fit Indexes in Covariance Structure Analysis: Conventional Criteria versus New Alternatives.” Structural Equation Modeling: A Multidisciplinary Journal 6 (1): 1–55. https://doi.org/10.1080/10705519909540118
Langdridge, Darren, Paschal Sheeran, and Kevin J. Connolly. 2007. “Analyzing Additional Variables in the Theory of Reasoned Action.” Journal of Applied Social Psychology 37 (8): 1884–1913.
Lestari, Jenjang Sri, and Michael Frömmel. 2024. “Socially Responsible Investments: Doing Good While Doing Well in Developed versus Emerging Markets?” Research in International Business and Finance 69 (April): 102229. https://doi.org/10.1016/j.ribaf.2024.102229
Lim, Thien Sang, Rasid Mail, Mohd Rahimie Abd Karim, Zatul Karamah Abdul Baharul Ulum, Mazalan Miflia, and Junainah Jaidia. 2020. “An Investigation of Financial Investment Intention Using Covariance-Based Structural Equation Modelling.” GLOBAL BUSINESS FINANCE REVIEW 25 (2): 37–50. https://doi.org/10.17549/gbfr.2020.25.2.37
Liu, Muyang, Xiaowei Luo, and Wei-Zhen Lu. 2023. “Public Perceptions of Environmental, Social, and Governance (ESG) Based on Social Media Data: Evidence from China.” Journal of Cleaner Production 387 (February): 135840. https://doi.org/10.1016/j.jclepro.2022.135840
Lozano, Josep M., Laura Albareda, and M. Rosario Balaguer. 2006. “Socially Responsible Investment in the Spanish Financial Market.” Journal of Business Ethics 69 (3): 305–16. https://doi.org/10.1007/s10551-006-9092-7
Owen, Ann L., and Yejun Qian. 2008. “Determinants of Socially Responsible Investment Decisions.” Empirical Economics Letters, 1–10.
Raut, Rajdeep Kumar. 2020. “Past Behaviour, Financial Literacy and Investment Decision-Making Process of Individual Investors.” International Journal of Emerging Markets 15 (6): 1243–63. https://doi.org/10.1108/IJOEM-07-2018-0379
Revelli, Christophe. 2016. “Re-Embedding Financial Stakes within Ethical and Social Values in Socially Responsible Investing (SRI).” Research in International Business and Finance 38 (September): 1–5. https://doi.org/10.1016/j.ribaf.2016.03.003
Rosen, Barry N., Dennis M. Sandler, and David Shani. 1991. “Social Issues and Socially Responsible Investment Behavior: A Preliminary Empirical Investigation.” Journal of Consumer Affairs 25 (2): 221–34.
Rothwell, David W., Mohammad N. Khan, and Katrina Cherney. 2016. “Building Financial Knowledge Is Not Enough: Financial Self-Efficacy as a Mediator in the Financial Capability of Low-Income Families.” Journal of Community Practice 24 (4): 368–88.
Schumacker, Randall E., and Richard G. Lomax. 2004. A Beginner’s Guide to Structural Equation Modeling. Psychology Press.
Singh, Manjit, Manju Mittal, Pooja Mehta, and Himanshu Singla. 2021. “Personal Values as Drivers of Socially Responsible Investments: A Moderation Analysis.” Review of Behavioral Finance 13 (5): 543–65. https://doi.org/10.1108/RBF-04-2020-0066
Sitkin, Sim B., and Laurie R. Weingart. 1995. “Determinants of Risky Decision-Making Behavior: A Test of the Mediating Role of Risk Perceptions and Propensity.” Academy of Management Journal 38 (6): 1573–92. https://doi.org/10.5465/256844
Statman, Meir. 2014. “Behavioral Finance: Finance with Normal People.” Borsa Istanbul Review 14 (2): 65–73. https://doi.org/10.1016/j.bir.2014.03.001
Tabachnick, Barbara G., and Linda S. Fidell. 2019. Using Multivariate Statistics. Seventh edition. Always Learning. New York, NY: Pearson.
Taylor, Shirley, and Peter A. Todd. 1995. “Understanding Information Technology Usage: A Test of Competing Models.” Information Systems Research 6 (2): 144–76. https://doi.org/10.1287/isre.6.2.144
Thanki, Heena, Sweety Shah, Harishchandra Singh Rathod, Ankit D. Oza, and Dumitru Doru Burduhos-Nergis. 2022. “I Am Ready to Invest in Socially Responsible Investments (SRI) Options Only If the Returns Are Not Compromised: Individual Investors’ Intentions toward SRI.” Sustainability 14 (18): 11377. https://doi.org/10.3390/su141811377
Downloads
Published
Issue
Section
License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
How to Cite
