Economic events and key economic variables affect stock markets on a daily basis. Inflation is one such economic variable that influences share prices to some extent. This article…
Abstract
Economic events and key economic variables affect stock markets on a daily basis. Inflation is one such economic variable that influences share prices to some extent. This article focuses on two SADC countries, South Africa and Namibia, and measures the impact of inflation on share market prices in these countries. It can be concluded from the study that neither South African nor Namibian companies can offer investors a perfect hedge against inflation.
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Braam Lowies, Christa Viljoen and Stanley McGreal
The purpose of this study is to investigate the perceptions of property investors of the risks and returns associated with property crowdfunding as an investment vehicle. The…
Abstract
Purpose
The purpose of this study is to investigate the perceptions of property investors of the risks and returns associated with property crowdfunding as an investment vehicle. The study contributes to the understanding of alternative property investment vehicles and how it is perceived by investors.
Design/methodology/approach
The study focusses on investor perceptions in using property crowdfunding as an investment vehicle and follows a survey-based design. A questionnaire was finalised after the completion of a pilot study and was distributed to existing property crowdfunding investors via email. Inferential statistical measures were used.
Findings
The results show, to an extent, similarities to general equity-based crowdfunding studies. However, the uniqueness of property crowdfunding as an investment vehicle may explain the insignificance of the results when related to other studies. Overall, the property crowdfunding investor seems to present cautious behaviour with a conservative perception of property crowdfunding as an investment vehicle.
Practical implications
It is recommended that property crowdfunding platforms present prospective investors with more formal regulation of the property crowdfunding industry. Such a regulatory framework may lessen the current level of uncertainty presented by investors.
Originality/value
The study enhances the understanding of the role of property crowdfunding as an alternative investment vehicle in Australia. More importantly, it went some way towards enhancing the understanding of how investors perceive and behave vis-à-vis property crowdfunding as an investment vehicle.
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Gert Abraham Lowies, John Henry Hall and Christiaan Ernst Cloete
The purpose of this paper is to determine whether anchoring and adjustment as heuristic-driven bias and herding behaviour influences listed property fund managers in South…
Abstract
Purpose
The purpose of this paper is to determine whether anchoring and adjustment as heuristic-driven bias and herding behaviour influences listed property fund managers in South Africa’s property investment decisions. The study contributes to the understanding of the influence of heuristic-driven bias and herding behaviour on property investment decisions made in a highly volatile environment.
Design/methodology/approach
This study is focused on the subject field of behavioural finance and follows a survey-based design. A questionnaire was finalised after completion of the pilot study and was sent via e-mail to fund managers of all South African-based property funds listed on the Johannesburg Securities Exchange. Non-parametric statistical measures were used.
Findings
Consistency with other studies suggests that anchoring and adjustment may exist in the decisions made by listed property fund managers. However, fund managers tend to not adjust to new information due to the current socio-political environment in South Africa rather than a lack of understanding of the new information.
Practical implications
It is recommended that investors form developed and emerging economies take notice of the highly volatile circumstances in which property fund managers in an emerging economy such as South Africa have to make investment decisions. The probability of missed gains as a result of conservative investment strategies may have an impact on future returns.
Originality/value
This study enhanced the understanding of the role that heuristic-driven bias plays in the South African property industry and more importantly, it went some way towards enhancing understanding of behavioural aspects and their influence on property investment decision making in an emerging market.
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Benjamin Gbolahan Ekemode and Abel Olaleye
In a bid to broaden the understanding of the real estate investment decision-making framework, the purpose of this paper is to examine the real estate asset allocation…
Abstract
Purpose
In a bid to broaden the understanding of the real estate investment decision-making framework, the purpose of this paper is to examine the real estate asset allocation decision-making practices of real estate funds in Nigeria, a developing economy. This is with a view to providing information toward enhancing real estate investment decisions.
Design/methodology/approach
A mixed-methods approach comprising a combination of literature review, expert interviews and semi-structured questionnaire survey is adopted for this study. Through literature review and expert interviews, the asset allocation decision-making process of institutional real estate funds was identified. Based on the literature review and expert discussions, a semi-structured questionnaire was developed and self-administered on fund/portfolio managers of 59 institutional real estate funds in Nigeria to investigate their asset allocation decision-making practice. Data were analyzed using descriptive and inferential statistics for the closed-ended questions while the open-ended questions were content analyzed.
Findings
The findings revealed that the asset allocation decision-making process utilized by public and private real estate funds follows an opportunistic asset accumulation approach. The decision-making process also varies depending on the nature of the fund. Further findings showed that government policies, political uncertainties and regulatory mechanism motivate asset allocation decisions. Moreover, majority of the sampled real estate funds employed a combination of in-house personnel and external consultants (hybrid), while mean/standard deviation and cash flow analysis (DCF, NPV) were mostly utilized by the funds in making property investment decisions.
Practical implications
The findings implied that the real estate asset allocation decision-making process of institutional property investors in Nigeria deviates from the normative model of the asset allocation process prescribed in the literature and varies depending on the nature of the real estate funds. As such, familiarization of institutional investors with government policies, political climate and other regulatory mechanism (barriers to entry) guiding the ownership and operation of real estate assets in the country could improve their real estate investment decisions.
Originality/value
The study complements and extends existing literature on real estate asset allocation decision-making process of institutional investors from the viewpoint of the actors involved in a developing African economy.
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The overall purpose of the study is to identify the impact of heuristics, prospect theory biases and personality traits on property investment decision-making of rank and file…
Abstract
Purpose
The overall purpose of the study is to identify the impact of heuristics, prospect theory biases and personality traits on property investment decision-making of rank and file individuals in Kosovo, with a concentration in Prishtina, which is the city with the largest number of investors and property transactions in Kosovo.
Design/methodology/approach
The present study used quantitative research with the questionnaire used as a research instrument. The questionnaire survey was conducted with 1,209 rank and file property investors in Prishtina, Kosovo. The sampling method used in this research was stratified random sampling.
Findings
The study finds that heuristics, prospect theory biases and personality traits as a whole model affect investment decision-making in Prishtina, Kosovo. Nevertheless, the study finds that not all dimensions of the constructed research model (heuristics, the prospect theory and personality) affect the property investment decision-making in Prishtina at the same level. Whereas prospect theory biases (regret aversion, framing and self-control) seem to very strongly influence property investment decision-making of rank and file investors in Prishtina, personality traits (conscientiousness, neuroticism and openness to new experiences) seem not to affect the real estate investment decision-making. Finally, heuristics biases also strongly influence the real estate investment decision-making with a strong statistically significant explanatory power but not to the same degree as prospect theory biases.
Practical implications
The present study contributes toward the understanding of the role that is played by heuristics, prospect theory biases and personality traits in Kosovo's property investment industry. More importantly, the implication of the results of the present study is that it goes some way toward enhancing understanding of heuristic and prospect theory-driven biases and their influence on property investment decision-making in a developing economy. The present study paves the way to further analyze why personality traits do not influence property investment decision-making in Kosovo.
Originality/value
The present study is the first quantification of the impact of heuristics, prospect theory biases and personality traits on the investment decision-making of rank and file individuals in Prishtina, Kosovo.
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Terence Y.M. Lam, Taylah O. Hasell and Malvern L.D.B. Tipping
Referring to “behavioural finance” and “normative model” theories, this study explores the relative significance of behavioural heuristic biases in the investment decisions of…
Abstract
Purpose
Referring to “behavioural finance” and “normative model” theories, this study explores the relative significance of behavioural heuristic biases in the investment decisions of real estate investment trusts (REITs) when compared with the conventional normative decision factors, with an ultimate aim to identify the significant behavioural factors that should be avoided to ensure rational asset acquisitions and market efficiency.
Design/methodology/approach
A triangulation approach was adopted. Qualitative multiple case studies were conducted, with four cases selected from Australian and New Zealand REITs across the industry, to identify what normative and behavioural finance factors are involved in investment decisions. This formed the basis for the subsequent expert review survey to explore how significant the behavioural factors were manifested in the judgement when compared with the normative factors.
Findings
Three out of four theoretical behavioural factors manifested themselves in the investment decisions: investor sentiment, anchoring factors and overconfidence. The overall impact of these three behavioural factors was that they were as significant as normative factors in investment decisions. The heuristic availability of information was found to have no significant effect on experienced REIT fund managers.
Research limitations/implications
The findings were based on four multiple cases and an expert review survey of six frontline fund managers, which form a baseline upon which further research can be conducted to widen the scope of research to cover all REITs in Australasia so that the results can become more robust to benefit the entire market in the region.
Practical implications
As behavioural factors are significant in the decision-making process, REIT fund managers should raise awareness to avoid the significant behavioural factors identified, in particular investor sentiment, which was found to be the most significant one.
Originality/value
This study confirms the relative significance of behavioural factors in property investment decisions within the context of Australasian REITs and alerts fund managers to the ways they should follow to ensure rational investments and market efficiency. It also extends the scale of existing studies to cover not only Australia but also New Zealand for the benefit of the entire Australasian market.
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Benjamin Kwakye and Tze-Haw Chan
Market sentiment has shown to influence housing prices in the global north, but in emerging economies, the nexus is rare to chance on in the current state of science for policy…
Abstract
Purpose
Market sentiment has shown to influence housing prices in the global north, but in emerging economies, the nexus is rare to chance on in the current state of science for policy direction. More importantly in the recent decade where policymakers are yet to conclude on the myriad of factors confronting the housing market in sub-Saharan Africa inhibiting affordability. This paper therefore examines the impact of market sentiment on house prices in South Africa.
Design/methodology/approach
The study used the Autoregressive Distributed Lag (ARDL) approach with quarterly data spanning from 2005Q1 to 2020Q4.
Findings
In all, it was established that market sentiment plays a minimal role in the property market in South Africa. But there was enough evidence of cointegration from the bound test between sentiment and house prices. Nevertheless, the lag values of sentiment pointed to a rise in house prices. Exchange rate volatilities and inflation had a statistically significant effect on prices in both the long and short term, respectively.
Research limitations/implications
Policymakers could still monitor market sentiment in the housing market due to the strong chemistry between house prices and sentiment, as evidenced from the bound test, but focus on economic fundamentals as the main policy tool for house price reduction.
Originality/value
The findings and the creation of the sentiment index make an invaluable contribution to the paper and add to the paucity of literature on the study of market sentiment in the housing market.
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Overconfidence bias is considered to be a very influential decision-making bias in the business environment. This paper aims to identify the susceptibility of management…
Abstract
Purpose
Overconfidence bias is considered to be a very influential decision-making bias in the business environment. This paper aims to identify the susceptibility of management accountants to overconfidence-related overplacement bias and to determine its pervasiveness among these professionals.
Design/methodology/approach
Two international samples of management accountants were surveyed using overplacement bias elicitation questions. The hypothesis that bias susceptibility varies between management accountants in different hierarchical employment positions was tested employing binary logistic regression.
Findings
Management accountants are found to be susceptible to overplacement bias, yet its pervasiveness among the samples is similar to other sample populations in comparable studies. Management accountants in the position of Chief Financial Officer (CFO) were found to be more susceptible to overplacement bias than their colleagues in other management accountant and business management positions.
Research limitations/implications
The use of convenience sampling represents a limitation of the research.
Practical implications
The findings confirm that there is a need for syllabi and continual professional development projects to educate management accountants on this bias. CFOs are especially at risk of being overconfident, which may not be in the best interest of the business.
Originality/value
This is the first paper to assess overplacement bias in management accountants as a group of decision-makers, especially within the context of their increasing involvement in business decision-making.
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Zack Enslin, John Hall and Elda du Toit
The emerging business partner role of management accountants (MAs) results in an increased requirement of MAs to make business decisions. Frame dependence cognitive biases…
Abstract
Purpose
The emerging business partner role of management accountants (MAs) results in an increased requirement of MAs to make business decisions. Frame dependence cognitive biases regularly influence decisions made in conditions of uncertainty, as is the case in business decision-making. Consequently, this study aims to examine susceptibility of MAs to frame dependence bias.
Design/methodology/approach
A survey was conducted among an international sample of practising MAs. The proportion of MAs influenced by framing bias was analysed and compared to findings in other populations. Logistic regression was then used to determine whether MAs who exhibit a higher preference for evidence-based (as opposed to intuitive) decision-making are more susceptible to framing bias.
Findings
Despite a comparatively high preference for evidence-based decision-making, the prevalence of framing bias among MAs is comparable to that of other populations. A higher preference for evidence-based decision-making was found to only be associated with higher susceptibility to endowment effect bias.
Originality/value
To the best of the authors’ knowledge, this is the first study to comprehensively examine framing bias for MAs as a group of decision-makers. Additionally, this study’s sample consists of practising MAs, and not only students.
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Muhammed Bolomope, Abdul-Rasheed Amidu, Olga Filippova and Deborah Levy
Decision-making behaviour of property investors has been the focus of real estate research for decades. Yet, there is no consensus on a generally accepted behavioural model that…
Abstract
Purpose
Decision-making behaviour of property investors has been the focus of real estate research for decades. Yet, there is no consensus on a generally accepted behavioural model that suits all market conditions and investment peculiarities. While scholars have emphasized the significance of rational reasoning and cognitive influences on property investment decision-making preferences, gaps remain regarding the impacts of market disruptions on property investment decision-making behaviour. This paper, therefore, explores the institutional framework as a theoretical basis for understanding property investment decision-making behaviour amidst market disruptions.
Design/methodology/approach
This paper reports a systematic review of pertinent theories that have explored decision-making behaviour. Commencing with an index search of high impact peer-reviewed journals, a snowball identification of relevant citations was also deployed to assemble theories from the field of psychology, sociology, economics and urban studies. Although a preliminary dataset of 82 papers with relevant decision-making theories was identified, the final dataset comprised 27 papers and 7 theories. The identified theories were reviewed accordingly.
Findings
The outcome of this study suggests that the institutional framework offers a robust approach to property investment decision-making amidst market disruptions, especially because it recognizes the dynamism in the investment environment and the roles of formal and informal rules that exist therein.
Originality/value
This study advances the current understanding of property investment decision-making behaviour by recognising the dynamism of the investment environment and how factors such as principles, laws, tradition and routines can lead to an established and legitimate standard of reasoning. By integrating both rational and cognitive attributes, the study provides a holistic perspective to property investors' decision-making behaviour in response to market disruptions.