Abstract:
Purpose
This study aimed at identifying the determinants of individual short-term investment decisions and the moderating effect
of investor characteristics in the Nairobi Securities Exchange (NSE)
Design/Methodology/Approach
The questionnaire was used to obtain data pertaining to the model's constructs. A multiple regression equation models
tested the hypotheses. The study employed an explanatory research design to identify the determinants of individual short
term investment decisions and the moderating effect of investor characteristics. Behavioral Finance Theory guided the
study. The target population was individual investors in the member firms of the NSE. Stratified random sampling and
systematic random sampling techniques were used to select firms and the respondents respectively. Questionnaires were
used to collect data from the respondents. A multiple regression equation models tested the hypotheses.
Findings
Findings indicated that accounting information and personal financial needs had a positive effect on individual short-
term investment decisions. Moderated regression model indicated that under higher education, accounting information
positively determined individual short-term investment decision. Under high investor experiences, accounting information
negatively affects individual short-term investment decision. In addition, the higher the investor’s age, the more personal
financial needs will determine individual short-term investment decision, while accounting information negatively affect
individual short-term investment decision.
Research Limitations/Implications
The study was only limited to determinants of investment behavior and their relative importance in shaping the behavior
of individual investors. Thus, other studies should be carried out to determine other factors that affect investment such as
expected return from investments, the cost of capital in terms of interest rate, the taxation of returns and the availability of
savings to meet investments.
Practical Implications
The growth of the related financial services sector has extensively contributed towards the deepening of the stock market.
It should be appreciated that in as much as an economy can have savings, there is usually a lack of established
mechanisms for channeling those savings into activities that create wealth. The establishment of an efficient securities
market is therefore indispensable for any economy that is keen on using scarce capital resources to achieve economic
growth
Social Implications
The very fact that institutions exist where savers can safely invest their money and in addition earn a return is an
incentive to investors to consume less and save more. Education, age, and experience of the investors are the areas
which can improve these intentions.
