Malaysian Individual Investors: What Are the Factors That Influence Their Financial Statement Usage?
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Published:
Feb 28, 2019
Keywords:
Financial Reporting Investment Decision-making Financial Knowledge
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Abstract
Research aim: This study seeks to examine the knowledge and attitudinal factors that influence financial statement usage among Malaysian individual investors.
Design/ Methodology/Approach: A survey was conducted on a sample of 399 Malaysian individual investors using self-administered questionnaires.
Research finding: The findings reveal that financial statement usage is positively associated with subjective norm, financial statement knowledge, attitude towards financial statement usage, and perceived behavioural control. However, it is negatively associated with trading frequency attitude.
Theoretical contribution/Originality: This study seeks to contribute to the very limited research on the factors that influence individual investors’ financial statement usage. Additionally, it enriches the literature on financial statement usage among individual investors in Malaysia by showing the extent to which the three main financial statements are utilised by them. Furthermore, this research extends financial literacy research on stock investing to the realm of financial statement usage by highlighting the influence of financial statement knowledge on this behaviour. Thus, the study seeks to bridge the gap between financial reporting and financial literacy.
Practitioner/Policy implication: The findings provide useful insights for the providers of investor education programmes in developing more holistic programmes.
Research limitation/Implication: Non-random sampling was employed in this study, albeit such an approach is consistent with the literature. Also, respondents comprised individual investors who are proficient in English because the researchers seek to complement Malaysian studies on the readability of English language financial statement narratives.
Keywords: Financial Reporting, Investment Decision-making, Financial Knowledge
Type of manuscript: Research paper
JEL Classification: M41, G41, D80
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Drake, M. S., Roulstone, D. T., & Thornock, J. R. (2016). The usefulness of historical accounting reports. Journal of Accounting and Economics, 61, 448-464.
Fowler, F. J. (2009). Survey research methods (4th ed.). Thousand Oaks, CA: Sage.
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Gopi, M., & Ramayah, T. (2007). Applicability of theory of planned behavior in predicting intention to trade online. International Journal of Emerging Markets, 2(4), 348-360.
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Graham, J. R., Harvey, C. R., & Huang, H. (2009). Investor competence, trading frequency, and home bias. Management Science, 55(7), 1094-1106.
Grinblatt, M., & Keloharju, M. (2009). Sensation seeking, overconfidence, and trading activity. The Journal of Finance, 64(2), 549-578.
Helppie, B., Kapinos, K. A., & Willis, R. J. (2010). Occupational learning, financial knowledge, and the accumulation of retirement wealth. University of Michigan Retirement Research Center Working Paper No. 2010-237, 1-39.
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Howlett, E., Kees, J., & Kemp, E. (2008). The role of self-regulation, future orientation, and financial knowledge in long-term financial decisions. The Journal of Consumer Affairs, 42(2), 223-242.
Hrasky, S., Mason, C., & Wills, D. (2009). The textual complexity of annual report narratives: A comparison of high- and low-performance companies. New Zealand Journal of Applied Business Research, 7(2), 31-45.
Hung, A. A., Parker, A. M., & Yoong, J. K. (2009). Defining and measuring financial literacy. RAND Labor and Population Working Papers, WR-708, 1-26.
Huston, S. J. (2010). Measuring financial literacy. The Journal of Consumer Affairs, 44(2), 296-316.
Ibrahim, D., Harun, R., & Isa, Z. M. (2009). A study on financial literacy of Malaysian degree students. Cross-cultural Communication, 5(4), 51-59.
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