FACTORS INFLUENCING THE INVESTMENT DECISIONS OF FINANCIAL MANAGER
ABSTRACT
This study is motivated by a desire to examine factors influencing the investment decisions of financial manager. In light of the empirical review and other discussions, a number of questions arose as to whether economic factors influence the investment decisions of financial managers; if social factors influence the investment decisions of financial managers; as well as whether psychological factor influence the investment decisions of financial managers. Questionnaire was administered to some selected financial managers from banks quoted in the Nigeria Stock Exchange. Data was collected and analyzed using the simple percentage, descriptive statistics and chi-square statistical tool. This study revealed among other things that there is a significant relationship between social factors and investment decision of financial managers. Recommendations were however made by the researcher.
TABLE OF CONTENTS
CHAPTER ONE: INTRODUCTION
Background to the Study                            
Statement of the Research Problems             
Objectives of the Study                         
Research Hypothesis                         
Scope of the Study                         
Significance of the Study                    
Limitation of the Study                        
References                             
CHAPTER TWO: LITERATURE REVIEW
Investment: An Introductory Approach            
Definition                                    
Characteristic of Investment                        
Factors Affecting Investors Decision Making             
Factors Influencing Individual Investor Behaviour         
Theoretical Framework                             
References                                 
CHAPTER THREE: RESEARCH METHODOLOGY
Introduction                                 
Research Design                                 
The Population of the Study                        
Sample Size                                    
Data Collection Method                             
Source of Data                                 
The Research Instrument                         
Data Analysis Method                             
References                                 
CHAPTER FOUR: PRESENTATION OF DATA AND ANALYSIS
4.1    Introduction                                
4.2    Descriptive Statistics                             
4.3     Hypotheses Testing                             
CHAPTER FIVE:    SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS
Introduction                                
Summary of Findings                        
Conclusion                                
Recommendations                                
Bibliography                                
Appendix                                     
    CHAPTER ONE
INTRODUCTION
BACKGROUND TO THE STUDY
The mobilization and allocation of both domestic and foreign savings are critical in the growth process. It is therefore, obvious that capital market has a significant role to play in economic development. Growth occurs when savings are channeled into productive investments which in turn enhance the capacity of the economy to produce goods and services which have bearing on standard of living. This means that a capital market will succeed in facilitating economic growth and development if it can encourage the flow of savings/investment through the purchase of securities issued by government or private enterprise and others with the aim of financing the implementation of capital projects (Aregbeyen and Mbadiugha, 2011).
    Therefore, the capital market plays a very crucial role in stimulating industrial growth as well as economic growth and development (Alile, 2007). Nigeria, like many countries has a formal capital market symbolized by existence of a stock exchange and an active new issues market. The market consists of the primary and secondary segments. The primary segment deals with new issues while the secondary market trades already existing securities. Securities in both markets comprise both debt and equity instruments and equity market is subdivided into the first and second tier securities markets.
Generally, decision-making is a process by which an individual responds to the opportunities and threats that confront him/her by analyzing the options and making determinations or decisions about specific goals and course of action (Akintoye, 2006). So, investors in bonds and securities or shares also go through a decision making process. According to Eastlick (1996) while many share investments may involve several participants who play such role as initiator, influencer, buyer and user just as in buying behaviour, the investment decision-maker goes through a decision making process consisting of problem recognition, information search, evaluation of alternative purchase decision and post purchase behaviours. This implies that investors in bonds and securities or shares go through a decision making process which is usually influenced by number of factors. There are however, contending theories on the factors that influence investment decisions.
In the light of the above, the researcher intends to investigate the factors influencing the investment decisions of financial managers.
STATEMENT OF THE RESEARCH PROBLEMS
Financial economists and investors have been spending considerable time searching for investment strategies that yield abnormal returns but the reliable one is yet to be found. Several studies have confirmed that the firm level fundamental variables are useful in explaining the stock  returns pattetns and the future price movements.
For instance, earning yield effect of Basu (1977), size effect of Banz (1981), leverage effect of Bhandari (1988), book-to-market effect of Stattman (1980), joint effect of beta, size, leverage, book-to-market equity and cash flow yield effect of Chan, et al (1991) are some of the major studies. These evidences shows that the firm level past accounting variables have the explanatory power to predict the future returns. Among the others, the size and book-to-market equity have more significantly explain the variations in stock returns.
The following research questions are raised in this study.
Do economic factors influence the investment decisions of financial managers?
Do social factors influence the investment decisions of financial managers?
Do psychological factor influence the investment decisions of financial managers?
OBJECTIVES OF THE STUDY
The objective of this study is to investigate the factors influencing the investment decisions of financial managers in Nigeria.
The specific objectives are:
To determine if economic factors influence the investment decisions of financial managers.
To verify whether social factors influence the investment decisions of financial managers.
To examine if psychological factor influence the investment decisions of financial managers.
RESEARCH HYPOTHESIS
The following hypotheses have been formulated to serve as a base for this research.
Hypothesis I
Ho:     Economic factors do not influence the investment decisions of financial managers.
H1:     Economic factors influence the investment decisions of financial managers.
Hypothesis II
Ho:    Social factors do not influence the investment decisions of financial managers.
H1:    Social factors influence the investment decisions of financial managers.
Hypothesis III
Ho:    Psychological factor do not influence the investment decisions of financial managers.
H1:    Psychological factor influence the investment decisions of financial managers.
SCOPE OF THE STUDY
This research work is an empirical study on the factors influencing investment decisions of financial managers in Nigeria.
The entire financial managers of quoted banks in the Nigeria Stock Exchange shall constitute the population of the study. Some randomly selected financial managers of the banks will be used as the sample size from 2007 – 2011.
SIGNIFICANCE OF THE STUDY
It is expected that this study would consolidate existing literature on the issues surrounding the relationship between investment decision and financial managers. Furthermore, given the empirical nature of the study, the outcome of this study would aid policy makers and regulatory bodies and policy simulation with respect to the selected variables examined in the study.
The result of the study would be of benefits to education analysts, and institutions in examining the effectiveness of investment decision and financial managers. It will also be useful in stimulating public discourse given the dearth of empirical researchers in this area from emerging economies like Nigeria.
Finally, it would also add to the available literature on the areas of study while also providing a platform for other researchers who may want to further this study.
LIMITATION OF THE STUDY
This research cannot be regarded as perfect and hitch free as some difficulties were encountered in the course of the study.
Some of the limitations are:
Smallness of sample size: It is interesting to emphasize that the findings of this empirical research are not to be generalize for all industry, since our limited to a number of small scale enterprise.
The inability to obtain a completely random sample.
Imprecise measurement of variables.
However, strenuous effort has been made to mitigate the effects of these constraints in order to come out with an effective work.
 REFERENCES
Alile, H. (2007), Capital Market and National Economic Development, Nigeria Tribune Newspaper, Tuesday, 13th December.
Akintoye, I. (1991), The Theory of Planned Behaviour, Organization Behaviour, Unique Educational Publishers, Lagos.
Eastlick, M. A. (2006), Consumer Intention to Adopt Interactive Tele-Shopping, Marketing Science Institute, Working Paper, (Report, No. 96 – 113), Cambridge, Massachusetts.
Aregbeyen, O. and Mbadiugha, S. O. (2011), Factors Influencing Investors Decision in Shares of Quoted Companies in Nigeria, Journal of Social Sciences, 6(3): 13 – 26.
Basu, S. (1977), Investment Performance of Common Stocks in Relation to their Price-Earnings Ratios: A Test of the Efficient Market Hypothesis, The Journal of Finance, Vol. 32, No. 3, pp. 663 – 682.
Banz, Rolf W. (1981), The relationship between return and market value of common stock, Journal of Financial Economics, March, 3 – 18.
Fama, Eugene, F. and Kenneth R. French (1992), “The Cross-Section of Expected Stock Returns, Journal of Finance, 47:2, pp. 427 – 465.
Chan, Louis, K. C., Yasushi Hamao and Josef Lakinshok, (1991), “Fundamentals and Stock Returns in Japan, Journal of Finance, 46:5, 1739 – 1789.
Stattman, Dennis, (1980), “Book Values and Stock Returns, The Chicago MBA: A Journals of Selected Papers, 4:25-45.