2.13 Conclusion
The review of the existing literature has revealed that the
whole notion on financial regulations, risk management, value creation, risk,
return and investment decision-making is so complex. This is therefore viewed
differently by the different schools (classical and behavioural) of finance.
According to the classical school of thought, risk is purely objective. The
investment decision-making process is dependent on the risk and return
trade-off and this is also largely dependent on the investor's attitude towards
risk which might be risk-averse (hate risk), risk-neutral (risk tolerant) or
risk-seeking (risk lovers). This either accounts for the existence of a
positive relationship between risk and return, or a negative relationship or a
curvilinear relationship. The review equally reveals that the process of
decision-making is as well dependent on some socio-psychological illusions
collectively referred to as the heuristic factors and the prospect
theory. However, there is no existing research reveal by the review of the
existing literature that has tested the extent to which a blend of the
classical and behavioural finance theories can influence the investment
decision-making process.
CHAPTER THREE
METHODOLOGY
3.1 Introduction
All in all, a research is looked at as an art of investigation
in search of pertinent information regarding a specific topic, hence making it
possible for a researcher to take into account all available information at his
disposal. It is therefore the art of investigating into the truth. It is a
systematic approach to finding answers to certain (research) questions. This
therefore implies that a good a research needs to be logical, systematic and
replicable. It is being suggested that a good business research should require
some sound reasoning, (Cooper and Schindler, 2008). According to Bryman and
Bell, 2003, a good research should have a systematic approach with concepts
being generated and defined, with ideas within a particular study content
communicated. This chapter centres on discussing and providing justification
for the methodology used as well as also exploiting some of the already
existing flaws.
3.2 Research Philosophy
The research philosophy is considered the main aspect
influencing the way in which a researcher views the world and undertakes his
research strategy (Saunders et al 2007). There exist two schools of thought
within the content of research in social sciences regarding the research
philosophy-the positivism school implying that the researcher is
working within an observable social reality. This best suits researchers
carrying on research that has to do with the implementation of scientific
methods used in testing social problems, researchers dealing with qualitative
and quantitative information and statistical data (Smith et al 2008). According
to Smith et al, 2008, the point of focus of every research should centre on the
identification of casual explanations.
The positivism school looked at the existence of the
socio-psychological factors which might influence the investment
decision-making process alongside financial regulations, risk management and
value creation as well as the extent to which all these influence the
investment decision-making process.
The other school of thought talks about studying through
gaining an insight through the discovery of meaning by way of improving
people's understanding as a whole. This school of thought is known as the
interpretivism. According to Husserl, 1965, the
interpretivists belief that the world can not be objectively
determined but rather socially constructed. According to the
interpretivists, the promotion of values of qualitative data in the
pursuit of knowledge is what matters most. It is with this uniqueness plus its
assumption of the fact that by placing people within their social content, that
made Hussey & Hussey, 1997 to conclude that there is a greater opportunity
in understanding what conception people have regarding their own activities. As
such, the interpretivists try in providing a platform for a better
understanding on how investors make sense out of the world around them. Note
that this research will be a blend of both schools of thought.
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