Investor behaviour : an empirical study of how large Swedish institutional investors make equity investment decisions

Sammanfattning: By describing investors' decision-making processes and actions, this thesis provides a background to the share prices that millions of people follow closely everyday. It focuses on the reasons for institutional investors' investment actions on the stock market, and in particular the role of financial information about the quoted companies. Interviews and document studies linked to a large number of actual investment actions in eight large Swedish institutional investor organisations constitute the empirical basis of the thesis. Important empirical results concern how action based on fundamental opinions about investment objects is restricted or reinforced by investor contexts and market premises, the role of valuation models and quantitative analysis in comparison with qualitative judgements, and how uncertainty is dealt with during investment decision-making processes. Non-public information played an essential role in forming the fundamental opinions about companies/equities. In addition, this information could help trigger equity investment actions. Several factors, some of them organisational, contributed to time lags between the first impulse and the completed investment transaction.The results also suggest that the institutional investors in this study did not take action independently of other investors. Furthermore, they did not develop their fundamental opinions about investment objects independently of other market participants - to varying extents they adjusted to other market participants' expectations, equity valuation methods and ways of using accounting figures.