Stock Market Image- Investors’ Overall Perception Towards Capital Market: Evidence from The Colombo Stock Exchange (CSE)

If a strong and dynamic stock market to be sustained, it has to be positively perceived by the investing public. With that backdrop, the main drive of this research was set to examine how the retail investors perceive the Colombo Stock Exchange (CSE) as an investment vehicle. The research identifies the overall perception of investors towards the stock market as the ‘stock market image’. A quantitative research approach was adopted in this study and cross-sectional survey was conducted to collect empirical data from 173 retail investors by utilizing structured self-administered questionnaire. The factor analysis produced a model with eight dimensions to measure the stock market image viz., Wealth Creating Capacity, Immorality, Fast Money, Market Regulators, Economic Bellwether, Tilted Playing Ground, Monitoring and Enforcement and Market Facilitators. According to the analysis the retail investors are in a firm notion that the CSE favors the large, sophisticated investors at the expense of small investors and they are more likely to perceive the CSE as an unethical, corrupted and gambling like venue. However, the retail investors are somewhat positive about the stock market facilitators and the CSE’s ability to support wealth creation. A segmentation of retail investors was carried out using stock market image dimensions by implementing the cluster analysis. These clusters were found to be significantly distinct to each other, revealing the fact that retail investors have a widely heterogeneous perception on the CSE ranging from positive to negative. Further, the analysis discloses that the stock market image is not significantly influenced by the investor characteristics, gender, education level, investment experience, age and financial literacy.