information, investors are influenced by sunk cost considerations and asymmetrical risk preferences for gain/loss situations. The research findings by [CITATION Nag941\t \l 1033 ] which examined factors influencing investor behavior, suggested that classical wealth – maximization criteria are important to investors, even though investors employ diverse criteria when choosing stocks. Contemporary concerns such as local or international operations, environmental track record and the firm’s ethical posture appear to be given only cursory consideration. The recommendations of brokerage houses, individual stock brokers, family members and coworkers go largelyunheeded. Many individual investors discount the benefits of valuation models when evaluating stocks. Thus, the basic purpose of this study is to examine the factors that appear to exercise the greatest influence on the individual stock investor. The effect of accounting information, firm's image and advocate recommendation on investment decision is a scientific area in Nepal which has not been explored properlyin Nepalese finance literature. The data used in empirical analysis are obtained from primary sources. The results of this paper are expected to conclude which factors havemore impact on the investment decision among the Nepalese investors.
STOCK SELECTION PROCESS12Statement of ProblemIn conventional financial theory, investors are assumed to be rational wealth-maximizers, following basic financial rules and basing their investment strategies purely on the risk-return consideration as the factors expected to influence investment decisions. Traditional economic theory assumes that people are rational agents who make decisions objectively to take advantage of the opportunities available to them. Investors think of themselves as rational and logical. But when it comes to investing, their emotional inclinations, ingrained thought patterns and psychological biases, color how they perceive the world and how they make decisions.Behavioral finance has gained much attention during the past two decades and investor heterogeneity is one of the potential reasons claimed by recent literature in support of the argument that the traditional pricing models do not fully explain the average stock returns in cross section. Research evidence confirm the impact of investor heterogeneity in capital markets. The studies conducted bring forward an old,but relatively ignored phenomenon in traditional finance theory, the impact of market participants’ behavior. The optimistic (pessimistic) behavior leads to over (under) reactions in the market. Market participant’s behavior is dependent upon own psychology, for instance [ CITATION Hed12 \l 1033 ] suggests that ‘herd behavior’ isthe most observed in financial markets.