Rumours From the Perspective of Malaysia Retail Investors: A Qualitative Study

This study explores the phenomenon of rumour dissemination within Malaysia’s retail investment sector, focusing on the social dynamics that influence the spread and impact of rumours among retail investors. Utilizing a qualitative approach, we conducted semi-structured interviews with participants aged 26 to 60, each possessing over ten years of retail investment experience, primarily from Malaysia’s Klang Valley. Thematic analysis was employed to interpret the data, revealing key factors that shape investor behaviour and market sentiment. Our findings identify three critical themes: individual traits and behaviours, organizational events, and the political climate. Personal factors, including individual experiences, motives, and beliefs, are central to how rumours form and spread, as they shape how investors interpret and share information within their networks. Investors' prior successes, failures, and motives for financial gain or social status drive these behaviours. Corporate events, such as key turning points, leadership changes, strategic decisions, and financial results, create ripple effects that influence both the organization’s performance and investor perceptions, often sparking speculation and rumour circulation. Furthermore, the political climate plays a significant role, as legislative changes, regulatory policies, and political stability affect the overall market environment. These socio-political factors shape investor sentiment and decision-making, adding layers of complexity to the spread and impact of market rumours. By applying the Gioia methodology, this study uncovers the complex interplay between these factors in rumour formation and dissemination. The research offers holistic insights into the socio-economic forces shaping retail investors’ behaviour in Malaysia, providing valuable contributions to understanding the role of rumours in market dynamics. Furthermore, it underscores the importance of socio-political elements in shaping investor perceptions, adding depth to the study of retail investment practices in Malaysia.