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www.ijcrt.org © 2021 IJCRT | Volume 9, Issue 4 April 2021 | ISSN: 2320-2882 IMPACT OF PUBLIC PERCEPTION OF COMPANIES ON INVESTMENT DECISIONS 1Sharvari 1Student 1Christ Deemed to be University Chapter 1 1. Introduction 1.1 Need for study or Justification of the Problem Traditional finance theories often assume the financial markets to be efficient ie. The asset prices reflect all the available information. The Efficient Market Hypothesis (EMH) by Eugene Fama suggests that the markets are efficient and the associated people make rational decisions. But since 1990s, researchers and academicians have started criticizing this theory due to the anomalies and behaviours that this theory fails to explain like the 1) January effect : According to Rozeff and Kinney, it is an anomaly where stock prices tend to rise in the month of January for no apparent reason. 2) Winners Curve: Thaler (1988) states that Winners curve is an anomaly where the winning big in an auction tends to exceed intrinsic value of the item purchased, mainly due to incomplete information and emotions leading bidders to over estimating the items value. With more such anomalies coming up, behavioural economists challenge the rationality of investors while making decisions to maximize profits. According to Martin Sewell, Behavioural Finance is the study of the impact of psychology or the behaviour of financial practitioners or investors, asset managers etc and the effect of their behaviours on the market. In simpler terms, it is field of study considering the influence of factors like fear, hope, optimism and pessimism etc on retail investors. It urges the financial theories to accept human behaviour as a factor. Daniel Kahneman and Amos Tversky are referred to as the fathers of the field of Behavioural Finance as they were the early proponents of ‘behavioural finance’ and introduced the behavioural aspects into finance through. investment decision making process. They identified 3 heuristic factors – representativeness, availability and anchoring that can cause biases in an investors decision making ability. IJCRT2104467 International Journal of Creative Research Thoughts (IJCRT) www.ijcrt.org 3756 www.ijcrt.org © 2021 IJCRT | Volume 9, Issue 4 April 2021 | ISSN: 2320-2882 The wave of fear or optimism needs channels to travel to individual investors and instil this emotion in their minds which later leads to bias. Stock Market announcements and communication thereof through mass media are key sources of credible information for the public. These channels could be Newspapers, radio shows, social media, news channels and articles. They can give a biased view of the situation or unknowingly favor some companies’ stocks over others because at the end of the day their goal is not limited to knowledge delivery but also focused on gaining viewership. How the media paints the picture of a certain company in your head. Even in business Valuations there exists a bias called Preconceptions and priors: When you decide to value a company, you don’t start with a blank slate. Instead, your valuation is inclined towards your prior views of the company to be valued. 1.2 Highlighting the problem When you see or hear about a particular company and their stock more frequently than others, you tend to develop an inclination towards that company and regardless of the company’s performance a retail investor behaviourally becomes biased towards buying this stock. This inclination challenges their rationality in decision making. 1.3 Defining the Topic My research study seeks to explore whether there exists a bias in the minds of retail investors towards big companies like Reliance industries, TATA group, Biocon, Birla Group or the Mahindra Group over companies like MOIL, Kaveri Seeds Co. Ltd , Deepak Nitrite, Thyrocare Tech or Heidelberg cement which are almost a 180 degrees. Since there is no parameter to measure visibility or exposure of a stock, the Market Capitalisation is chosen as the differentiating parameter as even Indices like Sensex and Nifty50 consider the same for choice of stocks. Both the lists have gainer who are likely to stay in the green on the NSE and BSE. I intend to see which list does a retail investor, with a little to nil education in finance, is inclined to choose and why. Are speculators really biased towards the list with the ‘big names’? Is there an existence of a fandom when it comes to stocks of popularly known companies ? If so, to what extent do these factors contribute to this bias 1. Market Factors 2. History of the company 3. Diversification 4. Company name 5. Media Coverage IJCRT2104467 International Journal of Creative Research Thoughts (IJCRT) www.ijcrt.org 3757 www.ijcrt.org © 2021 IJCRT | Volume 9, Issue 4 April 2021 | ISSN: 2320-2882 2020 was not chosen because of the Corona virus pandemic that was a black swan event and might have skewed the data. 1.4 Scope of Research – The study aims at checking for biases in investor decision due to increased visibility of the stock of a company and what factors affect this decision and to what extent. Theories and topics touched upon are a mixture of behavioural finance and influence of media and public relations on the Financial markets. Behavioural sciences tend to look at behaviour attributes of an investor but this study is limited to factors that create public perception of the company in turn giving rise to a heuristic instilled in the minds of investors making them predisposed to purchasing stocks of the ‘big’ companies. The duration of this study spans up to 3 months. A population sample of 212 respondents was taken spanning across the states on Karnataka and Maharashtra. For the sake of simplicity I have chosen TATA Group and MOIL as representatives of the 2 lists. 1.5 . Company profile – Tata Group A brief history of the company At the age of 29, Jamsetji Tata worked at his family’s owned company. With 21 Cr. as capital he started his own trading company in the year 1870. Later in his career he rescued a bankrupt oil mill in the area of Chinchpokli and turned it around to a cotton mill, under the name Alexandra Mill. He later sold the mill for a profit after only 2 years. In 1874, he set up another cotton mill at Nagpur named Empress Mill. Setting up an iron and steel company was one of his dreams. Dorabji Tata son of Jamsetji tata took over the chairmanship of the company in 1904. Sir Dorabji established TISCO that is now known to us as Tata Steel . After Dorabji, J. R. D. Tata was made the chairman at Tata Group in 1938. Under his chairmanship, the company witnessed a massive rise of the net worth up to US$5 billion. After J.R.D. Tata stepped down in 1988, Tata Sons grew to IJCRT2104467 International Journal of Creative Research Thoughts (IJCRT) www.ijcrt.org 3758 www.ijcrt.org © 2021 IJCRT | Volume 9, Issue 4 April 2021 | ISSN: 2320-2882 become the giant conglomerate of 95 enterprises. In 1991, Ratan Tata filled the shoes of chairman at the Tata Group. This year is earmarked for the famous economic liberalization, opening of the Indian market to several foreign players. During this time, Tata Group began to acquire a number of companies, including Tetley (2000), Corus Group (2007), and Jaguar and Land Rover (2008). In 2017, Natarajan Chandrasekaran was appointed chairman. Tata Group was founded in 1868 with an initial capital investment of Rs. 21,000 by Jamsetji Tata headquartered in Mumbai, Maharashtra, India. Founder Profile - Jamsetji Tata went to Elphinstone college. He was a merchant and went on to change the business world of India through his many ventures within the cotton and pig iron industry, and is known as one of the most important builders of the modern Indian economy. Out of his many achievements, Tata is notable for the Tata Iron and Steel Works company in Jamshedpur. In addition to the Tata Iron and Steel Works, he went on to establish businesses in many other areas that stood as a foundation to modern Indian business. His net worth in 1900 was 4 Million pounds. Nature of business back then started off from Cotton mills Past performance - Under Dorabji Tata TISCO was established and TATA Power was given birth to. Under J.R.D. Tata chairmanship, the assets of the Tata Group grew from US$101 million to over US$5 billion. Starting with 14 enterprises, upon his departure half a century later in 1988, Tata Sons had grown to a conglomerate of 95 enterprises. The TATA air services were founded and TATA motors started its focus on locomotives. Under Ratan Tata Group began to acquire a number of companies, including Tetley (2000), Corus Group (2007), and Jaguar and Land Rover (2008). In 2017, Natarajan Chandrasekaran was appointed chairman. The shareholding patterns for Tata Steel with promoters owning 34.41%, FIIs 16.87%,central govt. 0.25%, general public 17.06%, domestic institutional investors 15.79%. Turnover and number of employees - Revenues were reported at 106Billion USD in 2020 and number of employees were 7,50,000. Nature of business of the parent group– The Tata group is a conglomerate with products ranging from Automotive, airlines, chemicals, defence, FMCG, electric utility, finance, football club, home appliances, hospitality industry, IT services, retail, e-commerce, real estate, steel, telecom. Tata Steel in particular – Extraction , Refining, mining , manufacturing and marketing. Product profile :Tata Steel - Steel , Long steel products , Structural steel , Wire products , Steel casing pipes , Household goods Competitors – JSW steel , HindalCo, Jindal steel, NMDC, Kalyani steel, Nucor , BHEL IJCRT2104467 International Journal of Creative Research Thoughts (IJCRT) www.ijcrt.org 3759 www.ijcrt.org © 2021 IJCRT | Volume 9, Issue 4 April 2021 | ISSN: 2320-2882 Subsidiaries - Tata Steel Europe, Tata Steel BSL, Jamshedpur FC Improved turnover - The turnover during the current period was `70,611 crore, 16.7% higher than the previous year.

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