Investment environment, stock market perception and stock investments after stock market crash

Purpose This study examines how the importance of external investment environment factors affect stock market perception, and how stock market perception affects stock investments after stock market crash witnessed by individual investors in one of the emerging stock markets. Design/methodology/approach A cross-sectional survey was administrated among 223 individual investors who experienced stock market crash in 2010-2011 in Bangladesh, and the proposed model was tested by the partial least squares-structural equation modeling PLS-SEM model. Findings Findings show that the importance of Bangladesh's stock market performance, government policy, economic issues and neighboring country's stock market performance has effects on investors' stock market perception. This perception, in turn, decreases monthly stock trading and short-term investment horizon. The findings further show the mediating effect of stock market perception. Practical implications Investors need to carefully consider the external investment environment when they form their stock market perception, as this perception drives stock investments. Analogously, regulators should ensure releasing timely and updated statistics on external investment factors. Originality/value Addressing those investors who encountered stock market crash, a set of external investment environment issues, stock market perception and stock investments are new in the literature.