Journal of American Science 2016;12(9) http://www.jofamericanscience.org 72 Do Behavioral Finance Factors influence Stock Investment Decisions of Individual Investors? (Evidences from Saudi Stock Market) Talal Alquraan 1 (Corresponding Author), Ahmad Alqisie 2 , Amjad Al Shorafa 3 1 Faculty of Business and Finance, World Islamic Sciences and Education University, P.O. Box 1101 – Amman, 11947 Jordan Tel: 962-79-5656606 E-mail: tqurran@yahoo.com 2 Faculty of Business and Finance, World Islamic Sciences and Education University, P.O. Box 1101 – Amman, 11947 Jordan E-mail: Ahmadalqisie@yahoo.com 3 College of Business Administration CBA, Almajmaa University, P.O. Box 66-Almajmaa, 11952 Kingdom of Saudi Arabia E-mail: ashorafa@yahoo.com Abstract: The main objective of this study is exploring the behavioral finance factors influencing the stock investment decision of individual investors at Saudi Stock Market as one of the vital emerging markets in the Middle East. To conduct the study, (140) questionnaire has been distributed to the participants on randomly basis. Cronbach’s Alpha was used to test the validity of the instrument, in addition Multiple Linear Regression and ANOVA methods were used to test the hypotheses. Results of the study indicated that, behavioral finance factors (Loss Averse, Overconfidence and Risk Perception) have significant effect on the stock investment decisions of individual investors in Saudi Stock Market, while Herd has insignificant effect. The demographic variables (Gender, Age, Education, Income and Experience) don’t make any significant differences in the investor decision, except the demographic variable (Education) make significant differences in the investor decision. [Talal Alquraan, Ahmad Alqisie, Amjad Al Shorafa. Do Behavioral Finance Factors influence Stock Investment Decisions of Individual Investors?(Evidences from Saudi Stock Market). J Am Sci 2016;12(9):72-82]. ISSN 1545-1003 (print); ISSN 2375-7264 (online). http://www.jofamericanscience.org . 12. doi:10.7537/marsjas120916.12 . Keywords: Behavioral Finance, Classical Finance, Investment Decisions, Individual Investors, Saudi Stock Marke. 1.Introduction Studies of Financial theories has been developing since several last decades, these studies trying to understand the rationality of investors in the financial markets by using new models. The traditional financial theories have assumed that when investors take stocks investment decisions, they don’t have difficulty because they are well-informed, careful and consistent. Modern portfolio theory and Capital Asset pricing Model assumes that investors are not puzzled regarding the size of information presented to them and not controlled by their behavioral finance factors. But several studies in the developed capital markets found that many phenomena regarding stock investment decisions cannot be explained. Investors in capital asset exchanges, typically taking many different and important decisions, the most common are taking investment decisions in order to maximize their wealth; others are considering seeking market timing techniques to maximize their wealth. In contrast, some investors are more risk averter, so they are following stocks that have low risk levels, at the same time; other investors are accepting high risk stocks but applying some diversification techniques to control the unsystematic risks. As a result, studying the impact of behavioral finance of investor on stock investment decisions became very important; hence investors rarely depends on the assumptions of the financial theories when they made their decisions. Therefore the main objective of this study is to exploring the behavioral finance factors influencing the stock investment decisions of individual investors at Saudi Stock Market as one of the emerging market in the Middle East; hence several studies had different results in identifying any of those factors as the most influential on stock investment decision in the other markets. Our research studied the impact of the following behavioral finance factors on stock investment decisions: Loss aversion (avoiding losses is more important than acquiring gains), Overconfidence (overestimate investors knowledge, underestimate risks, and exaggerate their ability to control events), Herding (following the trend), Risk Perception (individual’s assessment of the inherent risk in a given situational problem). 2.Problem Statement In traditional financial theory, investors are assumed to be rational when they seeking for wealth- maximization, following basic financial rules, their investment strategies and decisions are built on