IOSR Journal of Business and Management (IOSR-JBM) e-ISSN: 2278-487X, p-ISSN: 2319-7668. Volume 16, Issue 2. Ver. III (Feb. 2014), PP 68-76 www.iosrjournals.org www.iosrjournals.org 68 | Page Factors Influencing Individual Investor Behavior: An Empirical Study of City Karachi Samreen Lodhi Jinnah University for Women, Karachi, Pakistan Abstract: This research study intends to examine the impact of financial literacy, accounting information, openness to experience and information asymmetry on individual investors’ decision making through the empirical research of the people living in Karachi city. Any investment is made with the primary objective of earning return on the invested sum. And depending on the degree of risk any individual can be classified as either RISK TAKER or RISK AVERTER. Duration of an investment is another aspect for any investment decision. Short term investments are rather riskier than long term investments in securities. Quantitative research was conducted to determine the relationship between desired explanatory and response variables. There were five independent variables including; financial literacy, high experience, use of accounting information, importance of analyzing financial statements and age that might affect the investment decision of any individual. Five different dependent variables were chosen from the questionnaire to reach to any conclusion they were; risk taking, preference investment in shares (risky investment), risk aversion, information asymmetry and shares investment. The obtained results show that financial literacy and accounting information helps investors in lowering information asymmetry and allows investors to invest in risky instruments. But as age and experience increase investors preference changes to less risky investments, it does not mean that investor does not prefer to invest in shares, he will but with the intension of getting dividend return rather than capital gain. I. Introduction: Many researchers have discussed the investment behavior and tried to enhance the understanding of people managing investments in different ways. If we go through the available literature , it is mainly personal characteristics that influence investment decision making. The nature of psychological factors and individuals’ behavior at the time of investment decision making is under discussion. Various psychological factors like beliefs, preferences, and psychological biases have been found. The purpose of this study is to determine how the personal investment is affected by the level of knowledge an investor possesses about different investment instrument, knowledge of the relationship between risk and return along with the knowledge of companies performance analysis technique and portfolio management techniques. The main reason for choosing Karachi for research is that; Karachi is the growth pole of Pakistan and is a residence of about one corer population and about 70 percent of investors. But since last four years there has been observed an apparent change in investors’ preferences about investments, as law and order situation is critical to attract any foreign and local investment in Pakistan in general and Karachi in particular. Political and macroeconomical instability make investment environment less conducive for investors and continue depreciation of Pakistani currency has made investment in international trade less frequent. Electricity and fuel crises have made the industrial performance miserable that force the investors to move to neighboring country like Bangladesh. 1.1 PROBLEM STATEMENT: To date however, there has been very little work on the impact of financial literacy, accounting information, openness to experience and information asymmetry in the individual investors’ decision making. This research study intends to examine the impact of these factors on individual investors’ decision making through the empirical research of the people living in Karachi city. Any investment is made with the primary objective of earning return on the invested sum. And depending on the degree of risk any individual can be classified as either RISK TAKER or RISK AVERTER. Duration of an investment is another aspect for any investment decision. Short term investments are rather riskier than long term investments in securities. Real estate and stock market investments have been important subjects in the past years. More and more people invested in stocks and real estate. The reason for this was to secure money for future needs. But due to recent global financial crises, investment decisions are considered as important task in our daily life. For this reason , it is necessary to understand various factors which prompt