Financial communication and perceived risk in initial public offerings: Evaluation of individual investor profile in terms of behavioral finance

The initial public offering is a very important tool for capital increase by companies offering their shares to the public for the first time. Although there are many factors that influence investors' financial decision-making processes, financial communication and perceived risk are two important factors to be investigated, especially in terms of initial public offerings. When it comes to the initial public offering investment type, financial communication between the company and the investor can be very important and this investment type can be perceived as risky for investors. The main purpose of the study is to investigate the effect of financial communication and perceived risk on initial public offering investment decisions and to examine the individual investor profile. To achieve this goal, a survey was applied to 1062 individual investors who invested in initial public offerings. SPSS 25 package program was used for Exploratory Factor Analysis and other analyzes, and AMOS 25 package program was used for Structural Equation Modeling. According to the results of the study, it has been determined that individual investors attach importance to financial communication regarding the initial public offerings and the risks perceived against this type of investment are also high. While investors prefer a strong financial communication with the company, they see the initial public offering investment type among the risky investments. According to the findings, the majority of the investors in the study are risk-seeking investors. When the individual investor profile is analyzed, it is concluded that investors' financial communication preferences and perceived risks generally differ according to their demographic characteristics. In line with these findings, when an assessment is made in terms of behavioral finance that examines the different behaviors of investors, it is seen that women prefer financial communication more than men and the risk they perceive against the initial public offering investment type is higher than men. Similarly, it is concluded that married people prefer financial communication more than singles. According to the results of the study, the financial communication preferences of the investors and the risks perceived differ according to their income levels. In terms of financial communication preferences, the age and education status of investors could not be significantly different, but it was concluded that the marital status of investors did not make a significant difference for perceived risks.