The mediating effect of knowledge of the investment protection act on investment decision-making in an emerging country

Abstract This study aims to determine the factors and their influence on the investment decisions of individual investors in the Vietnamese market. Using SPSS and AMOS 25 softwares, the study used CRA, EFA, SEM, and Bootstrap analysis techniques to test the hypotheses of the linear structure model. A total of 263 individual investors currently investing in the retail sector in several enterprises in several major cities in Vietnam agreed to participate in the research. The findings show that knowledge of the investment protection acts positively impacts investors’ decision-making in which the factors of information about enterprises or investment projects, supporting policies and calling for investment, and investors’ experiences have both direct positive and indirect positive effects through the investors’ knowledge and understanding of the law for making investment decisions. Meanwhile, this understanding of investors is positively and directly affected by five factors of information about the business or investment project, supporting policies and calling for investment, investors’ experience, investment advice, and provisions of the law on investment protection. The study’s results also provide empirical evidence that word-of-mouth information does not affect investors’ knowledge of investment protection laws and decision-making. Meanwhile, the provisions of the current investment protection law in Vietnam have an indirect impact on decision-making. The study results are the basis for improving the legal system on investment protection in Vietnam and governance implications for investors when doing investment research in this market.


PUBLIC INTEREST STATEMENT
This research examined previous scientific research on the topic of investment decisionmaking and the investment protection act. Accordingly, the research proposed that investors' knowledge and understanding were mediating variables in the structural equation modeling. By conducting an interviewing expert and individual investors survey in Vietnam-an emerging country. The findings have shown that knowledge of the investment protection acts positively impacts investors' decision-making; in which information about enterprises or investment projects, supporting policies and calling for investment, and investors' experiences have both direct positive and indirect positive effects through the investors' knowledge and understanding of the law for making investment decisions. However, word-of-mouth information does not directly affect investors' knowledge of investment protection laws and decision-making. Meanwhile, the provisions of the current investment protection law have an indirect impact on decision-making The research has proposed some policy implications to help Vietnamese legal system on investment protection in the future.
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Meanwhile, this understanding of investors is positively and directly affected by five factors of information about the business or investment project, supporting policies and calling for investment, investors' experience, investment advice, and provisions of the law on investment protection. The study's results also provide empirical evidence that word-of-mouth information does not affect investors' knowledge of investment protection laws and decision-making. Meanwhile, the provisions of the current investment protection law in Vietnam have an indirect impact on decisionmaking. The study results are the basis for improving the legal system on investment protection in Vietnam and governance implications for investors when doing investment research in this market.

Introduction
In recent years, investment decisions and factors affecting investment decisions have become a topic of interest for researchers, management agencies, and businesses. The research interest is to identify and measure the impact of factors on investors' investment decision-making. Therefore, many approaches are based on fundamental theories like prospect, regret, and information cascade (Wangzhou et al., 2021). Besides, there are also many approaches based on psychological theories, conventional theories of finance, and effective information theory. A number of studies show that investors' decisions to invest in the stock market are influenced by factors such as behavioural factors (e.g. representativeness, overconfidence, anchoring, gambler's fallacy, availability bias, loss aversion, regret aversion, and mental accounting) (Jan & Ullah, 2021;Waweru et al., 2008), market factors (Cao et al., 2021), factors of corporate governance (Farooq & Sajid, 2015;Javed & Marghoob, 2017), or a combination of many different factors including accounting information, images of investment enterprise projects, neutral information, opinions of consultants, and financial capacity of investor (Bashir et al., 2013;Rasheed et al., 2018;Wangzhou et al., 2021).
However, little is known about how investment knowledge and investment protection law affect investors' decision-making in Vietnam. These laws and the quality of their enforcement by regulators and courts are essential elements of corporate governance since the interests of investors need protection and are sometimes even specified by the legal system. Strong investor protection can indicate an increased willingness to finance investment in countries (R. La Porta et al., 2000). Based on a multi-factorial perspective and focusing on the legal issues of investment protection, this study was conducted to identify and measure the determining factors to the knowledge of investment and investment protection legislation as well as investors' decision-making. This study considers understanding investment and investment protection law, an intermediate variable to measure in a linear structural model.
The main contribution of this study is the scale of factors affecting investors' decision-making in a developing country. Besides, the study also contributes to providing more empirical evidence from a survey of investors who have been investing in projects and enterprises in the Vietnamese market. These findings might be helpful to business administrators, policy-makers, and state managers in Vietnam in general and similar developing countries.
The structure of the study is as follows: Section 1 is the Introduction, followed by research methods. Next, research results are presented, and finally, section 5 is the discussion with theoretical and practical implications.

Literature review and development hypotheses
Research on factors affecting investors' decision-making has been conducted diversely and extensively in many countries and fields. An overview of previous research is presented to build and develop research hypotheses and models.

Business and investment information
Information about investment projects and enterprises should be understood comprehensively from the perspective of two issues: general information and information on financial situations. General information is quite diverse, including reputation, brand enterprise, project owner, business field, the reputation of significant investment shareholders, corporate social responsibility, information about the technology that the enterprise is applying, and the legality of the project and many other issues (Abdul Kareem et al., 2023;Bashir et al., 2013). Financial situations are information about projects and enterprises that investors are interested in based on accounting data and the financial statements calculated by enterprises, consultants, or investors themselves through financial indicators such as expected corporate earnings, condition of financial statements, past performance of the company's stock, the dividend paid, expected paid, expected dividend, ROA, ROI, and ROE (Bashir et al., 2013). Many studies have found that this information itself is very valuable because it increases the understanding of decision-makers (investors) and, at the same time, reduces the uncertainty associated with decision-making and future prediction. Thus, the accuracy and validity of decisions are favorably reflected (Abdul Kareem et al., 2023;Gill et al., 2018). Based on the previous research, there are the following hypotheses: H1a: Information about investment projects and enterprises positively impacts investors' knowledge of investment and law. H1b: Information about investment projects and enterprises has a positive impact on investment decision-making.

Investment promotion policy
Governments, localities, and businesses should develop and issue policies to support and encourage investment, especially policies on investment protection to attract investors. A higher level of investment protection will lead to higher financial market development and favourable conditions for investors. On the contrary, the higher the level of local government intervention, the more unpredictable the effect on the development of the financial market and investment, whereas if the intervention of the local government emphasises training, propaganda, and knowledge dissemination for investors, it has an encouraging effect on development (Chu et al., 2017). In Vietnam, policies on investment assurance, investment protection mechanisms, and environment and administrative procedures for investment activities have changed a lot regarding reform and activeness compared to those in the past. Investment is very clearly regulated by the principles of national treatment and most-favoured-nation treatment in accordance with international law. The investment law, applied from 2021 in Vietnam, has cut 22 conditional business investment sectors and professions to contribute to removing barriers in business activities and to ensure the freedom to do business for people and enterprises in industries and professions not prohibited by law. This contributes to improving transparency and feasibility in applying Vietnam's commitments in complying with new-generation free trade agreements. This law has amended and supplemented industries and profession eligible for investment incentives in order to ensure selective and quality FDI investment attraction and at the same time ensure consistency and synchronization in the implementation of preferential and support policies (Vietnamese National Assembly, 2020). Promulgating and publicising supportive and encouraging policies from the government, localities, and businesses will help improve investor understanding and positively impact investor decisionmaking. Thus, the following hypotheses are proposed: H2a: Investment promotion and support policies positively impact investors' knowledge of investment and protection laws. H2b: Investment promotion and support policies have a positive impact on investment decisionmaking.

Investor experience
Experience is investors' knowledge and understanding of the issues they have experienced and faced directly. In detail, experience is a collection of emotional knowledge that investors collect through practical activities. Therefore, rational investors know that analysis is required before making an investment decision, but they also tend to rely on experience (Rasheed et al., 2018).
A number of studies have demonstrated that investment behaviour outcomes are significantly influenced by education level and professional experience (Khawaja & Alharbi, 2021). In the decision-making process, from rational to irrational, investor psychology's behavior is expressed through perception, memory, and thinking (Baker & Nofsinger, 2002). If the cognitive process is incorrect, investors might make mistakes in investment decisions (Hilton, 2001). The more a person has financial knowledge, the more rational decisions are made (Merton, 1987). Most investors believe that their previous experience and decisions are mostly correct; thus, they will also make sound decisions in the future (Chandra & Kumar, 2011;Shimizu, 2007). Thus, the following hypotheses are proposed: H3a: Investor experience has a positive effect on legal and investment knowledge.
H3b: Investor experience has a positive impact on investment decision-making.

Advocates' recommendations
In the process of making investment decisions, investors always consult different sources of information including stockbrokers, friends and colleagues, and family members and friends, major shareholders in the enterprise intending to invest. (Bashir et al., 2013). Research by Mohamad et al. (2017) also highlights recommendations from outsiders with adequate expertise and knowledge that can help investors' decision-making. It is clear that in the decision-making process, consultation with many stakeholders, especially relatives, will increase investor understanding and significantly influence decision-making. On the basis of these analyses, the authors propose the following hypotheses: H4a: Investment advice has a positive impact on investors' legal and investment knowledge.
H4b: Investment advice has a positive impact on investment decision-making.

Word of mouth
Word-of-mouth communication is a crucial information channel that influences customers' decisions regarding purchase behavior, purchase intention, or intention to use. However, there are still many inconsistent views on the impact of word-of-mouth on investment decision-making. Hwang (2022) suggests that word of mouth does not seem to help investors make better investment decisions. Meanwhile, the study by Argan et al. (2014) showed that there is a positive relationship between satisfaction, investment intention, and word-of-mouth information. Due to the different perspectives on the role of word-of-mouth in investment decision-making, the following hypotheses are proposed: H5a: Word of mouth has a positive effect on investors' legal and investment knowledge.
H5b: Word of mouth has a positive impact on investment decision-making.

Law on investment protection
Investment protection law depends on countries' historical, political, and economic characteristics. It positively impacts policy formulation in corporate governance and operational efficiency (Agrawal, 2013;Rizki & Jasmine, 2018). The protection of investors will contribute to developing countries' capital markets (R. L. La Porta et al., 1998) and influence government behavior and financial development of enterprises (Chu et al., 2017). Full regulation of measures and mechanisms for investor protection and integration with international practices will improve the influence of investors' decision-making. The following hypotheses are suggested: H6a: Investment protection law has a positive impact on investors' knowledge of investment and law.
H6b: Investment protection legislation has a positive impact on investment decision-making.

Investors' knowledge on investment and investment law protection
An investor's knowledge is considered to be the grasp, understanding and proficiency in techniques of information collection, and analysis and information processing related to investment. In addition, investor's knowledge also the understanding and compliance with the provisions of the law on investment and investment protection in the country and locality where the project and investment enterprise are located. This knowledge is accumulated from the investor's own experience, the collection of information and advice, word of mouth and neutral information, research of the legal system on investment and investment protection in the local market. Dobešová et al. (2021) clearly shows that knowledge plays an important role in improving the quality of investment decisions in information systems. Knowledge, income, and self-control are also decisive factors for investment decision-making (Atmaningrum et al., 2021). The following hypothesis is recommended.

H7:
Investor's knowledge of investment and law has a positive impact on investment decisionmaking.
The following research model was proposed, which is based on the evaluation and analysis of earlier studies and the formulation of hypotheses:

Research methodology
The following part conducts the research design, construction of a scale, and specific sample selection.

Research design
Interviewees are investors currently investing in businesses in the retail sector in Vietnam. Pilot study was first conducted to test the construction hypotheses ( Figure 1). The pilot study focuses on group discussions with experts in the field of investor protection law, the economic sector, and investors at a number of enterprises specializing in the sale of goods and retail services in three big cities: Ho Chi Minh, Da Nang, and Hanoi. It aims to evaluate the content of the scales, including Business and investment information; Investment promotion policy; Investor's experience; Investment advice; word of mouth; Law on investment protection; Investors' knowledge; Investment decision. Although the scales used in the study are inherited from previous studies, the terminology has been adapted and used to suit the interviewees who are investors in the retail sector in Vietnam.

Research sample
According to Vietnam's Investment Law No. 61/2020/QH14 (Vietnamese National Assembly, 2020), there are five forms of investment in Vietnam: (1) investment in establishing economic organizations, (2) investment in capital contribution and purchase of shares, purchase contributed capital, (3) carrying out investment activities of foreign-invested economic organizations, (4) investment in the form of BCC contracts, and (5) investment forms, types of new economic organization model according to the regulations of the Government of Vietnam. The specific content of this law shows that the Vietnamese government has taken a more harmonious approach with the general regulations of the world, especially the ASEAN comprehensive investment agreement (ACIA). This is reflected in the addition of industries and forms of investment incentives; shortening the conditional business lines; does not discriminate between foreign investors and domestic investors in terms of market access conditions when participating in investment.
In this study, based on information provided by the Ministry of Planning and Investment of Vietnam, a dataset of information about domestic investors in the second form of investment was accessed. These investors only make capital contribution, share purchase, and purchase capital contribution for projects and enterprises within the territory of Vietnam without going beyond the national border. Investors in the retail sector were sent interview emails as it is the field that attracts many investors to the Vietnamese market. Finally, 53 paper responses and 310 responses via email were received for the period of October 2022-February 2023. A total of 263 surveys were retained for analysis. J. F. Hair et al. (2009) suggested that the minimum number of samples required to satisfy the statistical constraints should be at least 5 times the total number of entries (5 × 36 = 180). Additionally, Hoelter (1983) pointed out that the required sample size is usually large and must be at least 200 to achieve a reliable estimate for the SEM linear structural model analysis method. The sample size of this study is 263, which is relatively suitable. The general information of the study sample is presented in Table 1.

Measurement
This study applies a 5-point Likert scale with levels 1 (Strongly disagree) to 5 (Strongly agree). Specifically, the INF scale is measured by five observations, the POL scale consists of four observations, EXP is measured by five observations, CON consists of four observations, WOM is measured by four observations, IPL is described by five observations, UND was measured by five observations, and DES was measured by four observations. The content of these observations is inherited from previous research: Bashir et al. (2013), Rasheed et al. (2018) (Wangzhou et al., 2021), and opinions of experts in the field of investment protection law and economic field. The details of the scales are presented in Table 2.

Data analysis
Confirmatory factor analysis (CFA) was used to evaluate the measurement model. Cronbach's Alpha (CA), Average Variance Extracted (AVE), and Composite Reliability (CR) were used to evaluate the internal consistency of latent variables and check the reliability of the structure (J. Hair et al., 2010). Structural equation modelling (SEM) is the statistical significance of hypothetical relationships (causal-intermediate) in the proposed structural model using AMOS 23 software. Measurement measures the concepts in the model using the reproducible observed variable method. Simultaneously, bootstrapping was applied with 1000 returned samples from the original sample at a significance level of 0.05 to retest the relationships between the variables in the model. Table 3 shows the results of descriptive statistics of items and internal reliability and convergent validity of the variables. The Cronbach's Alpha value ranges from 0.834 to 0.941 and the Composite Reliability (CR) range from 0.852 to 0.977, all higher than 0.6, so the study's scale is reliable (J. Hair et al., 2010). All load factors are above 0.5 and AVE values of all structures range from 0.599 to 0.896, higher than 0.5 (J. Hair et al., 2010), which means convergent value is obtained.

Testing of research model
In addition, according to the conditions of Fornell and Larcker (1981), the square root of AVE is greater than 0.7, and the pairs of concepts in the model achieve discriminant value. Based on Table 4, these values range from 0.773 to 0.956. Thus, this result confirms that the scales used in the research model are reliable. Table 4 suggests that the constructs have good discriminant reliability, with most of the diagonal values being close to 1.0, indicating high reliability. Additionally, the correlations between constructs are generally low, indicating that the constructs are measuring different aspects of the phenomenon being studied.  Table 5 suggests that both models fit the observed data well, as they meet the satisfactory-level criteria (J. Hair et al., 2010;Hu & Bentler, 1999)

Hypothesis test-SEM model
The metrics in the model can be seen in Figure 2. It shows the fit of the data to the market and is acceptable (Chi-square = 884.539; Chi-square/df = 1.53 < 2; GFI = 0.849 > 0.8; TLI = 0.952 > 0.9; CFI =
Specifically, word-of-mouth has no significant impact on investors' understanding of investment protection laws and decision-making (H5a: β = 0.084, p-value = 0.112; H5b: β = −0.017, p-value = 0.754). It might be explained that this type of information is not very accurate and reliable for investors. Therefore, word-of-mouth is a reference information channel and does not have an impact on investors' decision-making. While investment advice has a positive impact on the investor's knowledge, it does not have a statistically significant impact on investment decision (H4b: β = 0.085, p-value = 0.134). In addition, the results of the study also show that Law on investment protection in Vietnam does not have a direct and positive influence on investment decision (H6b: β). = 0.092, p-value = 0.115).
In table 7, The results from the Bias-Corrected Bootstrap method with 1,000 bootstrap samples indicate that there is an indirect relationship between the factors in the model. Specifically, the relationship of factors such as Business and investment information, Investment promotion policy, Investor Experience, Investment advice, and Law on investment protection law has a positive and statistically significant impact on investment decision through their own knowledge and understanding of investment protection laws in Vietnam. In which the relationship CON→UND→DES with β = 0.178, p-value = 0.001 < 0. Indirect interaction through the intermediary of knowledge and understanding of investment protection law is not statistically significant at all. Table 8 presents the bootstrapping results to confirm the certainty of the SEM analysis results as mentioned above. The results of the bootstrapping analysis were performed with a sample of 1,000 sample loops. The bootstrapping technique assigns precision measurements (deviation, variance, confidence intervals, prediction error, etc.) According to Efron (2003), at the 5% level of significance, the difference value of CR = (Bias/(SE-Bias) < 1.96, the relationship between the pairs of variables is reliable. The findings point out that all CR are all less than 1.96 except for four relationships that are WOM→UND, WOM→DES, IPL→DES, and CON→DES (CR = 2 > 1.96). This shows that the relationship between the variables except for the above four relationships is reliable (unbiased). These results show that the generalization of the sample from N = 263 to N = 1,000 still gives the same result.

Discussion
This study has applied the linear structural model (SEM) to examine the factors affecting the decision-making of individual investors through the intermediary role of knowledge and understanding about law of protect investment within the retail sector in the Vietnamese market.
Research shows that investor knowledge has a positive impact on investment decision. This effective relationship is also completely similar to the study by Atmaningrum et al. (2021) and Dobešová et al. (2021). This shows that once an investor understands investment (environment, procedures) and the contents of investment protection laws (protection measures and mechanisms) in the market, their intent to invest will lead to more confident investment decisions and considerations.
In addition, the results confirm that business and investment information, investment promotion policy, and investor experience have a direct impact on investment decision. The relationship between business and investment information; investment promotion policy, and investor experience and investment decisions were mediated by investors' knowledge. These results are similar to the studies of Abdul Kareem et al. (2023)  Alharbi (2021), Chandra andKumar (2011), Shimizu (2007), and some other studies. The investment decision-making depends on many different factors, including 1) investors, 2) external entities, and 3) information about the project and firms that investors are interested in.
Investment advice and law on investment protection in the Vietnamese market have an indirect impact on the decision-making of investment through Investors' knowledge. There was no direct relationship between these factors with decision-making. This result is in contrast with previous studies by Bashir et al. (2013) and Mohamad et al. (2017). This phenomenon can be explained by the fact that in an emerging country the stock market still has a lot of incomplete, transparent, and timely information, where investment advice is for reference only and does not directly affect decision-making. Although the provisions of the Investment Law No. 61/2020/QH14 in Vietnam have undergone several adjustments and changes in the direction of integration with international practices, there are still many shortcomings, leading to fear that directly affects investment decision-making.
The study also proves that word of mouth has no impact through the mediation of investors' knowledge on investment decision-making. This is in line with the results by Hwang (2022), which assert that word of mouth does not seem to help investors make better investment decisions. It might be explained that word of mouth is only for reference information and does not guarantee reliability for decision-making.
This study suggests several policy implications for government in developing countries like Vietnam. First, legislation on investment and investment protection needs to be reviewed and compared regularly in respecting the principles of national and most-favoured-nation treatment. For example, compared with the ASEAN comprehensive investment agreement (ACIA), a number of investment protection measures are not yet regulated in Vietnam's investment law. Therefore, it is necessary to supplement these measures to ensure compatibility and ensure the legitimate rights and interests of ASEAN investors.
Secondly, local authorities and managers at enterprises need to attract investment, study and further increase policies to encourage and support investment, and increase publicity and transparent and concretized information about projects and firms that need investment. Besides, it is necessary to organize the propagation and dissemination of information on investment protection measures and tools. The results of this study should be carefully considered with some limitations. First, it only selects some basic factors to build the research model and has not built one or a number of factors as a moderating variable. The scope of the study is also only surveying individual investors within the retail sector in some major cities in Vietnam. These are national investors in the second investment form out of five classified investment forms. The convenience sampling method, therefore, also contains errors in the representativeness of the population.

Conclusions
Based on background theories and inherited previous studies, hypotheses and research model building has been developed to explore the influence of different factors that affect investment decision-making. The determining factors belong to investors, invested projects and enterprises, localities and government, word of mouth, legal regulations on investment, and investment protection for investment decision-making. The results of the study confirm that the decisionmaking of investors is influenced by those different factors. They emphasize the mediating role of investors' knowledge in the relationship of determining factors and investment decision. The findings of this study, especially the experimental model and the proposed scale, will be the premise for further studies. The study recommends that the government in developing countries such as Vietnam should review and regularly compare investment and protection legislation while respecting national and most-favoured-nation treatment principles, and local authorities and enterprise managers should attract investment, increase transparency, and disseminate information on investment protection measures.