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Journal of Business Research 61 (2008) 47 – 55

How investor behavioral factors influence investment satisfaction, trust in

investment company, and reinvestment intention
Gyu-yeol Shim a,⁎, Seung-hwan Lee a,1 , Yong-man Kim b,2
a
Department of Real Estate Financial Technology, Gumi College, 407, Bugok-Dong, Gumi, Gyungbuk, 730-711, Republic of Korea
b
Department of Business Administration, Kyungnam University, 449, Wolyoung-dong, Masan, Kyungnam, Republic of Korea
Received 1 February 2006; received in revised form 1 April 2006; accepted 1 May 2006

Abstract

The purpose of this study is to provide strategic implications for the marketing revitalization of real state. By sampling investment behavioral factors of
investors in the Gumi area of South Korea (ROK), which is emerging as a promising investment area, the study shows their effects on investment
satisfaction, investment firm trust, and intention to reinvest. The behavioral factors, adopted from previous studies, are profitability investment stability,
investment regulations, investment location, and investment well-being. Location proves to be the most important factor in investment satisfaction,
followed by liquidity, profitability, and well-being. In addition, the structural relativity of satisfaction to reinvestment intention and trust in the investment
firm has positive effects. The results of the study reinforce major characteristics for a real estate marketer to consider and provide insights for future studies.
© 2007 Elsevier Inc. All rights reserved.

Keywords: Investor behavior factors; Investment satisfaction; Investment firm trust; Reinvestment intention

1. Introduction This study is intended to clarify, from the marketing point of

The purpose of investment in real estate is to profit from future
return in compensation for the cost of forgoing present con-
sumption. However, the expected return depends on an uncertain
future, which always involves risk. By observing the behavioral
patterns of real estate investors, we can categorize investment
patterns based on earning rate, stability, and liquidity into cash
deposits, securities, and/or real estate (Yang, 2002). Investors in
real estate tend to invest in actual assets because of the resulting
capital income from periodic income and transfer, tax protection,
protection against inflation, and gain in social status (Lee, 2000).
Investors are leveraging their securities and bank deposit invest-
ments into real estate because of market recession and decreased
bank interest rates. In light of these circumstances, various
supplementary administrative schemes and a related marketing
study are called for in order to protect actual investments.
⁎ Corresponding author. Tel.: +82 54 440 1323; fax: +82 54 442 8953.
E-mail address: icando@kumi.ac.kr (G. Shim).
1
Tel.: +82 54 440 1327; fax: +82 54 442 8953.
2
Tel.: +82 55 249 2424; fax: +82 55 223 1665.
0148-2963/$ - see front matter © 2007 Elsevier Inc. All rights reserved.
doi:10.1016/j.jbusres.2006.05.008
view of real estate-related firms, the structural relationship of six
expected behavioral factors of real estate investors to investment
satisfaction, investing firm trust, and reinvestment intention. The
six behavioral factors are the following: (1) investment
profitability, (2) investment stability, (3) investment liquidity,
(4) regulations, (5) investment location, and (6) investment well-
being. It is hoped that the study also offers practical implications
that can help the real estate marketer examine the relative
importance of investor behavior on investment satisfaction.
2. Theoretical background
2.1. Theoretical background on real estate investors' behavior
factors
2.1.1. The definition of real estate investor behavior
The behavior of real estate investors can be seen in terms of
subjective actions that offer economic rewards or satisfaction to
the individuals or groups that own investment capital in real
estate during a certain period of investment (Ahn, 1998). The
American Institute of Real Estate Appraisers (AIREA, 1987)
defines real estate investment as buying, building, and/or
48 G. Shim et al. / Journal of Business Research 61 (2008) 47–55
developing property for rent, such as investment property or
income property, with the premise of eventual recovery of
principal and reasonable security in earning a profit (Richard,
1998). Therefore, the term real estate investors' behavior can be
defined as actions involved in investing in real estate that is built
and developed for rent with the permanent purpose of earning a
profit, presuming reasonable security and eventual recovery in
compensation for forgoing current consumption.
2.1.2. The decision-making process of real estate investors
The decision-making process in real estate investment refers
to the systematic research, acquisition, application, and analysis
of the desired real estate asset that satisfies the investors'
economic and personal goals during the period of ownership
(Lee, 2000). The process consists of two aspects: (1) the
estimation of market value, or the most probable selling price of
the property, and (2) the investment calculation (Sirmans, 1999).
2.1.3. Investment profitability
The most salient factor that can influence a real estate
investor is profitability (earning rate). In general, profitability
and risk have a symmetrical relationship in real estate
investment — the higher the risk, the higher the demand for
return. Such a relationship is called the offset relation between
risk and profit. In this regard, profitability has a close rela-
tionship to investment behavior, which depends on the invest-
ment risk (Ross et al., 1995).
2.1.4. Investment security
This term refers to the ease of disposing of the assets gained
from real estate investment and reasonable recovery of the
principal through such disposal. Such security is not always
guaranteed in real estate investment activities, and it is
sometimes impossible to recover the principal (Bansal et al.,
1993). Risk-taking on principal is one of three risk management
factors in investment activity. It is judged and analyzed in terms
of law, economy, and technology in real estate investment.
2.1.5. Investment liquidity
Liquidity in real estate investment is highest when investors
are able to dispose of their assets readily at the market price
(Yang, 2002). For a period of time the disposal of real estate is
not easy, often resulting in a loss in liquidity. When it is difficult
to attain liquidity, or when a liquidity loss is expected, it is
called the risk management of liquidity. As a very important
decision factor, it constitutes the second of the three risk
management factors in investment activity.
2.1.6. Regulations and restrictions
Another of the behavioral factors of real estate investors is
the regulatory environment, which sometimes causes sensitive
reactions among investors. What makes real estate an object of
analysis index vis-à-vis other alternatives varies by the number
of regulatory restrictions on the property concerned (the
service area of the national territory utilization and manage-
ment or city plan), the supply-and-demand trend of the real
estate market, the income of local residents, the location of the
real estate, current market interest rates, the tax system, and the
expected return according to future price levels (AIREA,
1987). Region analysis, neighborhood analysis, site anal-
ysis, demand analysis, supply analysis, and economic effi-
ciency analysis are all used to determine the market or legal/
administrative restriction(s) on the service area and district
(Lee, 1996a).
2.1.7. Investment location
In a study on real estate investment, Lim (1991) emphasized
the importance of location, the pricing procedure, and the
investment analysis. In reality, investors place a high, if not the
highest, priority on investment location. They also consider
such characteristics as business cycle, inflation, deflation,
finance credit, population statistics, real estate preferences,
local economic background, related regulations and restrictions,
and environmental and tax accounting features. More minor
factors include the physical features of the property, regional
location, comfort and accessibility, legal factors, the nature of
leasing, capital supply, and tax privileges, which are affected by
system, regulation, and location characteristics.
2.1.8. Investment well-being
In a study by Hwang (2005), the importance of comfort is
emphasized among environmental factors. Comfort entails the
emotional and physical well-being to consider when choosing a
residence (Kirschenbaun, 1983). Well-being refers to quality of
life as defined in terms of happiness, good health, and welfare. In
the real estate industry, interest in well-being is on the rise. The
rural cottage for an affluent life and leisure time has set the stage.
Il-san and Bundang, which have risen as new towns in the
outskirts of Seoul, are considered among the first in Korea to
reflect the issue of well-being. An interest in things that are
healthy or not harmful is basic to the nature of consumers. The
real estate business has raised consumer interest in a healthy and
sound life more than ever before.
2.2. Investment satisfaction, investment firm trust, and
reinvestment intention
2.2.1. Real estate investor satisfaction
The satisfaction level of real estate investors means the state
of utility maximization on the future cash income vis-à-vis
present cash expenditures. And this level is rather different from
the real market because, as in general investment theory, it
basically assumes a perfect competitive market. Furthermore,
the real estate market, unlike capital markets, is rather restricted
in its nature. However, as one of the investment markets, it is a
geographically composed partial market (in the range of usage
and region) and can stay balanced because price is modified and
decided through the business process (mutual substitution,
exchange). Although the perfect competitive market model is
unrealistic, such a market is assumed (Lee, 1996b).
2.2.2. Trust in investment firm
Trust refers to the belief that a person can be faithful in a
contractual relationship (Schurr and Ozanne, 1985). It also refers
 G. Shim et al. / Journal of Business Research 61 (2008) 47–55
to the mutual belief that each partner in such a relationship would
not take advantage of the other's weakness (Barney and Hansen,
1994). Trust in a real estate investment firm has its own
characteristics. These include unchanging natural characteristics
regardless of human intervention on land and artificial character-
istics emerging when human and nature have a certain kind of
relation. Natural characteristics of real estate are so called physical
characteristics of real estate, including immobility, indestructibil-
ity, unproductivity, heterogeneity, and continuity. Artificial char-
acteristics of real estate are not only characteristics of land
stemming from the relation between land and human but also the
characteristics occurred by human's influencing or being
influenced by land. They are a variety of land use, divisibility,
and variability of social, economic and administrative location.
Due to this peculiarity, real estate sellers and buyers generally
come to make decisions under certainty, which can lead to high
levels of commitment and involvement. Strong trust is required
from subject companies and agents more than anything else. Trust
in the investment firm increases the interrelation period and
lowers the rate of separation, thus generating continuity with
customers; it should therefore have a positive effect on real estate
mediation performances in terms of real estate-related firms.
Generally, trust serves as an important mediator in the formation
of interaction between business and business, individual
and business, and individual and individual in an organization
(Garbarino and Johnson, 1999). In real estate investment, forming
trust is the result of accumulative interactions in which an
interdependent relationship should be premised.
2.2.3. Reinvestment intention
When consumers gain trust in the process of purchasing goods
and services, it affects their reinvestment intention after the
purchase (Oliver, 1996). Real estate reinvestment can be classified
in three ways. First, it can be a substitution investment (for capital
substitution) or net investment (for capital increase or formation).
Second, it can be independent (made regardless of income level or
interest rate, such as investing in new technology development or
in the public contribution) or inductive (generated as national
income levels rise). Third, an investment can be ex ante (planned
beforehand, or intended) or ex post (realized at the end of
production regardless of planning) (Kwon, 1998; Yang, 2002).
Reinvesting desirable real estate provides satisfaction by
achieving the economic and personal goals of the investing
owners, and also refers to the present effort to obtain future
profit vis-à-vis the present value of the property (Lee, 1995).
The cost of forgoing present consumption by reinvesting real
estate profits includes the cost of uncertainty risk.
2.3. Hypotheses
2.3.1. Investment profitability and investment satisfaction
In the selection criteria of real estate investors, Park (2001)
asserts that the selection of goods is judged by three categories
from the investors' side, premising that the real estate should
have all the investors' overall preferred or attractive conditions.
The earning rate should provide better future income, so the
amount of potential profit must be considered. Thus, because
49
investment profitability is the leading factor in investment
satisfaction, the following hypothesis is made:
H1. Investment profitability will have a positive effect on
investment satisfaction.
2.3.2. Investment security and investment satisfaction
Discussing investment security, Chang (1987) assumes that
when income is uncertain it cannot be a good investment target,
especially when the amount of investment money can be
secured without loss. However, profitability and security have
trade-offs. Because investment security is considered a major
factor, the following hypothesis can be made:
H2. Investment security will have a positive effect on investment
satisfaction.
2.3.3. Investment liquidity and investment satisfaction
Investment liquidity refers to an investment subject that can
be transferred into cash whenever the investor wants (Dongwon
Economic Institute, 1999). Goods that could meet the three
standards of profitability, security, and liquidity would be the
most ideal factors. However, in reality these kinds of in-
vestment goods do not exist because the standards are not
interconnected. Investment liquidity can be regarded as an
important factor, so the following hypothesis can be made:
H3. Investment liquidity will have a positive effect on investment
satisfaction.
2.3.4. Regulations and investment satisfaction
According to Yoon (1996), real estate can be divided into various
categories by its purpose and function, while its worth, potential
power, and development directions differ. Among the character-
istics of real estate investment are purpose and diversity. After all,
investors will come to focus on the diversity of purpose as future
value rather than present value, and through the understanding of
various statutes, regulations, and future earning rate will depend on
the development possibility and approval on the future invest-
related business. Therefore, regulatory levels will seriously affect
investment satisfaction; hence, the following hypothesis is made:
H4. Regulations will have a positive effect on investment
satisfaction.
2.3.5. Investment location and investment satisfaction
In the investment of real estate, the decision of location is made
with a mid- to long-term view and its concrete alternatives can be
searched in various ways. Thus, investment location, more than
anything else, prompts investors to heighten future value and thus
future earning rates (Ring, 1985). After all, competing facilities,
consumer characteristics, labor characteristics, social infrastruc-
ture, local government policy, and quality of life are all related to
investment satisfaction. Thus, the following hypothesis is made:
H5. Investment location will have a positive effect on in-
vestment satisfaction.
50 G. Shim et al. / Journal of Business Research 61 (2008) 47–55
2.3.6. Investment well-being and investment satisfaction
Hwang (2005) states that investors in mountainous real
estate are living in a mutual interaction with the environment,
with an increase of living necessities such as food and
clothing. It is especially true that an interest in investment
well-being is concentrated for people of modern times, who
have a reasonable standard of living. Therefore, investors
focus on satisfaction levels, such as pleasant surroundings,
low pollution levels, cultural and educational facilities, and
the art of fengshui. Therefore, the following hypothesis can be
made:
H6. Investment well-being will have a positive effect on
investment satisfaction.
2.3.7. Investment satisfaction and trust in investment company
Yang (2006) comments that the factor of trust can be
regarded as key to real estate investment. Trust in an investment
can lead to future reinvestment, which in turn can raise the real
estate company's mediation performance. Therefore, the
following hypothesis can be made:
H7. Investment satisfaction will have a positive effect on trust
in the investment firm.
2.3.8. Investment satisfaction and reinvestment intention
Based on real estate investment theory, the level of investment
satisfaction depends on land prices, connected to the general
factors of the real estate market: investment profitability, security,
periodic income, income stability, cash recovery rate, the potential
power of capital value, liquidity, risk, and marketability. The
significant relationship between satisfaction and reinvestment
intention has been confirmed in studies by Oliver (1980), Cronin
and Taylor (1992), and Anderson (1994), so these results can
apply to this study. The following hypothesis can be derived on
Fig. 1. Research model.
these two concepts by acknowledging reinvestment intention as
customer satisfaction result variables:
H8. The satisfaction level in the real estate investment will
have a positive effect on reinvestment intention.
2.3.9. Trust in investment firm and reinvestment intention
According to Kim and Oh (2002), reinvestment intention is
defined as the intention to reuse the current service supplier based
on past experience and future expectation. The degree to which
real estate investors count on investment firms depends on
whether they possess the latest information, such as on local
development plans and schedules, which general investors cannot
recognize. Investment firms can help foresee an investment result
by using such information in advance, attaining experience by
realizing these expectations, and enhancing trust and reputation
for general real estate investors, resulting in greater reinvestment
intention. Thus, the following hypothesis can be made:
H9. Trust in the investment firm will have a positive effect on
reinvestment intention.
The study models to verify the hypotheses in this section
based on the theoretical background above are shown in Fig. 1.
3. Research methods
3.1. Research subjects and samples
The subjects of this study all had experience in real estate
investment. They included normal company workers, big
business workers, independent businessmen, college faculty
members, and those who have experience with real estate
investment through chiefs and agents of licensed real estate
agencies in the Gumi area. The main reason for limiting this
 G. Shim et al. / Journal of Business Research 61 (2008) 47–55 51

area is that Gumi is not only regarded as having the highest mended to invest, investment intention in the real estate
degree of financial independence among Korean cities, it is also recommended by real estate investment firm, experience of
recognized by real estate investors to have shown the highest real estate investment, overall satisfaction with experience of
rise in prices for the past few years. real estate investment, investor's intention to recommend real
The study questionnaire was limited to subjects who invested estate investment to others, and reinvestment intention.
in seven areas: Gumi Indong area, Gumi Okgye area, Gumi
Bonggok area, Bugok, Gimcheon, Gumi Seonsan, and Jang- 3.3. Methodology
cheon area. Out of 200 questionnaires, 170 were collected.
Exempting those lacking in good faith and those with no After eliminating problematic questionnaires from the
answers, 147 final questionnaires were used in the final analysis. collected sample, the researchers in this study used SPSS 13.0
for Windows to obtain descriptive statistics in order to conduct
3.2. Operational definitions of variables and measures frequency analysis of the actual condition of the real estate
investment and capital and tax improvements. Relationships
The variables of this study were measured using a five-point among constructs were conducted through correlations analysis.
Likert scale (1 = not at all, 5 = very much). Each category of LISREL 8.3 was used to test the hypotheses of the research
variables was modified to the situation of the study based on the model.
measuring categories, the reliability and appropriateness of
which have already been verified in preceding theses (Cronin 4. Test results
and Taylor, 1992, Shim; 2000).
Investment profitability was measured by five questions, 4.1. Reliability and validity analysis results
including inflation guarantee against income, proper interest
guarantee on investment, increase of capital value, increase of To verify the study model, a structural equation model
effective value, and possibility of lease. Investment security was analyzed the reliability of the measures. In the first step, the
measured by four questions, including the level of ownership model was evaluated by confirmative factor analysis; in the
achievement, the level of the possibility of use, the level of the second step, the structural model containing measurement
possibility of development, and capital value conservation. variables and theoretical variables was verified. The programs
Investment liquidity was measured by four questions, including SPSS Windows 13.0 and LISREL 8.3 were used to verify the
the possibility of usage transfer, the possibility of investment study model.
enlargement and reduction, the possibility of lease, and the As a result of the analysis, Cronbach's α on the real estate
possibility of early return when necessary. Regulation was investor behavioral factors turned out to be .842 at the minimum
measured by three questions, including the possibility of and .897 at the maximum, which indicated very high reliability.
various restrictions, development possibilities, and invest- Investment satisfaction, trust in investment firm, and reinvest-
ment-related approval. Finally, investment location was mea- ment intention were .855, .930, and .876, respectively, showing
sured by four questions, including closeness of school groups, high reliability. Thus, the reliability of research constructs was
the location of public facilities, floating population and public considered to be fair.
transportation, and local household and income levels. In addition, exploratory factor analysis was carried out to
Hwang (2005) asserted that investment well-being is analyze the validity of the measurement variables. Using
recognized through cultural and personal factors, and various principal component analysis, the varimax rotation method, one
kinds of interactions emerge between people and their physical of the orthogonal rotations, kept independency among the
environment according to the adaptability of their housing to the
environment. Marans (1976) divided environmental physical Table 1
factors into the following categories: nearby green space, Exploratory factor and reliability analysis
facility maintenance, low population density, noise, spacious- Initial Oblique Reliability Cronbach's
ness, fengshui, housing density, degree of pollution, cultural item rotation analysis alpha
no.
amenities, hills and lakes, and surrounding trees and landscapes.
In this study, investment well-being was measured in four Real estate Investor Investment 5 5 5 .851
behavioral factors profitability
questions: surrounding natural environment, pollution levels,
Investment 4 4 4 .842
education and facilities, and fengshui. security
Because trust in an investment firm is made in a relatively Investment 5 5 5 .854
short period of time, generally involves a great deal of money, liquidity
and is evaluated by various complex factors, it is affected by the Regulations 3 3 3 .851
Investment 4 4 4 .897
investor's view of levels of trust. Thus, in this study, investment
location
firm trust was measured in four questions: openness of the Investment 4 4 4 .862
firm's management, honesty of the firms, reputation of the well-being
firm's representatives, and experience in investment firm. Investment satisfaction 4 4 4 .855
Investment satisfaction and reinvestment intention were Trust in investment company 4 4 4 .930
Reinvestment intention 2 2 2 .876
measured in six questions: satisfaction with the land recom-
52 G. Shim et al. / Journal of Business Research 61 (2008) 47–55

Table 2 due to the use of orthogonal rotation, the discriminant validity

Composite reliability, AVE and confirmatory factor analysis for each factor was attained (Tables 1 and 2).
Hypothetical Variable Coefficient (λ) t value Composite Variance
construct reliability extracted 4.2. Correlation among constructs
estimate
(AVE)
According to the factor analysis results, Pearson correlation
Investment Ret1 0.698 10.72 0.84 0.68
analysis was carried out to verify the mutual relationships
profitability Ret2 0.818 12.08
Ret3 0.882 14.32 among the constructs and their unidimensional characteristics.
Ret4 0.827 14.24 As a result, the relationships between the behavioral factors and
Ret5 0.731 12.58 investment satisfaction and reinvestment intention had a
Investment security Sta1 0.79 12.11 0.82 0.64 positive relationship, as shown in Table 3. The results are in
Sta2 0.872 15.89
accordance with the relative direction among the presented
Sta3 0.826 14.89
Sta4 0.819 13.58 variables. In addition, all measures had higher correlation
Investment liquidity Liq1 0.879 14.91 0.84 0.68 among similar concepts than dissimilar concepts, showing both
Liq2 0.87 15.52 convergent and discriminant validity.
Liq3 0.754 13.67
Liq4 0.793 14.47
4.3. Hypothesis testing
Liq5 0.688 13.32
Regulations Low1 0.892 15.05 0.83 0.67
Low2 0.877 14.42 4.3.1. Evaluation fit of model
Low3 0.866 14.9 To test the hypotheses in this study, we estimated the fit and
Investment location Loc1 0.903 15.33 0.88 0.7 parameters of the models through covariance structural analysis.
Loc2 0.872 15.58
The parameters of the overall model used maximum likelihood
Loc3 0.871 14.87
Loc4 0.859 14.76 estimation, and the fit of the model resulted as χ2 (189 d.f.) =
Investment Wel1 0.875 13.83 0.85 0.69 274.90 (p = .000), GFI = .91, AGFI = .88, RMR = .051, NFI = .91,
well-being Wel2 0.88 13.03 CFI = .97. Compared to general evaluation standards, this failed
Wel3 0.892 14.78 to meet the χ2 value. But it's enough to explain the relations
Wel4 0.747 13.52
among variables since GFI, NFI, and CFI turned out to be .91,
Investment Sat1 0.86 15.46 0.84 0.64
satisfaction Sat2 0.903 17.42 .91, and .97, respectively. The results for the path analysis on
Sat3 0.714 13.54 the structural model are shown in Table 4.
Sat4 0.861 14.26
Trust in investment Tru1 0.9 15.84 0.9 0.74 4.3.2. Results and discussion
company Tru2 0.906 16.25
Tru3 0.913 17.38
Results from the empirical analysis of the research
Tru4 0.92 17.98 hypotheses are as follows. H1, which predicted that investment
Reinvestment Re1 0.943 18.05 0.85 0.65 profitability would have a positive effect on investment
intention Re2 0.925 17.45 satisfaction, was adopted. With β = .24 (t = 2.13), it showed
Goodness of fit χ2(174) = 224.69, RMR = .04, GFI = .92, AGFI = .89, that the higher the condition on the trend (including inflation,
CFI = .98, NFI = .92
proper interest rate guarantee, capital value, use value, and
possibility of lease), the higher the satisfaction on the
factors. No constructs were exempted as a result of the analysis, investment.
and the factor loadings for each concept were all above .69 H2, which predicted a positive effect of investment security
(Nunnally 1978), so convergent validity was confirmed and, on investment satisfaction, was rejected because it showed no

Table 3
Correlation matrix of constructs
M SD Real estate investor behavior factor Investment Trust in Reinvestment
satisfaction investment intention
Investment Investment Investment Regulation Investment Investment
company
profitability security liquidity location well-being
Investment profitability 3.81 0.69 –
Investment security 3.86 0.73 .736⁎⁎⁎ –
Investment liquidity 3.67 0.77 .642⁎⁎⁎ .757⁎⁎⁎ –
Regulations 3.82 0.77 .631⁎⁎⁎ .662⁎⁎⁎ .661⁎⁎⁎ –
Investment location 4.06 0.78 .597⁎⁎⁎ .689⁎⁎⁎ .634⁎⁎⁎ .572⁎⁎⁎ –
Investment well-being 4.07 0.75 .615⁎⁎⁎ .598⁎⁎⁎ .607⁎⁎⁎ .570⁎⁎⁎ .734⁎⁎⁎ –
Investment satisfaction 3.23 0.82 .384⁎⁎⁎ .323⁎⁎⁎ .195⁎ .269⁎⁎ .499⁎⁎⁎ .455⁎⁎⁎ –
Trust in investment company 3.75 0.82 .642⁎⁎⁎ .736⁎⁎⁎ .768⁎⁎⁎ .535⁎⁎⁎ .723⁎⁎⁎ .621⁎⁎⁎ .367⁎⁎⁎ –
Reinvestment intention 3.32 0.89 .352⁎⁎⁎ .349⁎⁎⁎ .298⁎⁎ .245⁎⁎ .488⁎⁎⁎ .405⁎⁎⁎ .726⁎⁎⁎ .467⁎⁎⁎ –
Pearson's Linear Correlation Coefficient (r).
⁎p b .05, ⁎⁎p b .01, ⁎⁎⁎p b .001.
 G. Shim et al. / Journal of Business Research 61 (2008) 47–55 53

Table 4
Structure equation model results
Hypothesis Path Path name Path coefficient t value Results
H1 Investment profitability (ξ1) → investment satisfaction(η1) γ11 0.24 2.13⁎ Supported
H2 Investment security (ξ2) → investment satisfaction(η1) γ12 0.03 .05 Not supported
H3 Investment liquidity(ξ3) → investment satisfaction (η1) γ13 0.33 3.28⁎⁎ Supported
H4 Regulations(ξ4) → investment satisfaction(η1) γ14 0.02 .17 Not supported
H5 Investment location (ξ5) → investment satisfaction(η1) γ15 0.42 3.78⁎⁎⁎ Supported
H6 Investment well-being(ξ6) → investment satisfaction(η1) γ16 0.21 2.05⁎ Supported
H7 Investment satisfaction(η1) → trust in investment company(η2) β21 0.35 4.25⁎⁎⁎ Supported
H8 Investment satisfaction(η1) → reinvestment intention(η3) β31 0.64 10.36⁎⁎⁎ Supported
H9 Trust in investment company(ξ2) → reinvestment intention(η3) γ32 0.25 3.95⁎⁎⁎ Supported
⁎p b .05, ⁎⁎p b .01, ⁎⁎⁎p b .001.
χ2 (189 d.f.) = 274.90 (p = .000), GFI = .91, AGFI = .88, RMR = .051, NFI = .91, CFI = .97.

close relationship between the two factors (β = .03, t = .05).
Actually, individual investors recognize that the level of
ownership, possibility of use, possibility of development, and
conservation of capital value do not affect investment satis-
faction in real estate transactions.
H3 was supported by our results (β = .33, t = 3.28), indicating
that investment liquidity has a positive impact on investment
satisfaction. Satisfaction level increases when usage transfer,
investment enlargement or reduction, lease, sale, development,
and early return are readily possible.
H4 predicted that regulations would positively affect
investment satisfaction. But at β = .02 (t = .17), there appeared
to be no statistically significant effect. Regulations and restric-
tions on the investment-related approval may not have a close
relation with investment satisfaction, so H5 was rejected.
For H5, its prediction regarding investment location was
supported (β = .42, t = 3.78). It appears that the antecedent
variables affect investment satisfaction. That is, the more people
recognize regional factors such as school districts, public
facilities, mobile population, public transportation, and income
levels, the higher their satisfaction level. Thus, H5 was adopted.
The prediction of H6 that investment well-being would have
a positive effect on investment satisfaction was supported at
β = .21 (t = 2.05), with its consideration of natural surroundings,
low pollution levels, education/cultural facilities, and fengshui
in the investment process.
Next, H7 hypothesized a positive relationship between
investment satisfaction and trust in the investment firm. Its
results of β = .35 (t = 4.25) showed that the more the investors
were satisfied, the more they trusted the investment firm.
Satisfaction level in investment rises when openness and
honesty are apparent, recommending investment reputation of
the representatives and their investment experience levels.
Thus, H7 was adopted.

Fig. 2. Hypothesis test results of the research model.

54 G. Shim et al. / Journal of Business Research 61 (2008) 47–55
With results of β = .64 (t = 10.36), H8's prediction of a
positive effect of investment satisfaction on the intention to
reinvest appeared to show that the higher the satisfaction, the
higher the reinvestment intention. Thus, H8 was adopted.
Finally, results indicated that the higher the trust in the in-
vestment firm, the higher the intention to reinvest, so H9 was
supported as well (β = .25, t = 3.95).
Summing up the effects of investor behavioral factors,
investment location, followed by investment liquidity, profit-
ability, and well-being, turned out to be very important factors,
as all showed a strong positive effect on investment satisfaction.
Investment security and regulations, however, appeared to have
no meaningful positive effect. Ratings for the factors were
β = .223 for investment earning rate, β = .347 for investment
liquidity, β = .433 for investment location, and β = .219 for
investment well-being. With regard to the relative influence of
satisfaction and trust on the intention to reinvest, the results
showed investment satisfaction having a very strong effect on
reinvestment intention (β = .641), followed by trust in the
investment firm (β = .231). Fig. 2 shows all these results.
5. Conclusions
5.1. Summary and implications
The results of this study of investor behavioral factors came
from an empirical analysis of samples from investors around the
Gumi area of South Korea. Gumi is not only the most fi-
nancially independent of the nation's 14 large cities, it is also an
area in which real estate investment has been very active for the
last several years. In research on general perceptions of real
estate investment, the Gimcheon area, designated as the
renovation city among the studied area, showed the highest
investment rate for reasons of financial gain and preservation of
the capital value. On the perception level of investment capital
and tax, the percentage of personal capital was the highest,
whereas frequent changes in real estate policy were perceived to
be a problem.
The adoption of H1 was not much of a surprise, considering
the tendency of real estate investors to take inflation, proper
interest rate guarantee, capital value, use value, and possibility
of lease into account before making their investments in order to
try to guarantee more satisfying conditions. H2 was rejected
because investment security has relatively nothing to do with
satisfaction. It is no exaggeration to say that this is because
security in real estate investments is rare. General investors can
anticipate the possibility of use or development of the real estate
according to the civil, county, or district plan, but they also fear
that the will of the policy executors will count more than that of
the real estate possessors before the actual development plan is
carried out.
H3's adoption can be explained by considering that the more
investors consider such issues as usage transfer or investment
extension, possibility of reduction, lease, sale, development,
and chance of early return if necessary, the stronger the in-
vestment level tends to be. H4's results show that regulations
have no statistically meaningful effect on investment satisfac-
tion; real estate investors recognize that various restrictions or
openness to regulations and the procedures of investment-
related approval have no relationship with investment satisfac-
tion. Real estate policy is constantly published regardless of any
type of government. In such a situation, investors cannot help
being sensitive to statutes and regulations that lead directly to
liquidity, such as when a military protection area or green belt is
cancelled. This kind of restriction serves as an obstacle in the
access of investment information, and investors are unwillingly
obliged to obey.
Investment location and well-being were both found to have a
significant positive effect on investment satisfaction, supporting
H5 and H6. The more positive the perception of regional factors
such as school districts, public facilities, mobile population, and
income levels, as well as the surrounding natural environment,
low pollution levels, educational and cultural facilities, and
fengshui, the more satisfied investors will be.
5.2. Limitations and suggestions for future research
Certain limitations of this study should be noted, which lead
to suggestions for future studies. First, the study was limited to
specific areas in and around Gumi, hindering generalization in
South Korea (ROK). Future studies should extend the subject
nationwide so that the results of this study can better be
generalized. Second, besides the measured variables used in this
study, various other factors can affect real estate investment
behavior, and future research can focus on them in more detail.
Third, these questionnaire respondents were experienced in real
estate investment, but due to the secret nature of real estate
contracts the likelihood of false or dishonest answers could be
uncomfortably high. Future scholars should consider a new
approach to obtain responses, such as making the survey more
understandable and implementing a method that simultaneously
interviews experienced respondents in order to raise their
credibility.
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