Abstract
This study attests the belief-adjustment model to examine whether there are differences in investment decision making between the participants who obtain good news fol-lowed by bad news and those who obtain bad news followed by good news on the in-formation pattern which is processed based on end-of-sequence and long series infor-mation. The experiment design in this study is the pattern of presentation 1x1x2 end-of-Sequence, a long series information and directions of evidence (good news followed by bad news and bad news followed by good news). The research hypotheses were tested using Mann Whitney test. The variables used in this research are investment decision, pattern of presentation in end-of-sequence, length of the series of information, and order of evidence. The participants involved in this research are 47 students (ba-chelor program) of STIE Perbanas Surabaya majoring in Accounting and Manage-ment who are taking or have taken courses of Financial Statement Analysis and/or Investment Management and Capital Markets. The results show that there is no sig-nificant difference in the judgment between the participants who obtain good news followed by bad news and those who obtain bad news followed by good news. In addi-tion, there is no order-effect occurring in investment decision making.
Highlights
Capital market has an important role both as an alternative of financing and a means of investing
Based on the above theories and experiment designs used in this study, it can be formulated the following hypotheses: H1: There is a difference in investment decisions between the participants who obtain good news followed by bad news and the participants who obtain bad news followed by good news on endof-sequence pattern and long series of evidence
Results of the research conducted by Almilia and Supriyadi (2013) and Almilia et al (2013) show that there are differences in investment decisions between participants who receive the sequence of information: good news followed by bad news compared to participants who receive the sequence of information: bad news followed by good news on step-by-step patern of presenting information
Summary
Capital market has an important role both as an alternative of financing and a means of investing. This study seeks to provide evidence that EOS pattern in presenting information can be used as a method to mitigate or reduce the order effects on investment decision making. According to Hogarth and Einhorn (1992), primacy effect is predicted for the end-of-sequence pattern (simultaneously) in conjunction with a short series and simple evidence. This study seeks to provide evidence that EOS presentation pattern can be used as a method to mitigate or reduce the effect of the order in making investment decisions. The belief adjustment model is expressed to the step-by-step pattern of presenting a short series and simple evidence item, and the recentness effect is predicted to occur. Research suggests that when a set of short series of information is consistently positive or negative, expressed sequentially, compared to simultaneous disclosure, the belief revision in the decision of stock price is significantly greater in the sequential condition.
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