The effect of essential information and disposition effect on shifting decision investment

Sautma Ronni Basana,Zeplin Jiwa Husada Tarigan

doi:10.5267/j.ac.2021.6.015

Abstract

The current pandemic era has given uncertainty to the country's economic growth and resulted in many countries experiencing a drastic decline in share prices. This condition impacts investors' perceptions of the funds that have invested in the stock market. This study investigates the effect of essential information and disposition effect on shifting decision investment with the character investor's moderation as the moderator variable. A survey was conducted on 252 investors who have invested in the Indonesian stock exchange. The Data processing used the partial least square (PLS) technique. This study indicates that essential information for investors in the pandemic era can increase the disposition effect in deciding beneficial share ownership. The essential information obtained by investors in the covid era regarding stock market movements and its internal performance in the stock market list can increase investor shifting decisions. The disposition effect can have a significant effect on shifting decision investors. Essential information related to stock price movements and its internal performance affects investors' courage to take risks and provide optimism for shifting decisions. Then the investor type does not affect the disposition effect on shifting decisions. This study contributes to the theory of financial behavior in decision making by considering psychological factors when uncertainty exists in the stock market.

Highlights

Investors invest in several funds with the hope of obtaining higher returns in the future compared to the current result
This study aims to determine whether a shifting investment decision is caused by essential information and disposition effect with investors type as a moderator in Indonesian during the pandemic era
The pandemic era conditions resulted in differences and a drastic decline in the stock market, which resulted in many investors having difficulty choosing stocks that matched expectations

Summary

Introduction

Investors invest in several funds with the hope of obtaining higher returns in the future compared to the current result. Investors have invested in shares before the COVID-19 (Pandemic Coronavirus Disease), estimated to be in late December 2019 in Wuhan, China. This incident resulted in the Chinese government taking a strict policy or regulation on social and economic activities such as carrying out lockdowns. Lee et al (2020) found that the sectors studied on the Malaysian stock exchange were significantly affected by the coronavirus's impact, and only one sector was not significantly affected, namely Real Estate Investment Fund (REIT). There is a change in risk and return obtained by investors and significant changes in the capital market price, which impacts investors to make transactions quickly and benefit from getting a good return. Investors should look at how the management manages the firms efficiently and look at the prospects from the profitability perspective, looking at the percentage of income used to fund operational costs, non-operational costs, and dividend distribution to shareholders (Aryantini & Jumono, 2021)

Objectives

Findings

Discussion

Conclusion