THE EFFECT OF FINANCIAL ATTITUDE AND FINANCIAL KNOWLEDGE ON COMPANY PERFORMANCE WITH FINANCIAL DECISIONS AS INTERVENING VARIABLES: A BEHAVIORAL FINANCE PERSPECTIVE

Siti Aisyah Hidayati,Sri Wahyulina,Embun Suryani

doi:10.29303/jmm.v10i1.635

Abstract

This study aims to analyze the effect of Financial Attitude and Financial Knowledge on Company Performance with Financial Decision as an Intervening Variable on Small and Middle Enterprises Owners in Lombok Island. This research's theoretical contribution is expected to contribute to the knowledge and development of behavioral finance theory related to Financial Decision-making and Company Performance in Small and Middle Enterprises. Besides, it is also hoped that behavioral finance will become a subject in the financial management course. Furthermore, this research's practical contribution is expected to provide input, suggestions, and recommendations to the NTB Provincial Government's policymakers in making policies related to SMEs' development. This research is research based on a quantitative approach, with this type of explanatory research. The study population was all SMEs in Lombok Island. The sampling was carried out by non-probability selection, namely using judgment sampling, selecting SMEs engaged in the pottery industry and had already exported. Of the existing population, there are 35 (Thirty-Five) SMEs that can be taken as samples. Respondents in this study are the owners of each of these SMEs. The data collection technique used in this study was to use a questionnaire. The data obtained will be processed as needed by using GSCA (Generalized Structured Component Analysis) statistical tools to achieve the research objectives and hypothesis testing. The results showed that Financial Attitude and Financial Knowledge had a positive and significant effect on Financial Decision-making. Financial Decisions did not mediate the impact of Financial Attitude and Financial Knowledge on Company Performance, and Financial Decisions had a negative and significant effect on Company Performance. This circumstance is also motivated by the age of most of the respondents of productive age, mostly male, most of the education level is high school, and the length of business is more than 10 (ten) years. Keywords: Financial Attitude, Financial Knowledge, Financial Decision, Company Performance

Highlights

Financial Attitudes have a positive and significant effect on Financial Decision making by the manager and owner of Small Medium Enterprise (SMEs)
This means that the better the Financial Attitudes owned by the SMEs owner, the better it is in making Financial Decisions
The Influence of Financial Knowledge on Financial Decisions in SMEs Financial Knowledge has a positive and significant effect on Financial Decision making by the owner and owner of SMEs. This means that the better the Financial Knowledge possessed by SMEs owners, the better it is in making Financial Decisions

Summary

Introduction

Background Financial science is based on the assumption that people will be rational in making financial decisions. If the decision is faced with an element of uncertainty associated with economy and portfolio, people will make use of common sense. Humans are believed to have always been inseparable from bias during the decision-making process, leading financial decision-makers to experience mistakes. On this basis, it can be said that the elements of behavior and action or, in other words, psychology affect financial decision-making.

Objectives

Methods

Discussion

Conclusion