Affect Investment Decisions Research Articles

A Literature Review on the Theory of Asymmetric Information

Asymmetric information refers to a situation in which one of the parties involved in a market transaction has more information than the other, which reduces efficiency in resource allocation. The basic reasons are the high cost of information acquisition, blocked information transmission channels, and lack of enough information disclosure. Problems such as adverse selection and moral hazard created by asymmetric information damage the efficiency of the market. Asymmetric information has played a very important role in lending, hotel, and catering. As for the industry of lending, the existence of asymmetric information between borrowers and lenders would make it easy for high-risk borrowers to obtain loans and, further, increase the risk of default. Asymmetric information within the hotel industry makes it hard for consumers to judge the hotels service quality and price rationality. Asymmetric information affects investment decisions and enterprise efficiency in the catering industry, distorting valuation and causing investment loss. Addressing asymmetric information in various industries is crucial for fostering market transparency and efficiency. To achieve this, researchers must employ both signaling and screening models to mitigate the adverse effects of information asymmetry. This paper examines historical literature on asymmetric information across diverse industries and delineates strategies to enhance information transparency and promote more informed decision-making.

Factors Affecting Investment Decision of Life Insurance Policy

Factors Affecting Investment Decision of Life Insurance Policy

Pengaruh Pengetahuan Investasi, dan Herding Behaviour terhadap Keputusan Cryptocurrency (Studi Kasus pada Mahasiswa Perguruan Tinggi Negeri di Jambi)

This descriptive quantitative study aims to analyze and produce an empirical test of the influence of investment knowledge and herd behavior on cryptocurrency investment decisions among state university students in Jambi. The population and sample used are state university students in Jambi who have carried out cryptocurrency investment activities. The samples in this study were 54. Meanwhile, the total sample did not include Jambi Ministry of Health Polytechnic students. Data was collected by distributing questionnaires using Google Forms and Likert scale measurements. The data testing techniques used were validity and reliability tests, r-square tests, and hypothesis tests using Smartpls 4.0 software. The study results showed that (1) investment knowledge positively and significantly affects investment decisions. The better the students' investment knowledge about cryptocurrency is, the more it will affect investment decisions. The combination of awareness, knowledge, skills, attitudes, and behaviors is needed to make the right financial decisions and achieve individual financial well-being. and (2) Herding Behavior has a positive and significant effect on investment decisions; herd behavior is influenced by psychological factors that make investors take illogical actions, significantly when market uncertainty increases and market volatility is high. This is following the theory of financial behavior, which states that subjective norms, among others, are influenced by other investors' opinions, which can affect the decision of state university students in Jambi to invest in cryptocurrency. These findings have practical implications for understanding and managing cryptocurrency investments in the face of market uncertainty.

Brazilian investors' susceptibility to interpersonal influence: Impacts on risk tolerance and the disposition effect

Social interactions play an important role in the mindset of investors. Based on social finance, this study analyzes the effect of investors' susceptibility to interpersonal influence on financial risk tolerance and the disposition effect. A survey was conducted with Brazilian investors employing structural equation modeling. Investors' susceptibility to interpersonal influence had a direct and negative impact on the level of financial risk tolerance, whereas its influence on the disposition effect was indirect and negative, with financial risk tolerance as a mediator. Furthermore, financial risk tolerance had a direct and positive impact on the investors' disposition effect. This study advances in the field by discussing the effect of interpersonal influence on investments in a developing country. In a country with low savings rates, understanding how social interactions and norms affect investment decisions is vital when it comes to adopting strategies that prevent inexperienced investors from entering potentially harmful investments.

Social security, health capital and household investment behavior

The correlation between social security systems and household investment behavior has long intrigued economists. However, the mechanisms through which social safety nets affect investment decisions remain unclear. Furthermore, the potential moderating role of health capital, encompassing physical and mental health, has been underexplored. This study uses data from the 2020 China Family Panel Studies to examine the relationship between social security coverage and household investment behavior, with health capital as a moderator. The results reveal a positive association between social security coverage and the propensity for risky investments, which is significantly moderated by physical and mental health, with the latter having a stronger effect. These effects vary across regions and income levels, with the strongest impacts demonstrated in developed areas and high-income households. These findings elucidate the complex pathways through which social policies influence household investment behavior, providing insights for policymakers aiming to increase financial market participation in rapidly evolving economies.

Pengaruh Financial Attitude, Financial Knowledge, dan Financial Self-Efficacy terhadap Keputusan Investasi

This study aims to describe investment decisions, financial attitude, financial knowledge, and financial self-efficacy, as well as to analyze the influence of financial attitude, financial knowledge, and financial self-efficacy on the investment decisions of students at Universitas Indonesia Membangun. Utilizing a quantitative method with a descriptive and verification approach, a sample of 96 respondents was selected through purposive sampling, with data collected via questionnaires. The analysis was conducted using multiple linear regression. Descriptive results indicate that the investment decisions, financial attitude, financial knowledge, and financial self-efficacy of Universitas Indonesia Membangun students are categorized as high. Partially, financial attitude, financial knowledge, and financial self-efficacy positively and significantly affect investment decisions. Simultaneously, these three variables have a positive and significant influence on investment decisions, with a correlation of 0.821 and a contribution of 67.4%.

The Influence of Financial Literacy and Islamic Business Ethics on Investment in Islamic Financial Instruments: The Mediating Role of Risk Attitude and the Moderating Role of Religious Knowledge

Current challenges in the Islamic banking sector highlight the urgent need to understand the factors influencing ethical and informed investment decisions. This study aims to analyze the impact of financial literacy and Islamic business ethics on investment in Islamic financial instruments, focusing on the mediating role of risk attitude and the moderating role of religious knowledge. Data were collected through a primary method by distributing questionnaires to 300 bank customers and students in Aceh, Indonesia. The model employed is Structural Equation Modeling-Partial Least Squares (SEM-PLS) using Smart PLS software. The findings reveal that financial literacy significantly positively impacts investment decisions and risk attitudes. Islamic business ethics also significantly influence both investment decisions and risk attitudes. Religious knowledge positively affects investment decisions, while risk attitude has a positive impact on investments. However, the moderating effects of risk attitude and religious knowledge on investment are not significant. Risk attitude serves as a crucial mediator in the relationship between financial literacy and investment, as well as between Islamic business ethics and investment. The study underscores the importance of financial literacy, Islamic business ethics, religious knowledge, and risk attitude in shaping investment behavior in the Islamic finance sector, and highlights the need for integrating ethical practices to enhance investment outcomes.

The Spillover Effects of Public Attention and Real Estate Market: A Case Study from Shanghai, China

The real estate industry is closely linked to the national economy, and fluctuations in house prices have long been a major focus of public attention. This study explores the relationship between public attention and the real estate market, using public attention as a focal point. It systematically explains how public attention affects investment decisions in real estate. Taking Shanghai as a case, this study empirically examines the dynamic time-varying relationship between public attention and house prices, sales, investment and floor space completed by building a Time-Varying Parameter Vector Autoregression (TVP-VAR) model with data from 2011 to 2024.The research shows that the spillover index of house prices on public attention is positive and house prices acting as the sender of the shock, with rising house prices boost public attention. Conversely, the spillover index of public attention on house prices is negative, with public attention acting as the receiver of the shock. Based on the empirical results, it is recommended to incorporate public attention into the real estate market monitoring system, observe the real estate industry using multiple indicators, and enhance the regulation of online media to ensure policy transparency.

Influence of political stability on the stock market returns and volatility: GARCH and EGARCH approach

Political instability has increased drastically in Pakistan during the last few decades. This may intensify the fear of investors and eventually affect investment decisions. Therefore, the stock market’s reaction to political stability must be explored and appropriate policy measures should be prescribed. This paper examines the effect of political stability on stock market returns and volatility using time series data from Pakistan for the period from January 02, 2004, to May 31, 2018. The study uses the Generalized Autoregressive Conditional Heteroskedastic (GARCH) and Exponential Generalized Autoregressive Conditional Heteroskedastic (EGARCH) models to achieve the main objectives. The findings of the GARCH and EGARCH models confirm that political stability has a positive and significant influence on both stock market returns and volatility in Pakistan. In addition, the EGARCH findings indicate that negative shock (political instability) creates more volatility in the stock market than positive shock (political stability). The results of this study reveal that financial market investors are affected more by political instability. In conclusion, this study suggests that political stability is an essential factor affecting financial market volatility, and it leads to stable financial markets. It also emphasizes that political instability needs to be resolved to achieve stable financial markets.

Unlocking the Power of Financial Experience: How Risk Perception Shapes Investment Decisions

Research Aims: This study aims to investigate the influence of financial experience on investment decisions, with risk perception acting as an intervening variable among stock investors in Banjarmasin. Design/methodology/approach: The research employs a Partial Least Squares Structural Equation Modeling (PLS-SEM) approach to analyze the data collected through a survey questionnaire distributed to 122 stock investors in Banjarmasin. This methodology allows for simultaneous analysis of direct and indirect relationships between variables, providing a comprehensive understanding of the dynamics influencing investment decisions. Research Findings: The findings indicate that financial experience significantly and positively affects investment decisions, suggesting that investors with more extensive financial experience are likely to make more informed and strategic choices. Furthermore, financial experience significantly impacts risk perception, which in turn influences investment decisions, underscoring the crucial role of risk perception as a mediator in this relationship. Theoretical Contribution/Originality: This study contributes to the behavioral finance literature by elucidating the relationship between financial experience, risk perception, and investment decisions. It highlights the importance of financial literacy and education in enhancing investment decision-making processes, thereby promoting more rational and independent investment choices. Keywords: Financial experience, investment decisions, risk perception, behavioral finance, PLS-SEM

Factors Affecting Stock Investment by Individual Investors on the Indonesia Stock Exchange

This study aims to examine the factors that influence individual investors in investing in stocks on the Indonesia Stock Exchange. The factors studied and suspected of influencing individual investor decisions are financial literacy, risk perception and herding behavior. The study also examines the effect of financial literacy on risk perception. The population in this study were college students in Yogyakarta who had invested in the Indonesia Stock Exchange. Respondents were focused on students of the Islamic University of Indonesia with a total of 115 students taken using convenience sampling and snowball sampling techniques. To test the hypothesis, the researcher used a structural equation model analysis tool with the Smart PLS program. The results of the study indicate that financial literacy, risk perception have a positive effect on investment decisions. However, herding behavior does not affect investment decisions, while financial literacy also affects risk perception.

Factors Affecting Investment Decisions in Nepali Stock Market: A Systematic Review

The study examines factors influencing investment decisions in the Nepali stock market. It employs a thorough review methodology, drawing on past research across various stock market conditions. By analyzing relevant concepts, findings, and conclusions from these studies, it provides insights specific to the Nepali context. Key factors identified include market environment, investment motives, information availability, third-party opinions, the company's reputation, and herding behavior. The study highlights the importance of aligning investment strategies to achieve both long-term gains and short-term profits. Additionally, it emphasizes the need for diversification by building an investment portfolio to mitigate risks and enhance returns in the Nepali stock market.

The Impact of Managers' Self-interested Behavior on the Firm's Strategic Decision-making

Based on agency theory, this paper investigates the impact of managerial self-interest, especially managerial temporal myopia, on corporate strategic decision-making. This myopic behavior can lead to investment myopia, which in turn affects investment decisions. Moreover, it may result in financial distress and stock price crashes, ultimately affecting financing decisions. Firstly, it explores how managers exploit information asymmetry to advance their personal interests, consequently undermining the long-term value of the company. Next, the study examines the specific manifestations and causes of managerial temporal myopia, explaining how short-term behaviors in investment, financing, and debt management affect corporate decision-making. Finally, the paper proposes strategies to mitigate managerial self-interest, including curbing the tendency towards short-term gains, enhancing information disclosure, and restricting managerial expansion without adequate supervision. This analysis aims to provide valuable guidance for corporate governance, helping enterprises to make scientifically sound strategic decisions while considering managerial self-interest. The objective is to avoid long-term losses caused by myopic behavior.

The Ripple Effects of Financial Fraud: Investor Trust and Risk Appetite Post-Kangmei Pharmaceutical

The financial fraud at Kangmei Pharmaceutical (stock code: 600518) has had profound implications for retail investors. This paper, through data analysis, explores the correlation between information asymmetry and investment outcomes for retail investors. Information asymmetry often leaves retail investors unable to access the true financial state and operational conditions of companies, leading them to make speculative investments. Post-exposure, as information transparency increased, retail investors became aware of the company's financial issues and rushed to sell, causing a stock plunge. This highlights how information asymmetry not only affects investment decisions but also amplifies market volatility. To mitigate risks from information asymmetry, regulators must strengthen oversight and penalties, improve disclosure transparency and authenticity, while investors need to enhance self-protection awareness and information gathering and analysis capabilities. Only then can we minimize the impact of information asymmetry on retail investors and uphold fairness and stability in financial markets. This paper suggests that by implementing a robust regulatory framework and encouraging proactive investor education, we can better safeguard retail investors from the detrimental effects of information asymmetry, thereby fostering a more resilient and equitable financial market ecosystem.

Factors Affecting Investment Decisions of Individuals: A Comparative Study Between Developed and Emerging Markets (The Case of Jordan)

This study aimed to analyze the factors influencing individuals' investment decisions in Jordan, comparing emerging markets (such as Jordan) and developed markets (such as Dubai). The sample included 100 individual investors (50 from Jordan and 50 from Dubai), and a 30-item questionnaire covering economic, psychological, social, and technical factors was used. The results showed that economic factors such as inflation and growth significantly influence investment decisions in both markets, but without significant statistical differences, as the T-statistic value for economic factors was 0.8665 and the P-value was 0.3883. On the other hand, psychological factors were more influential in developed markets, as the T-Statistic showed a value of -4.3778 and the P-value was 0.00003, indicating that Dubai investors bear more risks than Jordan. Technical factors significantly impacted developed markets, as the F-statistic value was 9.623 and the P-value was 0.0025. In contrast, the study showed that investors in emerging markets face more significant challenges compared to developed markets, with a T-Statistic of 6.6154 and a P-Value of 0.0000000019. The study recommends increasing government support to enhance political and economic stability in emerging markets to mitigate investor challenges. It also recommends enhancing the use of technology in investing in emerging markets, and improving financial education to encourage informed risk-taking. In addition, it is suggested that regulators in developed markets adopt strategies that support greater transparency and clarity of investment opportunities to facilitate decision-making.

Economic policy uncertainty and the predictability of stock returns: impact of China in Asia

PurposeMotivated by the significant role of uncertainty in affecting investment decisions and China's economic leadership in Asia, this paper investigates the predictive role of exposure to Chinese economic policy uncertainty at the individual stock level in large Asian markets.Design/methodology/approachWe estimate the monthly uncertainty exposure (beta) for each stock and then employ the portfolio-level sorting analysis to investigate the relationship between the China’s uncertainty exposure and the future returns of major Asian markets over multiple trading horizons. The raw returns of the high-minus-low portfolios are then adjusted using conventional asset pricing models to investigate whether the relationship is explained by common risk factors. Finally, we check the robustness of the portfolio-level results through firm-level Fama and MacBeth (1973) regressions.FindingsApplying portfolio-level sorting analysis, we reveal that exposure to Chinese uncertainty is negatively related to the future returns of large stocks over multiple trading horizons in Japan, Hong Kong and India. We discover this is unexplained by common risk factors, including market, size, value, profitability, investment and momentum, and is robust to the specification of stock-level Fama and MacBeth (1973) regressions.Research limitations/implicationsOur analysis demonstrates the spillover effects of Chinese economic policy uncertainty across the region, provides evidence of China's emerging economic leadership, and offers trading strategies for managing uncertainty risks.Originality/valueThe findings of the study significantly improve our understanding of stock return predictability in Asian markets. Unlike previous studies, our results challenge the leading role of the US by providing a new intra-regional return predictor, namely, China’s uncertainty exposure. These results also evidence the continuing integration of the Asian economy and financial markets. However, contrary findings for some Asian markets point toward certain market-specific features. Compared with market-level research, our analysis provides deeper insights into the performance of individual stocks and is of particular importance to investors and other market participants.

Crowdfunding for sustainability: How environmental activism moderates support for B2B and B2C campaigns

This study explores the influence of customer investors' perceptions on their willingness to invest in sustainable crowdfunding campaigns. Specifically, it examines whether emphasizing a product's direct impact on consumers (B2C) or its broader industrial impact (B2B) affects investment decisions. Using a between-subjects experiment with 304 participants, the research investigates how environmental sustainability activism moderates investment behavior. The study found that higher levels of environmental activism decrease support for B2C campaigns compared to B2B campaigns. These results suggest that sustainability-focused backers prefer projects due to perceived greater systemic impact.

BEHAVIOUR BIAS IN INVESTMENT DECISIONS: EMPIRICAL STUDY OF INVESTOR PSYCHOLOGY IN INDONESIA

Investing involves putting money into a variety of asset classes for a predetermined amount of time in the hopes of increasing total value and producing more income. The goals of investments and economics, such as value creation, profit generation, and other related goals, are strongly correlated. It is critical to recognize that investments may include additional financial, social, and spiritual goals. This research aims to assess investor behavior from internal and external perspectives concerning investing decisions. This study employs the Structural Equation Model (SEM) methodology utilizing the Smart-PLS software. This study's findings demonstrate that qualities including anger, anxiety, overconfidence, and self-monitoring positively influence investment decisions. Herding mitigates the adverse impacts of anger, anxiety, overconfidence, and self-monitoring on investment decisions. This research's consequences can assist investors in circumventing irrational risks and yield more objective findings grounded in thorough study. This tendency can result in inefficient market transactions, asset bubbles, and significant volatility. This study arose as a counter to the conventional understanding of exchange markets predicated on the premise of trader rationality. This research identifies that emotional emotions, risk perception, and cognitive biases frequently affect investment decisions by comprehending human nature.

The The Influence of Financial Literacy, Risk Perception, Herding, Loss Aversion, Anchoring, And Income on Gold Investment Decisions at PT. Pegadaian (Persero)

The investment interest in Indonesia is rising in line with the society's awareness on the benefit of investment, especially gold investment. Investors act rationally or irrationally in making investment decisions. The aim of this research is to study the effect of financial literacy, risk perception, herding, loss aversion, anchoring and income to the decision of gold investment at PT. Pegadaian. This is a quantity experiment with the customer of PT. Pegadaian who used the gold investment as a population and sample of this research. Using the accidental sampling technique, there are 100 respondents. Data collection using a direct and online questionnaire. The Structural equation model partial least square method with the SmartPLS 3.0 software used to analyze the data collected. The results show that financial literacy affects investment decisions. Respondents have a fairly high level of education and moderately high association of financial literacy. While the risk perception, herding, loss aversion, anchoring and income are not affecting the investment decisions.

Analysis of Financial Literacy and Overconfidence on Investment Decision with Risk Tolerance Mediation and Gender as Moderator (Case Study of Generation Z Investors in Bandung City)

Financial literacy and overconfidence are important investment considerations due to market complexity. This study examines how Financial Literacy, Overconfidence, Risk Tolerance, and Gender affect investment decisions in Bandung generation Z investors. This study uses a descriptive quantitative methodology to survey 121 Generation Z investors via questionnaire. SEM- PLS provides further evidence that financial literacy positively affects risk tolerance at a 5% significance level. At 5% significance, financial literacy positively affects investing decisions. Risk tolerance also positively affects investing decisions at a 10% significance level. Additionally, there is evidence that the impact of financial literacy on investment decisions is mediated by risk tolerance, with a significance level of 10%. Gender positively influences financial literacy and risk tolerance, with a 5% significance level. In addition, a significance level of 5% indicates that overconfidence has a substantial and advantageous effect on risk tolerance. With a 5% significance threshold, overconfidence positively affects investing decisions. Overconfidence and investing decisions are mediated by risk tolerance at 10%. Lastly, gender moderate overconfidence's effect on risk tolerance with a 5% significance threshold. For overconfidence, gender has minimal impact. The complete analytical framework of this study combines financial knowledge, overconfidence, risk tolerance, and gender to explain individual investing decisions. This study seeks to help investors, particularly generation Z, make more logical and successful investment decisions by improving their financial literacy, regulating their overconfidence, and considering risk tolerance and gender.