Affect Investment Decisions Research Articles

Investment Behavioral Biases in Indonesia Millennial Investors Behavior during Pandemic

Purpose: Digital financial inclusion era has brought Indonesian people to gain interest in financial sector by accessing more resources to financial literature. During Covid-19 Pandemic, there was a unique phenomenon occurred where the price was going down but the number of individual investors, dominated by millennial, was increasing. This paper aimed to examine the behavioral biases that may influence Indonesian millennial investors during investment decision making process. The main focus is examining possibility of given effects from overconfidence, disposition effect, and loss aversion of the Indonesian millennial investors to investment decision making during Covid-19 Pandemic, by also examining the mediating effect for financial literature.
 Method: Using purposive sampling, a total of 1,035 valid respondents were collected using Google Form questionnaire. Structural Equation Modeling (SEM) analysis was conducted as the quantitative chosen method to examine the condition.
 Result: Overconfidence, disposition effect, and loss aversion are proven to positively affect investment decisions for Indonesian Millennial Investors during Covid-19 Pandemic. Additionally, financial literature is also proven to receive the mediating effect from overconfidence to investment decision, over all other independent variables. This study is believed to broaden the investment insight, especially in terms of investment decision making process and behavioral bias.

Carbon price floors and low-carbon investment: A survey of German firms

Introducing a price floor in emissions trading schemes (ETS) theoretically stabilizes expectations on future carbon prices and thus fosters low-carbon investment. Yet, ex post evidence on high carbon prices is scant and the relevance of carbon pricing for investment decisions is frequently contested. We provide empirical ex ante evidence on how a price floor in the EU ETS would impact the size and portfolio of energy firms’ investments. Analyzing survey responses of high-level managers in 113 German energy and industry companies, we find that the level of the price floor is crucial. A low price floor trajectory only provides insurance against downward price fluctuations and would leave investments largely unchanged except for industries receiving electricity price compensation, which reduce their investments. A high floor, significantly increasing the price level beyond current expectations, leads to higher investment by the majority of firms, especially by green firms, while investment in fossil energy would partially be abolished. Our studies implies that price floors can be important design components of ETS. However, policymakers need to ensure that they are at sufficiently high levels to affect investment decisions in a meaningful way.

THE IMPACT OF ADVOCATE RECOMMENDATIONS AND FIRM IMAGE ON INVESTMENT DECISION IN NEPALESE STOCK MARKET

Investors may select the best investing decision more easily when all the factors that contribute to it are clearly understood. The process, which differs from person to person, is influenced by a variety of factors. While some people rely exclusively on intuition when making decisions, others use a number of factors to guide them toward the ideal choice. A multitude of factors, including market characteristics and individual risk profiles, are assumed to influence investment decisions. Investors are continuously looking for strategies to increase their earnings. The study’s major goal was to look into the relationship between advocate recommendations and a firms’ image and how they affect investment decisions in the Nepalese stock market. The current study uses a descriptive and analytical research design. The primary data is the most important source of information for analyzing and determining the study’s outcome. An online Google form was used to collect required data utilizing a survey and structured questionnaire as research approach and instrument with a five-point Likert scale. The population of the study was Nepalese stock market investors. Researcher has selected 300 respondents using a judgmental sampling technique and provided a Google form. Out of them 86 people completed the survey and emailed it in. Eighty of them were correct. Mean, standard deviation, variance, independent sample t-test, and correlation were utilized in Excel and SPSS to analyze and interpret the collected data. According to the findings, advocate recommendations and firm image have a beneficial impact on investment decisions. Furthermore, there was no difference in advocate recommendations, firm image, and investment decisions across male and female in the Nepalese stock market.

CEO compensation, governance structure, and foreign direct investment in conflict-prone countries

Despite the apparent risks associated with an investment in conflict-prone countries, these countries still attract substantial investment from multinational enterprises (MNEs). Combining prospect theory and agency theory on principal–principal conflict, this study examines how CEO compensation affects investment decisions in conflict-prone countries. Using a panel dataset of 1036 privately owned Chinese MNEs from 2010 to 2019, we find that undercompensated CEOs are more likely to invest in conflict-prone countries as a means of compensating for the lack of remuneration. This effect, however, is contingent on the governance structures of their firms. We argue that the presence of more independent directors on boards makes undercompensated CEOs more likely to invest in conflict-prone regions. In contrast, the presence of more supervisors on boards makes undercompensated CEOs less likely to invest in such regions.

Qualitative Study of Individuals' Behavioral Biases toward Buying Decision of Financial Products: Evidence from Pakistani Stock Market

Due to increased complexity of financial instruments, the role of investors' bias in investment decision making has enhanced. To study this role, the present study aims identify the causes of behavioral biases which affect investment decision making. The main parameters of the study are home bias, disposition effect, herding bias, conformation bias and anchoring bias. The research design is exploratory in nature which will help to investigate the causes of behavioral biases that affect the investment decision making of individuals. The qualitative design was employed to get insights by conducting sixteen in-depth semi-structured interviews from individual investors. First and second order codes assigned to data mainly came from literature review. Researchers found that home bias, disposition effect, herding effect was quite evident in Pakistani Investor. However, anchoring bias has been found in half of the participants and confirmation bias not evident in Pakistani investors. The study has various implications for investors and academicians which will help to expand the scope of the future studies and generalizability by addressing the limitation of the current study.

Decarbonizing the Global Economy—Investigating the Role of Carbon Emission Inertia Using the Integrated Assessment Model MIND

In 2015, the 21st Conference of the Parties reaffirmed the target of keeping the global mean temperature rise below 2 °C or 1.5 °C by 2100 while finding no consensus on how to decarbonize the global economy. In this regard, the speed of decarbonization reflects the (in)flexibility of transforming the energy sector due to engineering, political, or societal constraints. Using economy–energy–climate-integrated assessment models (IAMs), the maximum absolute rate of change in carbon emission allowed from each time step to the next, so-called carbon emission inertia (CEI), governs the magnitude of emission change, affecting investment decisions and economic welfare. Employing the model of investment and endogenous technological development (MIND), we conduct a cost-effectiveness analysis and examine anthropogenic global carbon emission scenarios in line with decarbonizing the global economy while measuring the global mean temperature. We examine the role of CEI as a crucial assumption, where the CEI can vary in four scenarios from 3.7% to 12.6% p.a. We provide what-if studies on global carbon emissions, global mean temperature change, and investments in renewable energy production and show that decarbonizing the global economy might still be possible before 2100 only if the CEI is high enough. In addition, we show that climate policy scenarios with early decarbonization and without negative emissions may still comply with the 2 °C target. However, our results indicate that the 1.5 °C target is not likely to be reached without negative emission technologies. Hence, the window of opportunity is beginning to close. This work can also assist to better interpret existing publications on various climate targets when altering CEI could have played a significant role.

PENGARUH DEBT TO EQUITY RATIO, CASH RATIO DAN DIVIDEND PAYOUT RATIO TERHADAP HARGA SAHAM LQ45 YANG TERDAFTAR DI BURSA EFEK INDONESIA

This study aims to determine and analyze the effect of debt to equity ratio, cash ratio and dividend payout ratio on stock prices. The research method used is quantitative. A total of 54 sample data were determined by purposive sampling method. data analysis technique using multiple linear regression analysis. The results of the t test show that the independent variables debt to equity ratio, cash ratio and dividend payout ratio have no significant effect on stock prices, because LQ45 Company is a company that is highly trusted by the public so that information from DER, CR and DPR will not affect investment decisions.

PENGARUH OVERCONFIDENCE BIAS, MENTAL ACCOUNTING DAN FAMILIARITY BIAS TERHADAP PENGAMBILAN KEPUTUSAN INVESTASI


 
 
 
 This study aims to determine and analyze the effect of Overconfidence Bias, Mental Accounting and Familiarity Bias on investment decision making (case studies of victims of illegal binary option investments) either simultaneously or partially. The research method used was descriptive and verification methods. The research population is all victims of illegal Binary Options investment in Indonesia. The sampling technique used was the Probability Sampling Technique with the Simple Random Sampling method. Calculation of the sample in this study using the slovin formula. The data collection technique uses a questionnaire distributed to all victims of illegal Binary Options investment in Indonesia, while the data analysis technique uses multiple regression analysis. The results of the study show that Overconfidence Bias, Mental Accounting and Familiarity Bias simultaneously affect investment decision making. Overconfidence Bias, Mental Accounting and Familiarity Bias partially positive and significant effect on investment decision making.
 
 
 
 
 
 
 
 
 
 
 

Aggregate Investor Attention and Bitcoin Return: The Long Short-term Memory Networks Perspective

Investor attention is a scarce cognitive resource which affects investment decisions, and recent studies suggest that investor attention also have impacts on asset prices. Although Bitcoin is found to be one of the most unpredictable cryptocurrencies with excessive volatilities, researchers are still looking for determinants of Bitcoin prices. In this study, we firstly adopt the Long Short-Term Memory Networks (LSTM) approach to evaluate the effect of investor attention on Bitcoin returns by constructing an aggregate investor attention proxy. We combine both direct and indirect proxies for investor attention, in addition to the Bitcoin trading variables as the LSTM inputs. Our empirical results suggest that the including of attention variables could effectively improve the LSTM's prediction accuracy of Bitcoin returns, whereas direct proxies, i.e., Google Trends and Tweets, contain more valuable information to further improve the LSTM's forecasting capacity.

Panel data models with two threshold variables

Abstract We develop threshold estimation methods for panel data models with two threshold variables and individual fixed specific effects covering short time periods. In the static panel data model, we propose least squares estimation of the threshold and regression slopes using fixed effects transformations; while in the dynamic panel data model, we propose maximum likelihood estimation of the threshold and slope parameters using first difference transformations. In both models, we propose to estimate the threshold parameters sequentially. We apply the methods to a 15-year sample of 565 U.S. firms to test whether financial constraints affect investment decisions.

The Disclosure Effect of Sustainability Reporting and Financial Statements on Investment Efficiency: Evidence in Indonesia

This study aims to provide empirical evidence regarding the effect of the quality of financial statements and the intensity of reporting on a company’s sustainability efforts on investment efficiency. The research was conducted on all companies listed on the Indonesia Stock Exchange (IDX) sectors in 2018–2019. This study implemented a purposive sampling technique. The population derives from 52 companies with a combined sample of 104 data, uses multiple linear regression, and performs a classical assumption test. Hypothesis testing in this study used a simultaneous significance test and partial regression test appropriately. This study found that the quality of financial reports directly affects investment efficiency. The intensity of the sustainability report does not affect the company's investment efficiency; therefore, the sustainability report does not become a reference point for making investment decisions for greater efficiency. The author concluded that non-financial information does not affect investment decisions. This research proves that public companies in Indonesia can use financial reports to affect investment efficiency, whereas sustainability reports cannot be used for this purpose.

Events After the Reporting Period and Investment Decisions in Manufacturing Companies in Nigeria

Investors worldwide require a high level of credibility and certainty from firms’ financial reports to anchor their investment decisions. Thus, it is paramount for firms to comply with the regulatory framework to make the latter a success. On this basis, this study aims to determine how disclosure and adjustments of events after the reporting period (IAS 10) affect investment decisions in manufacturing companies in Nigeria. The study employed a descriptive survey design. Out of a total population of 25 manufacturing companies, 15 were specifically selected for the study. A questionnaire was used to collect data from the companies’ six principal officers, including the managing director, the accountant, the credit officer/risk manager, the quality control officer, the internal auditor, and the operation/plant manager. The mean and standard deviation were used to answer research questions. The PPMC and linear regression analysis were used to test the hypothesis at the 0.05 significance level. It was found that the level of compliance with IAS 10 on disclosure and adjusting events after the reporting period is high among manufacturing companies. Also, disclosure and adjusting events significantly impact the investment decisions of manufacturing companies. The research suggests that relevant authorities strictly adhere to reporting criteria based on the results.

Do liquidity constraints affect the investment decisions of California hospitals?

We explore how hospitals' liquidity constraints affect investment decisions for two types of hospital investments: general and health information technology capital investment. In the literature, only one dimension of the investment strategy, namely cash flow, has been examined empirically. Using the neoclassical model of investment and annual hospital financial data from California's Office of Statewide Health Planning and Development (OSHPD) from 1997 to 2007, we investigate the impacts of liquidity constraints such as cash flow and marginal profitability of capital on investment decisions across hospital ownership types. The system GMM estimation results reveal that hospitals face liquidity constraints for general capital investment, and these constraints are more pronounced in nonprofit hospitals than in for-profit or government-owned hospitals. However, they are not liquidity constrained for health IT capital investments. This represents that liquidity constraints are not the cause of the low health IT investment of California hospitals.

PENGARUH LITERASI KEUANGAN DAN PERILAKU KEUANGAN TERHADAP KEPUTUSAN INVESTASI MAHASISWA

Every investment requires the right decision because this decision will affect investment results in the future. People's access to financial products and services that continue to increase and are so easily available does not have a positive impact, especially on the younger generation if they do not have good financial understanding and management. The purpose of this study was to determine the effect of financial literacy and financial behavior on investment decisions of students majoring in Accounting FEB Bina Bangsa University. The research method used is a quantitative method using a questionnaire using a judgment sampling technique which was distributed to 62 respondents. The data analysis technique used is multiple regression test, t test and F test using SPSS Software Version 25. The results of this study show that financial literacy has a significant positive effect on investment decisions. The higher a person's financial literacy knowledge, it will affect investment decisions. The results of this study also found that student financial behavior has a significant positive effect on investment decisions. The higher the financial behavior such as the management of financial planning and financial irregularities, the easier it will be for someone to invest

Disaggregating confusion? The EU Taxonomy and its relation to ESG rating

This paper discusses the EU Taxonomy in the context of Environmental, Social, and Governance (ESG) ratings. ESG firm-level ratings tend to differ across ESG data providers, affecting investment decisions due to uncertainty about a firm's sustainability performance. We argue that the EU Taxonomy can support the reduction of this divergence. Using EU Taxonomy-related firm data in tobit regressions, we show that environmental ratings from three out of four ESG data providers are significantly related to the EU Taxonomy. However, our results suggest that the potential for reducing measurement divergence has not yet fully materialised. Our results have implications for investors, ESG data providers, and policy makers.

Property investment decision in Batam City

The aim of this research is to find out factors affecting property investment decision in Batam. Investment decision is defined as how a person decides on investment to select the right alternative and type of business. The independent variables in this study are accounting information, self-image/firm-image coincidence, neutral information, advocate recommendations, and personal financial need. The object of this study is property investors in Batam. This study distributed 300 questionnaires and selected 250 questionnaires to be processed/analyzed. The results show that accounting information does not significantly affect the investment decision, meanwhile self-image/firm-image coincidence, neutral information, advocate recommendations, and personal financial need significantly affect investment decision in Batam.

An integrated generalized TODIM model for portfolio selection based on financial performance of firms

Multi-criteria decision-making (MCDM) models are well-suited for solving portfolio selection problems. Diversified financial indices and complex subjective preferences are important factors affecting investment decisions within the MCDM framework. Therefore, this study adopts a well-known behavioral MCDM model called generalized TODIM (TOmada de Decisão Iterativa Multicritério) for portfolio selection based on the financial performance of firms. First, a multidimensional financial evaluation index system is proposed for financial performance evaluation, which is the most appropriate approach for stock investment within a long-term horizon. Second, features are selected from the financial ratios using affinity propagation clustering (APC). Through the APC algorithm, financial ratios with a strong influence on stock evaluation can be obtained. Third, a generalized TODIM method with entropy weight is used to calculate the dominance relation between stocks and reflect investors’ bounded rational behaviors. Fourth, an extended mean–variance multi-objective portfolio selection model that considers financial and stock market performance is constructed. The compromise solution is used when solving the multi-objective optimization programming. Finally, a case study on medical stock investment in the Chinese stock market is examined to recommend the optimal portfolio allocation for investors. Sensitivity and comparative analyses are performed to demonstrate the robustness, effectiveness, and superiority of the proposed methodology.

Professional financial statement users’ perceived value of carbon accounting disclosures and decision context

PurposeThis study aims to investigate how professional financial statement users use carbon accounting information in their decisions and whether this use is sensitive to changing the decision context from an investment to a donation.Design/methodology/approachUsing a sample of 173 US professional financial statement users, the authors conduct an experiment that manipulates an investment or donation choice to evaluate how differing levels of carbon sequestration affect decision-making across contexts.FindingsCarbon sequestration information affects users’ donation decisions but does not affect investment decisions. Variation in the reliability of the information and whether the information is linked to strategy do not affect users’ decision-making.Research limitations/implicationsThis study is performed by an experiment and informs our understanding of the relevance to users of carbon sequestration disclosure. Results indicate that carbon sequestration disclosure has value for donation but not investment decisions. The authors interpret this as evidence of some value of this type of disclosure in professional financial statement users’ decision-making but not for a financially focused evaluation.Originality/valueThis paper provides unique insights into the effect of reporting carbon sequestration on decision-making. There has been significant research on the broader topic of corporate sustainability, and capital markets research indicates that the market values increased sustainability disclosure. This study extends the research by examining a specific component of carbon disclosure that is not currently widely reported and by the use of information for different types of evaluations. The results find evidence that the value of this type of carbon disclosure does not stem from a purely financial perspective but instead, from other nonpecuniary factors.

Does Your Personality Affect the Investment Risk You Take?

Purpose: This paper considers personality, one not so extensively researched factor affecting investment decisions. It understands how personality traits affect an individual’s investment risk profile, and also how demographics affect this risk and personality. Methodology: For this purpose, a survey is conducted in Kolkata and Ranchi, with a total of 119 respondents. Investors’ personality is analyzed through Big Five Personality Trait Model. Risk Profile of investors is measured using Likert scale questions. Correlation, ANOVA or Chi Square tests are used to find relations between personality traits, risk taken and demographics. Findings: This study found positive correlations between Openness to Experience and Neuroticism with Investor Risk. It found significant relations between Gender and Risk Taken. Neuroticism & Gender, Extroversion & Employment, and Extroversion & Income were also found to be significantly related. Practical Implications: Understanding the financial personality helps in finding the reason behind an individual’s investment decision making, and how that individual is going to react to factors involved in investing. Originality/Value: Even though personality characteristics are important aspect, only recently have economists began analyzing their effect on financial decisions. This study will concentrates on this area, and explains how personality of the investor affects his/her risk perception.

Lecturer's Behavior Finance in Making Investment Decisions on Financial Assets from The Perspective of Psychological Factors

This research is a continuation of research year 1 with the title “Lecturer Financial Asset Investment Interest in Surabaya”. In the first year of research, the research was limited to investment interest as an endogenous latent variable. 3 exogenous latent variables were consisting of financial literacy, attitude, and motivation. There is also 1 moderating variable, namely family. The purpose of this study was to determine the behavior of lecturers in Surabaya in making investment decisions. 3 factors as exogenous variables are investment interest, risk perception, and risk tolerance. These factors affect investment decisions as endogenous variables. The analysis tool used is SEM PLS and with 56 participant’s data. The results show that investment interest greatly influences investment decisions. while the other two variables, risk perception, and risk tolerance do not affect investment decisions. The dependent variable or as an endogenous variable in this study is investment decisions and 3 exogenous latent variables, namely investment interest, risk perception, and risk tolerance.