Does COVID-19 really make people risk aversion in investment decision-making?

2018 ◽

Author(s):

Lilis Susilawaty ◽

Edi Purwanto ◽

Stela Febrina

Keyword(s):

Decision Making ◽

Corporate Governance ◽

Risk Aversion ◽

Capital Market ◽

Investment Decision ◽

Descriptive Analysis ◽

Primary Data ◽

Firm Level ◽

Quantitative Descriptive Analysis ◽

Investment Decision Making

<h5><em>The purpose of this research</em><em> to determine what factors affect the return on investment in the Indonesian capital market. By replicating the research conducted by Quershi et al (2012) found 4 (four) factors that influence investment decision making, namely heuristics, risk aversion, financial tools and firm levels of corporate governance. Data analysis technique is quantitative descriptive analysis using primary data with information that is in accordance with respondents who are investors who have invested in the Indonesian capital market. Hypothesis testing is done using multiple analysis by first testing the validity, reliability test, and classical assumption test.</em></h5><h5><em>With a total of 185 respondents, the results of the </em><em>research</em><em> show that heuristics, risk aversion, financial tools and corporate levels of corporate governance together have a significant influence on investment decision making. However, partially, heuristics and risk aversion have no effect on investment decision making, while financial tools and corporate governance levels are significant to investment decision making.</em><em></em></h5><h5><em> </em></h5><p><strong><em>Keywords</em></strong><strong><em>: </em></strong><em>investment decision making, heuristic, risk aversion, financial tools, firm level corporate governance</em></p>

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Investigation of Variation between Risk Attitude and Investment Biases

International Review of Financial Consumers ◽

10.36544/irfc.2016.1.5 ◽

2016 ◽

Vol 1 (No. 1 Oct 2016) ◽

pp. 57-80

Author(s):

Cherie H Chen ◽

Handley-Schachler Morrison

Keyword(s):

Decision Making ◽

Loss Aversion ◽

Financial Risk ◽

Experimental Approach ◽

Investment Decision ◽

Risk Attitude ◽

Personality Profiles ◽

Financial Investment ◽

Investment Decision Making ◽

Investment Behaviour

There is a palpable link between financial investment decision making and investors’ behaviour. Research into investors’ behaviour may prove useful in increasing our understanding of the extremely complex financial marketplace. In many cases, investors are unaware of their predisposition for error. And more often, an irrational investor is a dissatisfied investor, because biases usually undermine financial goals. By adopting an experimental approach, the researchers try to correlate established investor biases with the psychographic profiles of investors, to see whether specific risk personality profiles correlate with susceptibility to four biases: herding, endowment, loss aversion and framing. Many studies have focused on exploring the demographics of investment behavioural flaws, but very little attention has been paid to the risk attitude of investors and their actual investment behaviour. The findings of this study bridge two aspects of literature, being attitude to financial risk and behavioural investment biases.

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Factors affecting investment decision-making in Pakistan stock exchange

International Journal of Financial Engineering ◽

10.1142/s2424786318500330 ◽

2018 ◽

Vol 05 (04) ◽

pp. 1850033 ◽

Cited By ~ 1

Author(s):

Adeel Mumtaz ◽

Tahir Saeed ◽

M. Ramzan

Keyword(s):

Decision Making ◽

Corporate Governance ◽

Risk Aversion ◽

Stock Exchange ◽

Investment Decision ◽

Least Square ◽

Individual Investors ◽

Investment Decision Making ◽

Tools And Techniques ◽

The Impact

This study analyzes the impact of various factors like heuristic, risk aversion, financial tools and techniques, firm’s corporate governance, and day-to-day experience on the investor’s decision-making. The sample consisted of 701 individual investors trading in the Pakistan Stock Exchange. The Ordinary Least Square (OLS) is used for the estimation of research models. The findings revealed that heuristics, risk aversion, financial tools and techniques have a significant positive effect on the investment decisions of investors. The day-to-day experience and corporate governance (CG) play an important role in investment decision-making of the financial sector in Pakistan. This study will contribute to creating awareness in a diversity of investors for investing in the equity market and increases the investors’ confidence.

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The Decision Behavior of Taiwan Firms Investing in China: Evidence from Different Industries

Review of Pacific Basin Financial Markets and Policies ◽

10.1142/s0219091512500026 ◽

2012 ◽

Vol 15 (01) ◽

pp. 1250002

Author(s):

Szu-Hsien Lin ◽

You-Jie Chen ◽

Tz-Li Wang ◽

Hung-Chih Wang ◽

Ya-Chiu Angela Liu

Keyword(s):

Decision Making ◽

Information Technology ◽

Risk Behavior ◽

Investment Decision ◽

Risk Propensity ◽

Past Performance ◽

Academic World ◽

Investment Decision Making ◽

Decision Making Behavior ◽

Industry Sectors

The main purpose of this paper is to explore Taiwanese firms' risk behavior when investing in China. Firms' investment decision-making in relation to risk propensity may be affected by its (1) aspiration performance, (2) looming bankruptcy, (3) sound operating resource, and/or (4) investment behavior within an industry. There is no reason to believe that a consensus of risk behavior is shared among various industry sectors. Nevertheless, little empirical evidence exists on this issue in the academic world. Apart from risks associated with globalization, firms in Taiwan, unlike those of other nations, face very high political risk owing to the cross-strait political tension with China. Past researchers have taken variables such as innovation or R&D expenditure as proxies in testing the risk behavior of firms, and yet the reliability of these two variables to represent risk behavior remains arguable. The authors use China investment as the proxy for risk behavior of firms in Taiwan to study the decision-making behavior of two groups: One group in electronic and information technology (EIT) industry and another group in the nonelectronic and information technology (nonEIT) industry. Empirical results show that (1) China investment is significantly affected by peer investment; (2) the EIT firms are more aggressive in resource utilization; and (3) R&D expenditure has a significant positive relationship with China investments in Taiwanese firms with strong past performance.

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Investment Decision Making

Advances in Finance, Accounting, and Economics - Tools and Techniques for Economic Decision Analysis ◽

10.4018/978-1-5225-0959-2.ch001 ◽

2017 ◽

pp. 1-23

Author(s):

Aleksandar Šević ◽

Srđan Marinković

Keyword(s):

Decision Making ◽

Common Knowledge ◽

Investment Decision ◽

Market Equilibrium ◽

Pricing Model ◽

Investment Portfolio ◽

Body Of Knowledge ◽

Capital Assets ◽

Investment Decision Making ◽

Intellectual Traditions

This chapter is a review of different approaches academics take to find right answers on the question how investors' community makes decisions on optimal portfolio of securities and how this process converges toward capital market equilibrium. Authors will try to reconcile the approaches that come from different intellectual traditions. The authors start with the Capital Assets Pricing Model (hereafter CAPM). For decades long the model has been a cornerstone of modern finance literature and a guide for investment decision making. The model assumes that the choice of investment portfolio is directed toward optimization between statistically defined risk and observable return of a universe of available investments, in the setting of rational and homogeneous agents where information is common knowledge. The rigidity of CAPM assumptions led to a plethora of studies where some of those assumptions are relaxed. An important breakthrough to the extant body of knowledge has been made by the introduction of the asymmetric information in the decision-making process.

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Investment Decision Making

Foreign Direct Investments ◽

10.4018/978-1-7998-2448-0.ch067 ◽

2020 ◽

pp. 1498-1521

Author(s):

Aleksandar Šević ◽

Srđan Marinković

Keyword(s):

Decision Making ◽

Common Knowledge ◽

Investment Decision ◽

Market Equilibrium ◽

Pricing Model ◽

Investment Portfolio ◽

Body Of Knowledge ◽

Capital Assets ◽

Investment Decision Making ◽

Intellectual Traditions

This chapter is a review of different approaches academics take to find right answers on the question how investors' community makes decisions on optimal portfolio of securities and how this process converges toward capital market equilibrium. Authors will try to reconcile the approaches that come from different intellectual traditions. The authors start with the Capital Assets Pricing Model (hereafter CAPM). For decades long the model has been a cornerstone of modern finance literature and a guide for investment decision making. The model assumes that the choice of investment portfolio is directed toward optimization between statistically defined risk and observable return of a universe of available investments, in the setting of rational and homogeneous agents where information is common knowledge. The rigidity of CAPM assumptions led to a plethora of studies where some of those assumptions are relaxed. An important breakthrough to the extant body of knowledge has been made by the introduction of the asymmetric information in the decision-making process.

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