scholarly journals Over Confidence, Mental Accounting, and Loss Aversion In Investment Decision

2021 ◽  
Vol 9 (1) ◽  
pp. 44-53
Author(s):  
Rohmad Fuad Armansyah
Keyword(s):  
Loss Aversion ◽  
Investment Decision ◽  
Mental Accounting

Is Awareness That Powerful? Women’s Financial Literacy Support to Prospects Behaviour in Prudent Decision-making

2021 ◽  
pp. 097215092199618
Author(s):  
Tahira Iram ◽  
Ahmad Raza Bilal ◽  
Shahid Latif
Keyword(s):  
Decision Making ◽  
Loss Aversion ◽  
Financial Literacy ◽  
Decision Process ◽  
Women Entrepreneurs ◽  
Investment Decision ◽  
Mental Accounting ◽  
Self Control ◽  
Investment Decision Making ◽  
Regret Aversion

Financial literacy is of utmost relevance in the field of entrepreneurship, especially in developing countries. However, what builds financial literacy and how it shapes investment decision-making of women entrepreneurs is an exiguously researched area. Building on this gap, this study postulates that women entrepreneurs’ prospect behavioural factors (loss aversion, regret aversion, mental accounting, and self-control) impact their investment decision process through the intervening role of financial literacy. Based on a stratified sample of 579 women entrepreneurs operating in Punjab, Pakistan, structural equation modelling was used to analyse the hypothesized relationship among variables. Findings showed that loss aversion, regret aversion, mental accounting, and self-control significantly influenced women’s financial literacy and investment decision process, whereas no impact of regret aversion was traced on investment decision-making. Thus, our results offered robust support that financial literacy stimulated by women entrepreneurs’ prospect behaviour invigorates their investment decision power.

scholarly journals The Impact of Corporate Performance on Mental Accounting and Loss Aversion in Financial Decisions

2021 ◽  
Vol 12 (4) ◽  
pp. 259
Author(s):  
Mona Hassabelrasoul Mohammad ◽  
Dalal Mohamed Ebrahim Mohamed ◽  
Elsaid Abd Elazim Tolba Elsharkawi
Keyword(s):  
Graduate Students ◽  
Real Estate ◽  
Loss Aversion ◽  
Corporate Performance ◽  
Mental Accounting ◽  
Organization Performance ◽  
Financial Decisions ◽  
Real Estate Company ◽  
The Impact

This study investigates the effect of the organization performance on two psychological biases, mental accounting and aversion to loss, on financial decisions to both investors and managers. To achieve this, two experiments are conducted. The first experiment consists of 40 graduate students as investors, while the second one consists of 40 accountants in a real estate company as managers. The results of the study indicate that the performance of companies impacts both mental accounting and aversion to loss of investors, whereas the performance of companies affects the mental accounting of managers in making their financial decisions but does not affect the aversion to loss.

scholarly journals Factor Influencing Investor’s Decision Making in Indonesia: Moderating the Role of Locus of Control

2020 ◽  
pp. 49-56
Author(s):  
Febria Nalurita ◽  
Farah Margaretha Leon ◽  
Hamdy Hady
Keyword(s):  
Decision Making ◽  
Locus Of Control ◽  
Loss Aversion ◽  
Structural Equation ◽  
Investment Decision ◽  
Equation Modeling ◽  
Investment Decision Making ◽  
Market Factors ◽  
Regret Aversion

This study aims to investigate the effect of loss aversion, regret aversion, and market factors, on investment decision making with the moderating role of locus of control. Data collection is done by distributing questionnaires. The survey was conducted on individual investors in the Indonesia Stock Exchange in Jakarta to obtain a sample of 281. This research uses the Structural Equation Modeling approach. The statistical tool used is LISREL 8.8. This study found that loss aversion, regret aversion, and market factors significantly influence investment decision making. Locus of control plays the role of moderation between loss aversion, regret aversion, market factors, and investment decision making. The novelty in this study reveals the research that needs to be done to encourage investors to make rational decisions and control the required rate of returns through their locus of control. This research helps investors to make decisions logically and rationally with an open mind, high-performance thoughts and positive actions for investment goals that produce positive returns.

scholarly journals Effect of Emotional Biases on Investor’s Decision Making in Nigeria

2020 ◽  
Vol 4 (1) ◽  
pp. 33-39
Author(s):  
Ebenezer Y. Akinkoye ◽  
Oluwaseun E. Bankole
Keyword(s):  
Decision Making ◽  
Loss Aversion ◽  
Stock Exchange ◽  
Investment Decision ◽  
Investment Decisions ◽  
Primary Data ◽  
Investment Decision Making ◽  
Regret Aversion ◽  
Overconfidence Bias ◽  
Structured Questionnaire

The study examined emotional biases and its effect on investor’s decision making in Nigeria Primary data were employed and the population consists of clients of the top 10 stockbroking firms registered by the Nigerian Stock Exchange as at 31st January, 2018. These firms were selected because they contributed to 68.72% of total value of transactions as at 31st January, 2018. Data on emotional biases and investment decision making among investors in Nigeria were obtained through structured questionnaire which was administered to 30 clients of each stockbroking firm, totalling 300. Data analysis was done using percentages and logistic regression analysis. Findings showed that emotional biases, represented by loss-aversion bias, overconfidence bias, regret-aversion bias and herding bias were prevalent to Nigerian investors and also significantly influenced investor’s decision making in Nigeria. The study suggests that investors should improve the understanding of various emotional biases and traits exhibited by them, adopt a suitable decision technique to avoid this and seek experts’ opinion when making investment decisions.

scholarly journals CEO emotional bias and investment decision Bayesian Network method

2012 ◽  
Vol 9 (2) ◽  
pp. 239-256 ◽  
Author(s):  
Mohamed Ali Azouzi ◽  
Anis Jarboui
Keyword(s):  
Bayesian Network ◽  
Loss Aversion ◽  
Investment Decision ◽  
Investment Decisions ◽  
Behavioral Analysis ◽  
Central Hypothesis ◽  
Network Method ◽  
Emotional Bias ◽  
Investment Choices ◽  
Behavioral Perspective

This research examines the determinants of firms’ investment introducing a behavioral perspective that has received little attention in corporate finance literature. The following central hypothesis emerges from a set of recently developed theories: Investment decisions are influenced not only by their fundamentals but also depend on different factors. One factor is the biasness of any CEO to their investment, biasness depends on the cognition and emotions, because some leaders use them as heuristic for the investment decision instead of fundamentals. Keeping this in view, this paper shows how CEO emotional bias (optimism, loss aversion and overconfidence) effects the investment decisions. I will use Bayesian Network Method to examine this relation. Emotional bias has been measured by means of a questionnaire comprising several items. As for the selected sample, it has been composed of some100 Tunisian executives. Our results have revealed that the behavioral analysis of investment decision implies leader affected by behavioral biases (optimism, loss aversion, and overconfidence) adjusts its investment choices based on their ability to assess alternatives (optimism and overconfidence) and risk perception (loss aversion) to create of shareholder value and ensure its place at the head of the management team.

Impact of socio-psychological factors on investment decisions: The mediating role of behavioral biases

2020 ◽  
Author(s):  
Sadia Jabeen ◽  
Syed Zulfiqar Ali Shah ◽  
Naheed Sultana ◽  
Altamash Khan
Keyword(s):  
Decision Making ◽  
Social Interaction ◽  
Loss Aversion ◽  
Investment Decision ◽  
Equation Modeling ◽  
Behavioral Biases ◽  
Mediating Role ◽  
Investment Decision Making ◽  
The Relationship

Unlike previous studies that examine the effect of behavioral biases on investor decision-making, this study explores the root causes of behavioral biases and examines the mediating role of behavioral biases in the relationship between different types of emotions and investment decision-making. The cognitive theory of depression, attentional control theory, and prospect theory together provide the foundation and anticipate that stress, depression, anxiety, and social interaction are the major sources of cognitive mistakes that,in turn, affect investment decision-making. Model testing relies upon the data collected from 252stock investors trading in different stock exchanges of Pakistan; in order to test the hypothesized relationship, structural equation modeling has been used. Depression is a major source of loss aversion bias. Anxiety is a strong source of herding. Stress is a major source of representative bias.Social interaction is a root cause of overconfidence. Loss aversion bias, herding, and overconfidence fully mediate the relationship between depression, anxiety, social interaction, and investor decision; however, anxiety has the strongest impact on investor decision via herding bias, while stress has both insignificant direct and indirect effect on investment decision-making. Keywords: Sources of biases, self-efficacy, behavioral pattern, investment decision.

THE EFFECT OF MENTAL ACCOUNTING ON STUDENT’S INVESTMENT DECISIONS: A STUDY AT INVESTMENT GALLERY (GI) FEB UNIVERSITY OF BENGKULU AND SYARIAH INVESTMENT GALLERY (GIS) FEB IAIN BENGKULU

2019 ◽  
Vol 24 (2) ◽  
pp. 152-167
Author(s):  
Fitri Santi ◽  
Nelsi Valetta Sahara ◽  
Kamaludin
Keyword(s):  
Regression Analysis ◽  
Linear Regression ◽  
Investment Decision ◽  
Linear Regression Analysis ◽  
Investment Decisions ◽  
Mental Accounting ◽  
Simple Linear Regression ◽  
Simple Linear Regression Analysis ◽  
Stock Investment

Our study tries to explore the existence of mental accounting (MA) phenomenon among the investors at Investment Gallery FEB University of Bengkulu and the investors at Sharia Investment Gallery FEB IAIN Bengkulu, and to test its influences on the stock investment decision. We collect data using questioner. This study uses simple linear regression analysis to test the hypothesis. The results show that investors do have the MA. The average respondents' answers indicate that they treat monthly money with bonus money differently in investing while using monthly money as the capital, they averagely use a smaller portion of their monthly money for investment, but when the capital is their bonus money, then they use more portion of the money for the investment. For the respondents, their monthly money is more important than the bonus money, and they are also more afraid of the risks of investing the monthly money than investing the bonus money, and when there is a loss, the regret level of losses from investing monthly money is higher than regret level of losses from investing bonus money. The result shows the MA exists among the investors, and have a significant effect on the stock investment decisions.

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