scholarly journals How Does Important Sustainability Reporting for Investment Decision Making?

2020 ◽  
Vol 3 (4) ◽  
pp. 283
Author(s):  
Sumiyati Sumiyati ◽  
Suhaidar Suhaidar
Keyword(s):  
Decision Making ◽  
Investment Decision ◽  
Sustainability Reporting ◽  
Individual Investors ◽  
Rational Decision ◽  
Rational Decision Making ◽  
Behavior Study ◽  
Investment Decision Making ◽  
Quasi Experimental ◽  
Sustainability Reports

This study was conducted to examine the importance of sustainability reporting for investment decision making by prospective investors using  belief-action-outcome (BAO) theory. This study is a rational investor behavior study in deciding the use of their  assets by explaining it using  Rational Decision Making Model (RDMM) theory.This study used  an online quasi-experimental approach. The respondents of this research were prospective individual investors who understand the use of financial statements to make investments. This research was conducted with two tests. First, test the construct of variables. Second, test the subject's behavior with experiments. As for the experiments carried out two steps namely first, the subjects were given a questionnaire without any sustainability reporting. Second, subjects were given a questionnaire with instructions to read sustainability reporting first.The expected outcome is that investors  tend to choose to buy shares of companies that also attach sustainability reports compared to companies without sustainability reports. Investors also tend to be rational in making decisions. This result showed  the importance of sustainability report in rational decision making.

scholarly journals Do Investors’ Exhibit Cognitive Biases: Evidence From Indian Equity Market

2020 ◽  
Vol 11 (2) ◽  
pp. 26
Author(s):  
Manika Sharma ◽  
Mohammad Firoz
Keyword(s):  
Decision Making ◽  
Capital Market ◽  
Cognitive Biases ◽  
Investment Decision ◽  
Individual Investors ◽  
Rational Decision ◽  
Section Data ◽  
Rational Decision Making ◽  
Erroneous Decision ◽  
Financial Consultants

The current article examines the influence of cognitive biases on the process of decision making among equity investors of India. The research is being directed by conducting a survey on a sample of 400 investors investing in Indian capital market. This study measures behavioural biases of individual investors' using a structured questionnaire as a research instrument of the study. By means of cross section data analysis, this analysis steadily provides evidence that behavioural biases adversely affect rational decision-making of an investor. This research indicates that a statistically significant relationship exists between behavioural biases among investors and the process of rational decision-making. The findings of the study are imperative to investors investing Indian capital market, brokers, financial consultants and investment advisors; responsible for managing assets and constructing portfolios for investment clients, as they can alter the investment decision by accessing the susceptibility of investors towards cognitive biases, which often lead to erroneous decision.

Investor Biases in Financial Decisions

2015 ◽  
pp. 147-169
Author(s):  
Shalini Kalra Sahi
Keyword(s):  
Decision Making ◽  
Information Processing ◽  
Financial Management ◽  
Investment Decision ◽  
Self Awareness ◽  
Rational Decision ◽  
Net Worth ◽  
Financial Decisions ◽  
Investment Decision Making ◽  
Making Choices

Financial Decisions involve making choices between various investment alternatives, with the aim of increasing the individual's net worth. The investor today is exposed to various investment options, but does not have the knowledge and capability of evaluating all the options and making a rational decision. Due to the limitation in the information processing capacities of the individuals, their beliefs and preferences, the investment decision-making process, gets biased. This chapter highlights ten such biases and throws light on how they impact investment behaviour, both positively and negatively. This understanding of investor psychology will generate insights that will benefit the financial advisory relationship. Further for Individuals, recognizing how the biases impact their financial decisions, can help create self-awareness and an understanding that would help them in better financial management, in case these tendencies are leading them to make unsatisfactory investments.

scholarly journals An Analysis of Behavioral Biases in Investment Decision-Making

2019 ◽  
Vol 10 (4) ◽  
pp. 55 ◽  
Author(s):  
Geetika Madaan ◽  
Sanjeet Singh
Keyword(s):  
Decision Making ◽  
Positive Impact ◽  
Stock Exchange ◽  
Investment Decision ◽  
Investment Decisions ◽  
Individual Investors ◽  
Behavioral Biases ◽  
Investment Decision Making ◽  
Survey Responses ◽  
The Impact

Individual investor’s behavior is extensively influenced by various biases that highlighted in the growing discipline of behavior finance. Therefore, this study is also one of another effort to assess the impact of behavioral biases in investment decision-making in National Stock Exchange. A questionnaire is designed and through survey responses collected from 243 investors. The present research has applied inferential statistics and descriptive statistics. In the existing study, four behavioral biases have been reviewed namely, overconfidence, anchoring, disposition effect and herding behavior. The results show that overconfidence and herding bias have significant positive impact on investment decision. Overall results conclude that individual investors have limited knowledge and more prone towards making psychological errors. The findings of the study also indicate the existence of these four behavioral biases on individual investment decisions. This study will be helpful to financial intermediaries to advice their clients. Further, study can be elaborated to study other behavioral biases on investment decisions.

Development and validation of behavioral biases scale: a SEM approach

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ritika ◽  
Nawal Kishor
Keyword(s):  
Decision Making ◽  
Investment Decision ◽  
Phase 1 ◽  
Secondary Data ◽  
Higher Order ◽  
Second Order ◽  
Individual Investors ◽  
Content Type ◽  
Behavioral Biases ◽  
Investment Decision Making

PurposeThis paper attempts to identify the biases in decision-making of individual investors. The paper aims to develop and validate a higher-order behavioral biases scale.Design/methodology/approachScale development is done by identifying the relevant items of the scale through existing literature and then, adding new items for some biases. In phase 1, using a structured questionnaire, data was collected from 274 investors who invest in financial markets. The major dimensions of the scale have been pruned by using exploratory factor analysis administered on data collected in phase 1. Higher-order CFA is used to analyze the data and to validate the scale on another set of data (collected in phase 2) containing 576 investors.FindingsThe study reveals that the scale for measuring behavioral biases has many dimensions. It has two second-order factors and 13 zero-order constructs. Two second-order constructs have been modeled on the basis of cause of errors in investment decision-making, that is, biases caused due to cognition, biases caused due to emotions.Originality/valueBehavioral biases are yet to receive a due attention, especially, in the Indian context. The present research is focusing on providing an empirically tested scale to test the behavioral biases. Some of the biases, which have been analyzed using secondary data in previous studies, have been tested with the help of statements in this study.

Evidence on rationality and behavioural biases in investment decision making

2016 ◽  
Vol 8 (4) ◽  
pp. 270-287 ◽  
Author(s):  
Satish Kumar ◽  
Nisha Goyal
Keyword(s):  
Decision Making ◽  
Path Model ◽  
Decision Making Process ◽  
Individual Investors ◽  
Significant Implication ◽  
Rational Decision ◽  
Content Type ◽  
Rational Decision Making ◽  
Significant Difference ◽  
The Relationship

Purpose The purpose of this paper is to investigate the relationship between rational decision-making and behavioural biases among individual investors in India, as well as to examine the influence of demographic variables on rational decision-making process and how those differences manifest themselves in the form of behavioural biases. Design/methodology/approach Using a structured questionnaire, a total of 386 valid responses have been collected from May to October 2015. Statistical techniques like t-test, analysis of variance (ANOVA) and Fisher’s least significant difference (LSD) test have been used in this study. Structural equation modelling (SEM) has been used to analyse the relationship between rational decision-making and behavioural biases. Findings The findings show that the structural path model closely fits the sample data, indicating investors follow a rational decision-making process while investing. However, behavioural biases also arise in different stages of the decision-making process. It further explores that gender and income have a significant difference with respect to rational decision-making process. Male investors are more prone to overconfidence and herding bias in India. Research limitations/implications The findings of the study have significant implication for the individual investors. It is recommended that if individuals are aware about the biases, they may become alert before taking irrational investment decisions. Originality/value To best of the authors’ knowledge, the present study is a first of its kind to investigate the relationship between rational decision-making and behavioural biases among individual investors in India.

scholarly journals Standardization of sustainability reporting: rationale for better investment decision-making

2017 ◽  
Vol 6 (2) ◽  
pp. 7-15 ◽  
Author(s):  
Henry Mynhardt ◽  
Inna Makarenko ◽  
Alex Plastun
Keyword(s):  
Decision Making ◽  
Investment Decision ◽  
Reliability And Validity ◽  
Sustainability Reporting ◽  
Annual Reports ◽  
Steady Increase ◽  
Reporting Accuracy ◽  
Investment Decision Making ◽  
Long Term Trends

The role of sustainability reporting in investment decision-making is not clear and obvious. Despite the steady increase of such statements in corporate annual reports, the relationship between the sustainability reporting and the financial performance of companies is not always positive. The main problems of sustainability reporting nowadays are insufficient comparability of reporting, accuracy (lack of materiality, reliability and validity of indicators), lack of common approaches for its verification. Synthesis of standardization and regulation features of sustainability reporting, which is provided in this paper in different dimensions (countries, regulators standards), allows to identify long-term trends of this reporting to ensure its quality during investment decision-making in traditional and responsible financial markets.

scholarly journals Environmental, Social, and Governance Investment in Emerging Markets: A Case Study of Firms in Southeast Asia

WIMAYA ◽  
2021 ◽  
Vol 2 (01) ◽  
pp. 8-16
Author(s):  
Upalat Korwatanasakul ◽  
Adam Majoe
Keyword(s):  
Decision Making ◽  
Content Analysis ◽  
Emerging Markets ◽  
Southeast Asia ◽  
Investment Decision ◽  
Decision Making Process ◽  
Investment Decision Making ◽  
Sustainability Reports ◽  
Asean Countries

This study examines the current situation of environmental, social, and governance (ESG) investment in Association of Southeast Asian Nations (ASEAN) countries. Based on a purposive sampling, our sample includes 143 leading firms from 10 ASEAN countries. By intensively reviewing firms’ multiyear annual and sustainability reports, we utilize content analysis to identify the characteristics of ESG firms (firms considering ESG factors in their investment decision-making process). Our result shows that ESG firms, on average, have higher profitability. Moreover, ESG investment helps lower costs and boost revenue and profits. However, ESG investment has only been implicitly and unsystematically implemented in ASEAN firms.

Factors That Influence Investment Decision Making Among Potential Individual Investors in Malaysia

2019 ◽  
Vol 5 (1) ◽  
pp. 9
Author(s):  
Atikah Zulaikha Ahmad Zaidi ◽  
Nor Suziwana Hj Tahir
Keyword(s):  
Decision Making ◽  
Information Structure ◽  
Investment Decision ◽  
Accounting Information ◽  
Investment Decisions ◽  
Individual Investors ◽  
Market Outcomes ◽  
Decision Tools ◽  
Investment Decision Making ◽  
Behavioural Factors

Individual investments behaviour is concerned with choices about purchases of small amounts of securities for his or her own account. Decision tools often support investment decisions. It is assumed that information structure and the factors in the market systematically influence individuals’ investment decisions as well as market outcomes. Decision tools often support investment decisions. It is assumed that information structure and the factors in the market systematically influence individuals’ investment decisions as well as market outcomes. Investor market behaviour derives from psychological principles of decision making to explain why people buy or sell stocks. These factors will focus upon how investors interpret and act on information to make investment decisions. The purpose of the study was to identify the factors that influence investment decision making among potential individual investors in Malaysia. Three behavioural factors might influence investment decision making which are accounting-information, firm-image coincidence and personal-financial-needs. A set of questionnaire was distributed to 384 potential investors in Malaysia specifically in housing area of Klang Valley as population of this study. Based on the findings, it showed that there is positive relationship between accounting-information, firm-image-coincidence and personal-financial-needs in investment decision making. Hence, between these three behavioural factors, accounting-information, firm-image coincidence and personal-financial-needs, the main influential factor is accounting-information. This study also proposed a future research for investment decision making and give implications to the potential investors, community, organization, policy makers and investment practitioners.

Past behaviour, financial literacy and investment decision-making process of individual investors

2020 ◽  
Vol 15 (6) ◽  
pp. 1243-1263 ◽  
Author(s):  
Rajdeep Kumar Raut
Keyword(s):  
Decision Making ◽  
Financial Literacy ◽  
Structural Equation ◽  
Investment Decision ◽  
Individual Investors ◽  
Successful Implementation ◽  
Snowball Sampling ◽  
Content Type ◽  
Investment Decision Making ◽  
External Variables

PurposeThis study aims to explore the importance of past behaviour and financial literacy in the investment decision-making of individual investors and examines the validity of the theory of planned behaviour in this context.Design/methodology/approachThe study used a self-administered questionnaire and adopted the convenience sampling technique followed by a snowball sampling method for the survey to collect data from the individual investors covering the four distinct states of India. Collected data were analysed on AMOS 20.0 using two-step structural equation modelling (SEM).FindingsResults indicated a significant effect of all the predictive variables. Past behaviour showed no significant direct impact on investor's intention; however, it had an indirect significant relationship while mediated by the attitude of investors. The multiple squared correlation (R2) showed that the final model could explain 36% of the variance in investors' intention towards stock investment which signified a successful implementation of the TPB model along with external variables added to it. Moreover, Indian investors were found to be highly influenced, primarily, by social pressure which could be curbed through financial literacy.Practical implicationsA significant importance of subjective norms was found on stock market participation which could be a strategic theme for the government and the policymakers to educate investors through their opinion leaders for increasing their participation. Moreover, by doing so investors could control their behaviour and take rational decisions.Originality/valueThis study extended the understandings of investor's decision-making behaviour using TPB by incorporating the two external variables viz., Financial literacy and past behaviour. The addition of past behaviour is perhaps the novelty of this article since such examination has not been conducted empirically especially in the case of developing countries like India.

scholarly journals Impact of Behavioral Factors in Making Investment Decisions and Performance: Evidence from Pakistan Stock Exchange

Market Forces ◽  
2021 ◽  
Vol 16 (1) ◽  
pp. 22
Author(s):  
Muhammad Rehan ◽  
Jahanzaib Alvi ◽  
Lubna Javed ◽  
Baber Saleem
Keyword(s):  
Decision Making ◽  
Behavioral Finance ◽  
Stock Exchange ◽  
Investment Decision ◽  
Investment Decisions ◽  
Individual Investors ◽  
Behavioral Factors ◽  
Factors Affecting ◽  
Investment Decision Making ◽  
The Impact

Market irregularities and irrational behavior triggered investor’s changes in the stock market, and this has led to an investigation into the impact of various behavioral biases and factors affecting decision-making for individual investors. The quality of individual investor behavior in making stock investment decisions is very important to be understood as a reference of the movement of the capital market. This study investigated the role of behavioral finance and investor psychology in investment decision-making at the Pakistan Stock Exchange (PSE). Using a sample of 147 individual investors, the study established that behavioral factors such as Herding, Heuristic, Market and Prospect that affected the decisions of the investors operating at the Pakistan Stock Exchange (PSE). As there are a few studies in Pakistan related to behavioral finance, so this study mainly contributes to the field of behavioral finance in Pakistan. This study focusses on existing theories of behavioral finance which led to develop the hypothesis. The result of the analysis is that the four variables have greatly influenced the investment decision and return on investment. All behavioral variables have a significant impact on the decision-making process of investors, which led to the acceptance of all assumptions regarding the level of influence of behavioral factors in decision making for individual investors

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