scholarly journals Herd Behavior of Investments: An Assessment of Indian Stock Market

2020 ◽  
Author(s):  
AISDL
Keyword(s):  
Decision Making ◽  
Behavioral Finance ◽  
Structural Equation ◽  
Cognitive Biases ◽  
Investment Decision ◽  
Mediating Effect ◽  
Equation Modeling ◽  
Herd Behavior ◽  
Investment Performance ◽  
Investment Decision Making

Behavioral finance theorists contradict market efficiency and propose that investment decision making is not always rational. Investors base their decisions on factors in addition to stock fundamentals and such factors include cognitive biases such as loss aversion, herd behavior, regret aversion, price anchoring and the like. This paper makes an attempt to analyze the influence of two major factors – herd behavior and market factors on investment decision making and in turn it's mediating effect on perception of investment performance. Structured questionnaire was used for collecting the sample for study and structural equation modeling was performed. The study presents evidence to ascertain significant influence of both the factors – herd behavior and market – on investment decision making. The mediating effect of investment decision making on perception of investment performance was also observed to be strong and significant.

scholarly journals The The Impact of Behavioral Aspects on Investment Decision Making

2021 ◽  
Vol 10 (1) ◽  
pp. 15-27
Author(s):  
Ninditya Nareswari ◽  
Alifia Salsabila Balqista ◽  
Nugroho Priyo Negoro
Keyword(s):  
Decision Making ◽  
Structural Equation ◽  
Investment Decision ◽  
Partial Least Square ◽  
Least Square ◽  
Equation Modeling ◽  
Herd Behavior ◽  
Investment Decision Making ◽  
Behavioral Aspects ◽  
The Impact

This study aims to investigate the impact of behavioral aspects (sentiment investor, overconfidence, salience, overreaction, and herd behavior) on investment decision making. The sample contained 413 individual investors—used partial least square structural equation modeling (PLS-SEM) as a data analysis technique. The results showed that sentiment investors, overconfidence, salience, overreaction, and herd behavior positively affect investment decision making. The finding of this study has important implications for the investor to understand themselves to anticipate bias in investment decision making.

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 Investors’ Behavior and Perceptions Towards Stock Market: Structural Equation Modeling Approach

2018 ◽  
Vol 7 (4.36) ◽  
pp. 586
Author(s):  
D. Kinslin ◽  
V. P. Velmurugan
Keyword(s):  
Decision Making ◽  
Stock Market ◽  
Structural Equation ◽  
Tamil Nadu ◽  
Investment Decision ◽  
Equation Modeling ◽  
Stock Indices ◽  
Investment Decision Making ◽  
Irrational Behavior ◽  
Decision Making Behavior

Investors’ behavior and perception towards stock indices performances of the stock market was taken into account for this study. Relevant data was collected from 416 equity investors indulged in the stock market situated in diverse parts of southern Tamil Nadu, India. This research focuses on how the investors’ perceptions regarding stock indices movements of stock markets are affected by their irrational behavior, rational behavior and decision making behavior. In this study SEM approach was applied to analyze the data. The observations from the study disclosed that, the hypothesized model has a good fit and indicates that the anticipated model has the adequate fit, by way of satiating the suggested values. The finding indicates that investors are partly rational and partly irrational because they collect complete financial information and use this information for investment decision making and also use short cuts for decision making. 

scholarly journals Pengaruh Faktor Demografi dan Literasi keuangan dengan Behavior Finance dalam Pengambilan Keputusan Investasi

2021 ◽  
Vol 11 (2) ◽  
pp. 237-248
Author(s):  
Elkunny Dovir Siratan ◽  
Temy Setiawan
Keyword(s):  
Decision Making ◽  
Behavioral Finance ◽  
Financial Literacy ◽  
Structural Equation ◽  
Investment Decision ◽  
Demographic Factors ◽  
Individual Investors ◽  
Portfolio Performance ◽  
Investment Decision Making ◽  
The Impact

The investment decision-making process is influenced by various factors, including financial literacy and demographic factors. This research examines the impact of demographic factors and financial literacy with behavioral finance as a mediation on investment decision making.  This research using structural equation model (SEM) analysis. The result shows that demographic factors through gender, age, education, income, occupation and experience have an influence and cause a specific behavior in investment decision making. Then the financial literacy factor has an influence in reducing negative behavior. Likewise, demographic factors and financial literacy with behavioral finance as a mediation on investment decisions have a positive influence. The existence of behavior that is manages with planning, financial literacy support, and demographic factors owned by individual investors will create an opportunity for market momentum. Which help maximize profit, better investment and portfolio performance, avoid risks, better investment decision, and forming trading strategies.

scholarly journals Does Herding Behaviour and Overconfidence Drive the Investor’s Decision Making During the Covid-19 Pandemic

2021 ◽  
Vol 1 (8) ◽  
pp. 1-16
Author(s):  
Hirdinis M.
Keyword(s):  
Decision Making ◽  
Structural Equation Modeling ◽  
Data Analysis ◽  
Structural Equation ◽  
Stock Exchange ◽  
Investment Decision ◽  
Investment Decisions ◽  
Equation Modeling ◽  
Herding Behavior ◽  
Investment Decision Making

This study is intended to analyze the effect of herding behavior and overconfidence in encouraging investment decision-making by investors on the Indonesia Stock Exchange in the Jakarta area. The population of this research is investors who invest in investment instruments listed on the Indonesia Stock Exchange in the Jakarta area with an unknown population, and the number of samples in this study is 100 investors. Data analysis in this study used an alternative method of Structural Equation Modeling (SEM) with Wrap PLS 5.0 data processing tools. The findings of this study is herding has a positive and significant effect on investment decisions by investors in the Jakarta area. Overconfidence has a positive and significant effect on investment decisions by investors in the Jakarta area. This means that the increasing herding and overconfidence of investors can drive the investor’s decisions making in the Jakarta area.

Factors influencing investor’s decision making in Pakistan

2018 ◽  
Vol 10 (1) ◽  
pp. 70-87 ◽  
Author(s):  
Muhammad Haroon Rasheed ◽  
Amir Rafique ◽  
Tayyaba Zahid ◽  
Muhammad Waqar Akhtar
Keyword(s):  
Decision Making ◽  
Locus Of Control ◽  
Structural Equation ◽  
Quantitative Research ◽  
Investment Decision ◽  
Equation Modeling ◽  
Individual Investors ◽  
Content Type ◽  
Investment Decision Making ◽  
The Impact

Purpose The purpose of this paper is to look at the impact of two most commonly used heuristics, namely, representative bias and availability bias on investment decision making and to check that either locus of control interact with the said relations through theoretical proposal and then verification through empirical evidence. Design/methodology/approach The study is a quantitative research using a survey questionnaire for its data collection. Data are collected from 227 investors operating at Islamabad, Lahore, and Sargodha in Pakistan and analyzed using structural equation modeling while the interaction effect is analyzed through simple linear regression following the rules set by Baron and Kenny (1986). Findings The results reveal that both of the heuristics under study significantly cause investors to deviate from rational decision making while the locus of control have no significant moderating effect. Originality/value The proposed model provides insight on how the behavioral factors can lead investors to suboptimal decision making. This study is first of its kind to quantify the degree of irrationality caused by these factors. The findings of this study are practically useful for individual investors, investment managers, and also for policy makers.

Investor sentiment antecedents

2019 ◽  
Vol 11 (1) ◽  
pp. 36-54 ◽  
Author(s):  
Ranjan Dasgupta ◽  
Rashmi Singh
Keyword(s):  
Decision Making ◽  
Stock Market ◽  
Emerging Market ◽  
Investment Decision ◽  
Investor Sentiment ◽  
Equation Modeling ◽  
Content Type ◽  
Investment Decision Making ◽  
Retail Investors ◽  
Specific Factors

PurposeThe determinants of investor sentiment based on stock market proxies are found in numbers in empirical studies. However, investor sentiment antecedents developed from primary survey measures by constructing an investor sentiment index (ISI) are not done till date. The purpose of this paper is to fill this research gap by first developing an ISI for the Indian retail investors and then examining the investor-specific, stock market-specific, macroeconomic and policy-specific factors’ individual impact on the investor sentiment.Design/methodology/approachFirst, the authors develop the ISI by using the mean scores of six statements as formulated based on popular direct investor sentiment surveys undertaken throughout the world. Then, the authors employ the structural equation modeling approach on the responses of 576 respondents on 40 statements (representing the index and four study hypotheses) collected in 2016 across the country.FindingsThe results show that investor- and stock market-specific factors are the major antecedents of investor sentiment for these investors. However, interestingly macroeconomic fundamentals and policy-specific factors have no role to play in driving their sentiment to invest in the stock market.Practical implicationsThe major implication of the results is that the Indian retail investors are showing a mixed approach of Bayesian and behavioral finance decision making. So, these implications can guide the investment consultants, regulators, other stakeholders in markets and overwhelmingly the retail investors to introspect their investment decision making across time horizons.Originality/valueThe formulation of ISI in an emerging market context and thereafter examining possible antecedents to influence retail investors in their investment decision making are not done till date. So, the study is unique in its research issue and findings and will have significant implication for the retail investors at least in emerging market contexts.

scholarly journals A Study on The Behavioural Aspects of Retail Investors for Investment Decision Making in Telangana State

2016 ◽  
Vol 1 (1) ◽  
pp. 51-59
Author(s):  
Jhansi Rani Boda ◽  
G. Sunitha ◽  
Parag Ray
Keyword(s):  
Decision Making ◽  
Behavioral Finance ◽  
Investment Decision ◽  
Investment Behavior ◽  
Behavioral Patterns ◽  
Behavioral Factors ◽  
Investment Decision Making ◽  
Retail Investors ◽  
Telangana State ◽  
Behavioural Aspects

Objective - Investment is the commitment of funds which have been saved from the current consumption with an expectation of favorable future returns. Investment behavior is concerned with choices made about the purchase of a significant number of securities for an individual or institutional account. Individual investment behavior is relatively a new area of research in behavioral finance. This study aims to identify the various behavioral patterns of retail investors and their investment decision making in the newly formed Telangana state of India. Methodology/Technique - Data were collected from a sample of 200 retail investors via a structured questionnaire. Factor analysis was then conducted to critically identify the behavioral patterns of the retail investors. Findings - The findings of this study indicate that the two behavioral factors of Heuristics and Prospect have significant impact on the investment decision making attitudes of the retail investors. Novelty - As a newly formed state in India, the Telangana state provides potential investment opportunities for retail as well as institutional investors. It is thus, highly imperative to explore how retail investors make investment decisions especially in the newly formed Telangana State in India Type of Paper: Empirical Keywords: Behavioral Factors; Behavioral Finance; Investment Behavior; Investment Decision Making; Retail Investor.

Effect of Disposition Effect on Investment Decision Making in Property Market in Plateau State, Nigeria

2019 ◽  
pp. 83-98
Author(s):  
Dashol Ishaya Usman ◽  
Mary Pam
Keyword(s):  
Decision Making ◽  
Behavioral Finance ◽  
Investment Decision ◽  
Investment Decisions ◽  
Primary Data ◽  
Property Market ◽  
Financial Decisions ◽  
Descriptive Research ◽  
Investment Decision Making ◽  
Plateau State

The purpose of the chapter was to establish the effect of disposition on investment decision making in property market in Plateau State, Nigeria. Descriptive research design was used in the study. Primary data was collected using standard questionnaires with both closed and open-ended questions. The regression analysis results confirmed that there was a significant positive linear relationship between disposition and investor investment decision making in property market in Plateau State in Nigeria. The study concluded that disposition effects bias does not alter rationality in investment decision making. Disposition affected investment decisions. The main recommendation for investors is to make constant attempts to increase their awareness on behavioral finance by educating themselves on the field. Studying about the biases and reflecting on their decisions are likely to help achieve better self-understanding of the extent and manner to which they are influenced by emotions while making financial decisions under uncertainty.

Evaluation of behavioral biases affecting investment decision making of individual equity investors by fuzzy analytic hierarchy process

2019 ◽  
Vol 12 (3) ◽  
pp. 297-314 ◽  
Author(s):  
Jinesh Jain ◽  
Nidhi Walia ◽  
Sanjay Gupta
Keyword(s):  
Decision Making ◽  
Behavioral Finance ◽  
Investment Decision ◽  
Investment Decisions ◽  
Analytic Hierarchy ◽  
Content Type ◽  
Behavioral Biases ◽  
Investment Decision Making ◽  
Overconfidence Bias ◽  
Hierarchy Process

Purpose Research in the area of behavioral finance has demonstrated that investors exhibit irrational behavior while making investment decisions. Investor behavior usually deviates from logic and reason, and consequently, investors exhibit various behavioral biases which impact their investment decisions. The purpose of this paper is to rank the behavioral biases influencing the investment decision making of individual equity investors from the state of Punjab, India. This research would provide valuable insight into the different behavioral biases to investors and other participants of the capital market and help them in improving investment decisions. Design/methodology/approach The research is conducted on the individual equity investors of Punjab, India. Fuzzy analytic hierarchy process was applied to rank the factors influencing the decision making of individual equity investors of Punjab. The primary factors considered for the study are overconfidence bias, representative bias, anchoring bias, availability bias, regret aversion bias, loss aversion bias, mental accounting bias and herding bias. Findings The three most influential criteria were herding bias, loss aversion bias and overconfidence bias. The five most influential sub-criteria were “I readily sell shares that have increased in value (C61),” “News about the company (Newspapers, TV and magazines) affects my investment decision (C84),” “I invest each element of my investment portfolio separately (C71)” and “I usually hold loosing stock for long time, expecting trend reversal (C52).” Research limitations/implications Although sample survey conducted in the present study was based on a limited sample selected from a particular area that truly represented the total population, it is considered as the limitation of this study. Practical implications The outcome of this research provides investors with a better understanding of behavioral biases that influence their decision making. This study provides them a guideline on different behavioral biases that they should consider while making investment decisions. Originality/value The research model is based on the available literature on behavioral finance and the research results and findings would add value to the existing knowledge base.

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