The Factors influencing Investment Decisions: a Case Study of Investors in Indonesia
Yvonne Vanessa Chung
Werner Ria Murhadi
Putu Anom Mahadwartha
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
This journal is licensed by a Creative Commons Attribution License (CC BY-NC-SA 4.0) Attribution-Non Commercial 4.0 International. For the CC licenses, the principle isthe creative freedom. This system complements the copyright without opposing it, conscious of its importance in our culture. The content of the articles is the responsibility of each author, and does not compromise in any way, to the journal or the university. It allows the transmission and reproduction of titles, abstracts and full content, with academic, scientific, cultural ends, provided acknowledgment of the respective source. This work cannot be used for commercial purposes.
They journal does not charge authors for submission or publication.
Abstract
This research aims to examine the influence of demographic factors, including age, gender, education level, and investment experience, on overconfidence behavior, herding behavior, investment decisions, and the impact of overconfidence behavior and herding behavior on investment decisions. This type of research employs a quantitative approach, utilizing the SEM (Structural Equation Modeling) analysis method. In this study, the data source was obtained by distributing questionnaires to Indonesian investors who carry out stock investment activities registered on the Indonesia Stock Exchange (BEI) and are aged 18 years or older. The research results state that investment decisions have a significant influence on gender, education level, investment experience, overconfidence, and herding behavior, but do not have a significant influence on age. Furthermore, the behavioral factor of overconfidence does not have a significant influence on all demographic factors in this study. Finally, herding behavior has a significant influence on age and education level, but does not have a significant influence on gender and investment experience.
References
Almenberg, J., & Dreber, A. (2015). Gender, stock market participation and financial literacy. Economics Letters, 137, 140–142. https://doi.org/10.1016/j.econlet.2015.10.009
Alquraan, T., Alqisie, A., & Al Shorafa, A. (2016). Do Behavioral Finance Factors Influence Stock Investment Decisions of Individual Investors? (Evidences from Saudi Stock Market). In American International Journal of Contemporary Research, 6(3), 159-169. https://www.aijcrnet.com/journals/Vol_6_No_3_June_2016/16.pdf
Armansyah, R. F. (2021). Over Confidence, Mental Accounting, and Loss Aversion In Investment Decision. Journal of Auditing, Finance, and Forensic Accounting, 9(1), 44–53. https://doi.org/10.21107/jaffa.v9i1.10523
Baker, H. K., Kumar, S., Goyal, N., & Gaur, V. (2019). How financial literacy and demographic variables relate to behavioral biases. Managerial Finance, 45(1), 124–146. https://doi.org/10.1108/MF-01-2018-0003
Barber, B. M., & Odean, T. (2001). Boys will be boys: Gender, overconfidence, and common stock investment. Quarterly Journal of Economics, 116(1), 261–292. https://doi.org/10.1162/003355301556400
Beatrice, V., Murhadi, W. R., & Herlambang, A. (2021). The effect of demographic factors on behavioral biases. Jurnal Siasat Bisnis, 25(1), 17–29. https://doi.org/10.20885/jsb.vol25.iss1.art2
Bhandari, G., & Deaves, R. (2006). The demographics of overconfidence. The Journal of Behavioral Finance, 7(1), 5-11. https://psycnet.apa.org/doi/10.1207/s15427579jpfm0701_2
Chavali, K., & Rosario, S. (2019). Influence of Gender on investment decisions of Investors in Sultanate of Oman. Global Journal of Economics and Business, 7(2), 234–242. https://doi.org/10.31559/gjeb2019.7.2.7
Eagly, A. H., & Carli, L. L. (1981). Sex of researchers and sex-typed communications as determinants of sex differences in influenceability: a meta-analysis of social influence studies. Psychological Bulletin, 90(1), 1–20. https://doi.org/10.1037/0033-2909.90.1.1
Elizabeth, J., Murhadi, W. R., & Sutejo, B. S. (2020). Dosen. Investor Behavioral Bias Based on Demographic Characteristics, 115, 6–12. https://www.atlantis-press.com/proceedings/insyma-20/125933156
Goo, Y. J., Chen, D. H., Chang, S. H., & Yeh, C. F. (2010). A study of the disposition effect for individual investors in the Taiwan stock market. Emerging Markets Finance and Trade, 46(1), 108–119. https://doi.org/10.2753/REE1540-496X460110
Hair, J.F., Black, W.C., Babin, B.J. and Anderson, R.E. (2010) Multivariate Data Analysis. 7th Edition, Pearson, New York.
Hon-Snir, S., Kudryavtsev, A., & Cohen, G. (2012). Stock market investors: Who is more rational, and who relies on intuition. International Journal of Economics and Finance, 4(5), 56-72.
Hossain, T., & Siddiqua, P. (2022). Exploring the influence of behavioral aspects on stock investment decision-making: a study on Bangladeshi individual investors. PSU Research Review. https://doi.org/10.1108/PRR-10-2021-0054
Istianti, L. N., & Lestari, N. P. (2023). May Financial Literacy, Risk Tolerance, and Demographic Factors Influence the Investment Decisions of BCA Malang Customers? Asean International Journal of Business, 2(1), 14–25. https://doi.org/10.54099/aijb.v2i1.455
Joseph, N. N., & Ibrahim, A. (2015). Determinants of investment decision making among Kenya ferry services employees. International Journal of scientific research and management, 3(8), 3477-3484. https://ijsrm.net/index.php/ijsrm/article/view/298
Kalsum, U., Sarita, B., Cahyono, E., & Wawo, A. B. (2018). Effects of Financial Literacy and Investment Experience on Access to Finance and Investment Decisions in Small Enterprises in Southeast Sulawesi. International Journal of Scientific & Engineering Research, 9(2), 849–857. https://www.academia.edu/36107303/Effects_of_Financial_Literacy_and_Investment_Experience_on_Access_to_Finance_and_Investment_Decisions_in_Small_Enterprises_in_Southeast_Sulawesi
Kannadhasan, M. (2015). Retail investors’ financial risk tolerance and their risk-taking behaviour: The role of demographics as differentiating and classifying factors. IIMB Management Review, 27(3), 175–184. https://doi.org/10.1016/j.iimb.2015.06.004
Koputra, T., & Mahadwartha, P. A. (2022). Herding Behavior Detection: Bullish and Bearish Cases. Herding Behavior Detection: Bullish and Bearish Cases, 180, 11–15. https://doi.org/10.2991/aebmr.k.210628.003
Kumar, S., & Goyal, N. (2016). Evidence on rationality and behavioural biases in investment decision making. Qualitative Research in Financial Markets, 8(4), 270–287. https://doi.org/10.1108/QRFM-05-2016-0016
Metawa, N., Hassan, M. K., Metawa, S., & Safa, M. F. (2019). Impact of behavioral factors on investors’ financial decisions: case of the Egyptian stock market. International Journal of Islamic and Middle Eastern Finance and Management, 12(1), 30–55. https://doi.org/10.1108/IMEFM-12-2017-0333
Murhadi, W.R., Frederica, D., & Marciano, D. (2024). The effect of financial literacy and demographic variable on behavioral biases. Asian Economic and Financial Review (AEFR), 14(4):312-325. https://doi.org/10.55493/5002.v14i4.5037
Nair, A. M., Yermal, L., & Balsubramanian, Dr. (2017). Factors Influencing Herding Behavior Among Indian Stock Investors. https://doi.org/10.1109/ICDMAI.2017.8073535
Pikulina, E., Renneboog, L., & Tobler, P. N. (2017). Overconfidence and investment: An experimental approach. Journal of Corporate Finance, 43, 175-192. https://doi.org/10.1016/j.jcorpfin.2017.01.002
Qasim, M., Hussain, R. Y., Mehboob, I., & Arshad, M. (2019). Impact of herding behavior and overconfidence bias on investors’ decision-making in Pakistan. Accounting, 5, 81–90. https://doi.org/10.5267/j.ac.2018.07.001
Rahman, M., & Gan, S. S. (2020). Generation Y investment decision: an analysis using behavioural factors. Managerial Finance, 46(8), 1023–1041. https://doi.org/10.1108/MF-10-2018-0534
Rajeshwaran, N. (2020). The Impact of Behavioural Factors on Investment Decision Making and Performance of CSE Investors in Eastern Province of Sri Lanka. Sri Lanka Journal of Economic Research, 8(1), 27–51. https://doi.org/10.4038/sljer.v8i1.123
Rasool, N., & Ullah, S. (2020). Financial literacy and behavioural biases of individual investors: empirical evidence of Pakistan stock exchange. Journal of Economics, Finance and Administrative Science, 25(50), 261–278. https://doi.org/10.1108/JEFAS-03-2019-0031
Santoso, I., & Liu, H. (2023). Pengaruh Perilaku Herding, Risk Aversion terhadap Keputusan Investasi dengan Financial Attitude Sebagai Variabel Moderating. Jurnal Ilmiah Universitas Batanghari Jambi, 23(1), 137. https://doi.org/10.33087/jiubj.v23i1.3025
Shalom-Gilo, R. (2013). Effects of level of investors’ confidence and herding behavior on stock prices and their volatilities. Thesis. School of Business Administration, the Hebrew University of Jerusalem.
Subagio, H., Satoto, S. H., & Ediningsih, S. I. (2020). The Effect of Investment Education and Investment Experience on Investment Decision With Financial Knowledge As Intervening Variable. Russian Journal of Agricultural and Socio-Economic Sciences, 99(3), 143–150. https://doi.org/10.18551/rjoas.2020-03.16
Utami, L. D., & Kartini, K. (2017). Faktor demografis, personality traits, dan overconfidence (Survey terhadap investor saham di Yogyakarta). Jurnal Siasat Bisnis, 20(2), 181–196. https://doi.org/10.20885/jsb.vol20.iss2.art6
Wahyuni, A. N., & Astuti, Y. P. (2021). The Influence of Demographic Factors on Investment Decisions in Indonesia in the Pandemic Time Covid-19. Proceedings of the 3rd International Conference on Banking, Accounting, Management and Economics (ICOBAME 2020), 169(Icobame 2020), 350–355. https://doi.org/10.2991/aebmr.k.210311.070
