Factors Affecting Investment Decision Making: Moderating Role of Investors Characteristics

Abstract

The current study aimed to investigate the factors affecting investment decision making. Moreover, the moderating effects of age, gender, and financial information were also tested. The study utilized a quantitative research design for that the data was collected using a structured questionnaire. The questionnaire was sent to 570 individuals out of that 374 questionnaires were returned however 372 of the questionnaires were found to be useable. The study framework had 6 constructs namely heuristics, financial information, corporate governance, risk aversion, and experience were independent variables while investment decision making was dependent variable while age, gender and financial education were moderating variables. All the latent construct were measured using multi items based on 5 point Likert scales from 1 strongly disagree to 5 strongly disagree. The results found the Heuristics, Risk Aversion, Financial Information, Corporate Governance and Experience to be significant factors affecting the investment decision making. Moreover, the moderating effect of gender was found to be significant in the relationship of (financial information, corporate governance, and experience) and investment decision making. The moderating effect of age was found to be significant in the relationship of (Heuristics, Corporate Governance, and Experience) and investment decision making while the moderating role of financial education was found to be significant in the relationship of (financial information, corporte governance and experience) and investment decision making.

The Influence Of Financial Socialization, Overconfidence And Mental Accounting On Investment Decisions

“…According to (A. Alshamy, 2019), overconfidence was also important in making better investment decisions on the Pakistan Stock Exchange. According to (Saurabh & Nandan, 2020) Pakistani investors are significantly and positively influenced by overconfidence on investment decisions.…”

“…This is because there will be factors or assumptions that influence investment decision-making when making investment decisions (A. Alshamy, 2019). Mental accounting is included in prospect theory, which explains that the state of mind can affect the investor's decisionmaking process; investors tend to categorise their finances in different accounts that deviate from conventional concepts, causing irrational effects on investment decisions.…”

“…(A. Alshamy, 2019) explains that mental accounting positively affects investment decisions. (Zhang & Sussman, 2018), (Hunguru et al, 2020) and (Abbas Elhussein & Elfaki Osman, 2019) also stated that mental accounting significantly affects investment decisions.…”

The impact of behavioral factors on investment decisions and investment performance in Croatian stock market

“…Alquraan et al (2016) found that loss aversion has a positive impact on investment decisions, while risk perception has a negative impact, since investors in high-risk situations often withdraw from investing, in order to minimize losses due to uncertainty of return. Alshamy (2019) concluded that risk aversion positively affects investment decisions. According to Luong and Thu Ha (2011), prospect theory elements negatively affect investment performance, because of a different perception about gains and losses.…”

An optimal Islamic investment decision in two-region economy: The case of Indonesia and Malaysia

“…An interesting fact was revealed from extensive survey research conducted by Lan et al (2018), where demographic characteristics, such as age, gender, years of education, occupation, investment experience, financial knowledge level, and income, are closely linked to decision behaviors. Alshamy (2019) employed structural equation modeling to show that expertise, risk aversion, corporate governance, financial information, and experience to be significant determinants affecting investment decision making, in addition to gender, age, and financial education as moderating variables. A study by Schwarzkopf (2003) revealed that the attraction effect, i.e., an effect that occurs in which adding an inferior or irrelevant alternative into an existing choice set changes decision maker's perception due to its ability to increase the attractiveness, can influence investment decisions.…”