The Effect of Information Sequential and Personality on the Investor Belief Revision (An Experimental Study in Decision Making)

Kusumawati

Alimuddin

et al. 2020

IJFR

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This study examines the effect of the interaction between cognitive moral development (pragmatic, accommodating, and autonomous) and an organizational situation (agency and stewardship) in business ethical decision making (earnings management and expropriation). This research employed a laboratory experiment design of full factorial factor 3x2 between-within subjects.There were 97 postgraduate students of Hasanuddin University that acted as participants. Data were analyzed by ANOVA and t-test. The results showed that the level of cognitive moral development is positively related to the degree of ethical decisions in accounting and expropriation. The higher the level of cognitive moral development, the more managers act ethically in decisions relating to accounting and expropriation. Meanwhile, the agency and stewardship situation have no effect on the differences in ethical decision making both in accounting and expropriation. Similarly, the exposure to an organizational situation has no impact on the relationship between levels of cognitive moral development and ethical decision making.The assumption stating that cognitive moral development of each participant has been an anchor and not easily changed to the different or the opposite situations is empirically proven.

Section: Methodsmentioning

confidence: 99%

Cognitive Moral Development, Organizational Situation and Ethical Decision Making in Business and Accounting

Kusumawati

Alimuddin

et al. 2020

IJFR

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“…Belief adjustment theory explains that high (low) anchors will decrease (increase) when faced with negative (positive) information when compared to low anchors (high) (Hartono, 2004;Habbe & Mande, 2016). Investors tend to overestimate the positive (negative) initial earnings information.…”

Section: Anchoring-adjustmentmentioning

confidence: 99%

Do Investors Experience Heuristics in Earnings Forecasting?

Praditha¹,

Haliah

Business: Theory and Practice

et al. 2020

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This research aims to examine empirically the overreliance on representativeness heuristic and anchoring-adjustment influences experienced by investors in forecasting future earnings. This research was a laboratory experiment with a design of 2x2 full factorial between subject. The results showed that representativeness heuristics were only experienced by investors who obtained positive information. Besides, this study also shows that investors do not overreliance on anchoring-adjustment heuristics. Generally, this research shows that cognitive biases occur when the information presented is of good value so that it can be taken into consideration for investors to be more careful in making predictions. Multiple benchmark information can be used as a consideration in evaluating the company’s earnings and stock performance.

“…Investors will be pegged by the amount of anchoring value used as initial belief, then make adjustments to the new information received. Anchoring is considered to be very strong as a basic reference so that many people then become dependent on these values (Bloomfield et al, 2003); (Boussaidi, 2013) ; (Wahyuni et al, 2016); (Habbe & Mande, 2016); (Habbe, 2017); (Sundari & Habbe, 2018); (Praditha et al, 2020).…”

Section: Testing Differences In Prediction On Negative Information Loadsmentioning

confidence: 99%

“…Investor's belief revision is generally influenced by psychological factors, in this case, heuristic psychology. At the very least, investors experience an initial value or initial belief in making consideration or making investment decisions (Bloomfield et al, 2003;Habbe & Mande, 2016;Habbe, 2017;Richie & Josephson, 2017;Praditha et al, 2020).…”

Section: Introductionmentioning

confidence: 99%

Investor Beliefs Revision In The Multiple Benchmark Accounting Information

Praditha¹,

Jao

2020

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Penelitian ini bertujuan untuk menguji efektivitas dari pengungkapan informasi akuntansi multiple benchmark terhadap revisi keyakinan investor dalam memprediksi kinerja laba masa depan. Desain penelitian yang digunakan adalah eksperimen laboratorium 2x2 full factorial within subject. Subjek yang digunakan dalam penelitian ini adalah 20 orang mahasiswa Program Doktor Ilmu Ekonomi Universitas Hasanuddin yang diproksikan sebagai investor. Hasil penelitian menunjukkan bahwa ketika investor memeroleh informasi laba transitory bernilai positif investor cenderung melakukan revisi atas prediksi laba yang dilakukan berdasarkan informasi tambahan (management guidance). Hal tersebut ditunjukkan adanya perbedaan yang signifikan antara prediksi laba sebelum dan setelah diberikan informasi tambahan. Sedangkan, ketika investor memeroleh informasi laba transitory bernilai negatif, menunjukkan hasil yang sebaliknya. Investor cenderung memprediksi kinerja laba masa depan tidak jauh berbeda dari keyakinan awalnya. Hal ini menunjukkan adanya keterpatokan terhadap nilai awal yang menyebabkan investor mengalami bias heuristik anchoring-adjustment.This study aims to examine the effectiveness of the disclosure of multiple benchmark accounting information on the investor's belief revision in predicting future earnings performance. The research design used laboratory experiments 2x2 full factorial within-subject. The subjects used in this study were 20 students of the Doctoral Program in Economics, Hasanuddin University who were proxied as investors. The results show that when investors obtain information on temporary earnings is positive, investors tend to revise earning predictions based on additional information (management guidance). This is indicated by the significant difference between earnings predictions before and after additional information is provided. Meanwhile, when investors get information about negative temporary earnings, the results show the opposite. Investors tend to predict future earnings performance that is not much different from their initial beliefs. This shows the existence of a set of initial values that cause investors to experience anchoring-adjustment heuristic bias.