Information signals and bias in investment decisions: A meta-analytic comparison of prediction and actual performance of new ventures

Ashish Vazirani, Subhro Sarkar, Titas Bhattacharjee, Yogesh K Dwivedi and Sarah Jack

Journal of Business Research, 2023, vol. 155, issue PB

Abstract: This study investigates the presence, direction, and scale of bias in investors’ consideration of qualitative information signals while appraising new venture proposals through a meta-analysis of 75 empirical studies published between 2000 and 2020. Our results suggest that investors evaluate different information signals differently owing to their varying abilities and motivations. High levels of ability and motivation stimulate elaboration, resulting in positive bias, whereas low levels of both ability and motivation reduce the likelihood of elaboration, resulting in negative bias. However, for lower levels of either ability or motivation, we found a mix of both positive and negative biases determined by the dominance of information cues. While considering the prospects of investment decisions, our results show that signals suggesting growth potential are preferred over those suggesting financial risk coverage. This study has substantial implications for investors to optimize their decision-making processes and enable entrepreneurs to understand investors’ appraisal processes.

Keywords: New-venture financing; New-venture performance; Decision bias; ELM; Meta-analysis (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S014829632200889X
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:155:y:2023:i:pb:s014829632200889x

DOI: 10.1016/j.jbusres.2022.113424

Access Statistics for this article

Journal of Business Research is currently edited by A. G. Woodside

More articles in Journal of Business Research from Elsevier
Bibliographic data for series maintained by Catherine Liu ().