The impact of overconfidence and herding bias on stock investment decisions mediated by risk perception

Muchammad Arie Wibowo, Nur Khusniyah Indrawati and Siti Aisjah
Additional contact information
Muchammad Arie Wibowo: Univesity of Brawijaya
Nur Khusniyah Indrawati: Univesity of Brawijaya
Siti Aisjah: Univesity of Brawijaya

International Journal of Research in Business and Social Science (2147-4478), 2023, vol. 12, issue 5, 174-184

Abstract: This study examines the impact of overconfidence bias, herding bias, and risk perception on stock investment decisions. This study uses explanatory research with a quantitative approach. The population in this study is the Generation Z Society, the generation born between 1997-2012 in Malang City who invests in the capital market. The sampling technique used in the study was purposive sampling. Data collection was used through surveys using questionnaires, and the use of Likert scales to test instruments. The data were analyzed using Structural Equation Model Partial Least Square (SEM-PLS) modeling. The results of this study indicate that overconfidence bias and herding bias contained in investors can reduce the quality of investment decisions. In addition, overconfidence bias and herding bias can also reduce investors' risk perception. The perception of risk in investors can influence investment decisions and increase the benefits of the investment process. Risk perception can mediate between overconfidence bias and herding bias on investment decisions. The results of this study suggest that investors should minimize the formation of bias when making investment decisions and diversify their portfolios to minimize risk. Key Words: Overconfidence Bias, Herding Bias, Risk Perception, Investment Decision, Behavioral Finance.

Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.ssbfnet.com/ojs/index.php/ijrbs/article/view/2663/1895 (application/pdf)
https://doi.org/10.20525/ijrbs.v12i5.2663 (text/html)

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:rbs:ijbrss:v:12:y:2023:i:5:p:174-184

Access Statistics for this article

International Journal of Research in Business and Social Science (2147-4478) is currently edited by Prof.Dr.Umit Hacioglu

More articles in International Journal of Research in Business and Social Science (2147-4478) from Center for the Strategic Studies in Business and Finance Editorial Office,Baris Mah. Enver Adakan Cd. No: 5/8, Beylikduzu, Istanbul, Turkey. Contact information at EDIRC.
Bibliographic data for series maintained by Umit Hacioglu ().