Purpose: This paper aims to analyze the influence of overconfidence bias and herding bias on investment decision making and the moderating role of financial literacy and risk attitude on overconfidence bias and herding bias on investment decision making in the Colombo Stock Market.Design/Methodology/Approach: This paper collects data from a structured questionnaire survey carried out among 110 individual investors in the Colombo stock market. This paper used a multiple regression method to analyze the influence of overconfidence bias and herding bias on investment decisions with financial literacy and risk attitude as moderating variables.Findings: Overconfidence bias has a significant influence on investment decisions. Results do not indicate that herding bias significantly influence investment decisions. Financial literacy significantly moderates the relationship between overconfidence in investment decisions. However, financial literacy does not significantly moderate the relationship between herding bias in investment decisions. Financial literacy and risk attitude do not significantly moderate the relationship between herding bias in investment decisions.Implications: The findings of this paper would help to understand the influence of behavioral bias on investment decisions of individual investors in Colombo stock market.Originality/Value: The research described in this paper study the moderating role of financial literacy and risk attitude on overconfidence bias and herding bias in making investment decisions (in Colombo Stock Exchange).
Purpose of the study: Individual investor’s behavior is extensively influenced by biases that are highlighted in the growing discipline of behavioral finance. The present study sought to investigate the influence of socio-economic factors (i.e., investors’ age, gender, education, profession, and income), trading sophistication factors (i.e., trading experience and trading frequency), and self-reflection on herding bias in investment decision-making in Colombo Stock Exchange (CSE). Methodology: The study adopted descriptive and explanatory research designs. It was a census of all 243 individual investors registered with CSE as of September 2020. Sampling was done applying proportionate stratified random sampling technique and data was gathered using self-administered semi-structured questionnaires. The analysis was conducted using means, standard deviations, and regression. Main Findings: The results show that herd behavior is mostly seen among females, having less educational qualifications, who are engaged in the finance field professions, those who are with a very low monthly income, low experience, and who trade less frequently. Self-reflection can be seen in herding bias. On the other hand, age does not impact on herding bias of investors. Applications of this study: This study will be helpful to financial intermediaries to advise their clients. Moreover, the results of the present study facilitate individual investors to realize their herding bias by its’ determinants in the pursuit of making sensible and effective financial decisions. Novelty/Originality of this study: This study gives a unique insight into the investors’ profile corresponding to herding bias under consideration. It not only updates the evidence on herding bias but also highlights which factors are the most influential on herding bias in the Sri Lankan context. With the peculiar scenario in Sri Lanka, this paper contributed to the behavioral finance field as a reference for individual investors and financial advisors.
The Small Over the previous few years, a considerable number of articles have been written about the rapid spread of entrepreneurship, the area of coprenurs are still under research field. Departing from a social constructionist approach, this study examines how entrepreneurial couples are constructed in research articles. The Methodological approach of this study is supported by discourse analysis. Discourse analysis was enabled to disclose the hidden motivations behind the text to interpret that text. Findings reveal that seven hegemonic statements : the love bond between a husband and wife grows stronger with involvement in a copreneurial venture, socially constructed men and women, the division of business and household responsibilities is traditional, blending of work and family dimensions creates new opportunities for tensions, conceptions of the female entrepreneur as problematic, female copreneurs and challenges of being in business with spouse and key patterns of couples in multiplex relationships. These influences reproduce the notion of essential gender differences and the idea of the female as the weaker sex. The findings of the study are dependent on the particular context in which the articles are constructed. This means that their results and assumptions cannot be generalized to other contexts uncritically. By discussing research findings, the study opens the avenues for alternative ways of theorizing and researching entrepreneurial couples. Suggestions for alternative research practices include the adding of an institutional approach to the research agenda, such as family policy, and legislation.
This paper aims to investigate the impact of heuristic biases on the decision making of individual investors' who are actively trading on Colombo Stock Exchange (CSE). Most studies focus on welldeveloped financial markets and very little is known about investors' behaviour in less developed financial markets or emerging markets. The present study contributes to filling this gap in the literature. Investors' heuristic biases have been measured using a five-point Likert scale questionnaire which contained numerous items including indicators of investment decisions. The sample consists of 140 individual investors trading on the CSE. The systematic random sampling technique was used for data collection. To examine the impact of heuristic biases on investment decision making, hypotheses were tested by using multiple regression analysis. The results suggest that, there is a significant impact from the heuristic bias create from the initial piece of information (Anchoring and adjustment bias) over the investment decision making. But other biases such as the overconfidence bias, representativeness bias and availability bias are not much significantly impact on investment decision making by the individual investors in CSE. The paper inspires the investors to avoid relying on heuristic biases when making investments. It provides awareness and understanding of heuristic biases in investment management which could be really worth for decision makers and professionals in financial institutions, such as portfolio managers and traders in commercial banks, investment banks and mutual funds. This paper helps investors to select better investment tools and to avoid repeating expensive errors, which occur because of heuristic biases. So, it is necessary to focus on a specific investment strategy to control mental mistakes by investors due to heuristic biases.
Individual investor’s behavior is extensively influenced by biases that highlighted in the growing discipline of behavior finance. This study is one of another effort to assess the determinants of behavioral biases in investor’s investment decision-making. The present study has analyzed the influence of socio-economic, trading sophistication and self-reflection factors, which cause changes in the extent of overconfidence level among the individual individuals. The study analyses the perception of 243 survey responses from individual investors of Colombo Stock Exchange. A survey has been conducted to investigate the influence of determinants of overconfidence with the help of a well-structured close-ended questionnaire. The collected data are analyzed with the help of t-test, ANOVA and simple linear regression. The results show that those self-reflective males who has high education qualifications and have more investment experience are more subject to the overconfidence. The study also concludes that the investors’ age, profession and income do not influence investors' overconfidence bias. The potential limitations of the present survey can be ascribed to socially desirable responses and their difference with actual market behavior. Further, due to time and resource constraint, the data set is limited to investors of only Colombo Stock Exchange. Moreover, this study is most relevant for financial advisors, as it facilitates them in gaining a better understanding of their clients’ psychology. It can aid them in developing behaviorally modified portfolio, which best suits their clients’ predisposition, and the study is useful for the market regulators, financial educators, stock market advisors and individual investors in avoiding costly investment mistakes. Moreover, the study attempts to explore the impact of demographic and investment characteristics in one go, which makes it a valuable contribution in the existing literature. Keywords: Colombo Stock Exchange, Overconfidence, Self-reflection, Socio-economic, Trading Sophistication
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