The disposition effect is the tendency of investors to sell stocks early when the price increases and hold stocks longer when this price decreases. As a consequence, investors may lose opportunities to gain greater profits from a stock winner whose price continues to rise; in contrast, they can suffer greater loss when the stocks continue to decline. The disposition effect is a phenomenon widely studied in behavioral finance. There are two main competing theories attempting to explain this phenomenon: the prospect theory and the regret theory. Although both theories give a fairly comprehensive explanation, they fail to take into account the motivation of investors in making investment decisions. This paper seeks to make a critical review of both of the main theories as well as provide a new explanation related to the motivation of investors from the perspective of the regulatory-focus theory. Regulatory-focus theory explains that individuals can be categorized into two groups, i.e. the prevention group and the promotion group. Regulatory-focus theory adds a more specific explanation that the disposition effect is more likely to occur in the prevention rather than the promotion group. The explanation of the disposition effect based on regulatory-focus -is a novelty in this paper.
This study aims to see the extent to which risk management practices in companies, especially banking, influence the sustainability of conventional banking financial performance on the Indonesia Stock Exchange. The research sample is the banking industry on the IDX capital market during the period 2017 to 2019. Of the 41 banks that went public, 38 conventional banks were used as research samples. The dependent variable used is the Sustainable growth rate as a proxy for sustainable financing performance The independent variables used are Cash flow operating to total liability as a proxy for risk management practice in cash flow operating, cash flow investing to total liability, cash flow financing to total liability and cash flow operating to shareholder equity. The results show that risk management practices in cash flow finance to total libility, risk management practices in cash flow investing to total liability, risk management practices in cash flow operating to total share holder equity have an impact on the sustainability of banking financial performance. These results have implications for banking management, especially in terms of predicting the sustainability of banking financial performance.
Key Words: sustainable financing performance, cash flow risk management pratices
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