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Behavioural Finance and Investment Decisions: Does Behavioral Bias Matter?

Author

Listed:
  • Etse Nkukpornu
  • Prince Gyimah
  • Linda Sakyiwaa

Abstract

This paper examines the nexus between behavioural bias and investment decisions in a developing country context. Specifically, this study tests the effect of four behavioural biases (overconfidence, regret, belief, and “snakebite”) on investment decisions. Descriptive statistics and inferential statistics including multiple regression are used to examine the behavioural biases-investment decisions nexus. The study reveals that the four bias have a significant positive and robust relationship with investment decision making. The result also shows that the "snakebite" effect contributes more to the decision making, followed by belief bias then regret bias. Overconfidence bias, however, contributes the least effect on investment decisions. Our contribution confirms the prospect theory and that behavioural bias influences investment decisions in the developing country perspective.

Suggested Citation

  • Etse Nkukpornu & Prince Gyimah & Linda Sakyiwaa, 2020. "Behavioural Finance and Investment Decisions: Does Behavioral Bias Matter?," International Business Research, Canadian Center of Science and Education, vol. 13(11), pages 1-65, November.
    • Handle: RePEc:ibn:ibrjnl:v:13:y:2020:i:11:p:65
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    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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