Factors Affecting Investment Decision Mediated By Risk Aversion: A Case of Pakistani Investors

Purpose: The purpose of this study is to check the impact of information asymmetry, financial literacy, and personal values on investment decisions mediating by risk aversion. Methodology: Cross sectional data were used for this study. This research study aims at the identification of some of the core factors in the existing body of the knowledge which will enhance the individual stock market investor’s performance and their decision making while trading. A questionnaire was used for data collection from 300 institutional and individual investors of Lahore and Islamabad stock exchanges. Pilot testing was done through confirmatory factor analysis by using AMOS and Structural Equation Modeling (SEM) was applied to identify the direct, indirect or mediation relationship between the dependent, independent variables. Findings: The result indicates that information asymmetry, financial literacy and risk aversion have a positive significant effect on investment decision. While personal values have a negative and insignificant effect on investment decision. Information Asymmetry and Financial literacy have significant positive effects on Risk aversion. Personal values have a negative and insignificant effect on risk aversion. Risk aversion has a positive and significant effect on investment decision. Information asymmetry and financial literacy has fully mediation impact on investment decision. Recommendations: Personal values have no mediation on investment decision.