IDEAS home Printed from https://ideas.repec.org/a/rbs/ijbrss/v12y2023i5p174-184.html
   My bibliography  Save this article

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

Author

Listed:
  • Muchammad Arie Wibowo

    (Univesity of Brawijaya)

  • Nur Khusniyah Indrawati

    (Univesity of Brawijaya)

  • Siti Aisjah

    (Univesity of Brawijaya)

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.

Suggested Citation

  • Muchammad Arie Wibowo & Nur Khusniyah Indrawati & Siti Aisjah, 2023. "The impact of overconfidence and herding bias on stock investment decisions mediated by risk perception," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 12(5), pages 174-184, July.
    • Handle: RePEc:rbs:ijbrss:v:12:y:2023:i:5:p:174-184
    DOI: 10.20525/ijrbs.v12i5.2663
    as

    Download full text from publisher

    File URL: https://www.ssbfnet.com/ojs/index.php/ijrbs/article/view/2663/1895
    Download Restriction: no
    File URL: https://doi.org/10.20525/ijrbs.v12i5.2663
    Download Restriction: no
    File URL: https://libkey.io/10.20525/ijrbs.v12i5.2663?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rbs:ijbrss:v:12:y:2023:i:5:p:174-184. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Umit Hacioglu (email available below). General contact details of provider: https://edirc.repec.org/data/ssbffea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.