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Implementation of Transactional Theory to Unlock the Secrets of Investor Behavior in the Capital Market

In: Proceedings of the 3rd Annual Management, Business and Economics Conference (AMBEC 2021)

Author

Listed:
  • Satia Nur Maharani

    (Universitas Negeri Malang, Accounting Department, Faculty of Economics)

  • Setya Ayu Rahmawati

    (Universitas Negeri Malang, Accounting Department, Faculty of Economics)

Abstract

When traditional financial theory is tested in an actual context, various anomalies have been discovered. Such anomalies are the result of deviations from the norms established by standard financial theory. Further analysis of the anomaly leads to the understanding that the actual observed behavior is not as modeled in traditional financial theory. Through a qualitative approach using the perspective of Lazarus Folkman’s transactional theory, this article presents research findings that investors do not always behave rationally and/or always emotional. The character of human cognitive and affective potentials presents a very wide space of possibilities for collaboration and competition against these two potentials. In the end, the behavior of investors in making economic decisions is very complex and varied. Maximum cognitive with limited affective and vice versa maximal affective with limited cognitive is one of the findings that reflects the collaboration and competition of the potential that produces several kinds of investor behavior. The conceptual framework found in this study has the potential to be tested in subsequent research with a different method approach.

Suggested Citation

  • Satia Nur Maharani & Setya Ayu Rahmawati, 2023. "Implementation of Transactional Theory to Unlock the Secrets of Investor Behavior in the Capital Market," Advances in Economics, Business and Management Research, in: Nurafni Eltivia & Nur Indah Riwajanti & Kartika Dewi Sri Susilowati (ed.), Proceedings of the 3rd Annual Management, Business and Economics Conference (AMBEC 2021), pages 303-315, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-026-8_35
    DOI: 10.2991/978-94-6463-026-8_35
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