Examining The Effect of Theory of Planned Behavior on Individual Investment Intention in The Indonesia Stock Exchange, Moderated by Herding Behavior and Risk Propensity

Eka Bertuah; Hotman Dufeb Halomoan Oppusunggu

doi:10.22441/jurnal_mix.2022.v12.i3.004

Examining The Effect of Theory of Planned Behavior on Individual Investment Intention in The Indonesia Stock Exchange, Moderated by Herding Behavior and Risk Propensity

Eka Bertuah, Hotman Dufeb Halomoan Oppusunggu

Abstract

There are several products or instruments traded on the Indonesia Stock Exchange, that is Stocks, Bonds, Mutual Funds, Exchange Traded Funds (ETFs), and Derivatives, with stocks being the most popular instrument right now. The benefits of the existence of the capital market for investors are that it provides an opportunity for the public to have a healthy company that has good prospects in the future, and is an alternative investment beside gold and properties that provides potential profits with calculated risks (Kurniawan, 2019).

Objectives: This study aims to determine the effect of the construct variable of the Theory of Planned Behavior on Investment Intention, and the role of Investment Intention as a mediating variable that connects these variables after being moderated by Risk Propensity and Herding Behavior on Investment Behavior of individual investors in Indonesia

Methodology: This study uses primary data which data was collected by distributing online questionnaires via google form. This research was conducted from January to March 2022, from a sample of individual investors from some big islands in Indonesia (Java, North Sumatra, South Sulawesi, Kalimantan). To determine the sample, this study uses the Slovin formula with probability sampling technique - simple random and a total of 525 respondents were collected, but those who met the predetermined sample criteria were 468 respondents. The data analysis that is used is the path analysis Structural Equation Model (SEM).

Finding: Herding behavior and Risk Propensity do not strengthen Investment Intention among individual investors towards Investment Behavior and can be a subject for further study.

Conclusion: The results of this study is only that Product Involvement of Theory of Planned Behavior variables can positively influence Investment Intention. Furthermore, Investment Intention can mediate this variable on Investment Behavior, although not strengthened by the influence of Risk Propensity and Herding Behavior

Keywords

Herding Behavior; Investment Behavior; Investment intention; Risk Propensity

Full Text:

PDF

References

Abduh, M., Taufik, T. M., & Hussin, T. (2018). Factors Influence Intention to Opt for Islamic Investment Schemes among Market Players. Global Review of Islamic Economics and Business, 6(2), 091–102. https://doi.org/10.14421/GRIEB.2018.062-02

Ajzen, I. (2002). Residual Effects of Past on Later Behavior: Habituation and Reasoned Action Perspectives. In Personality and Social Psychology Review (Vol. 6, Issue 2).

https://doi.org/10.1207/S15327957PSPR0602_02

Ajzen, I. (2005). Attitudes, personality, and behavior.

Ajzen, I. (2006). TPB Questionnaire Construction 1 Constructing a Theory of Planned Behavior Questionnaire. http://people.umass.edu/~aizen/pdf/tpb.measurement.pdf

Akhtar, F., & Das, N. (2019). Predictors of investment intention in Indian stock markets: Extending the theory of planned behaviour. International Journal of Bank Marketing, 37(1), 97–119. https://doi.org/10.1108/IJBM-08-2017-0167

Allen, M. W., Gupta, R., & Monnier, A. (2008). The Interactive Effect of Cultural Symbols and Human Values on Taste Evaluation. Journal of Consumer Research, 35(2), 294–308. https://doi.org/10.1086/590319

Alleyne, P., & Tracey, B. (2011). Using the Theory of Planned Behaviour and Risk Propensity to Measure ... In Journal of Eastern Caribbean Studies (Vol. 36, Issue 1).

Alquraan, T., Alqisie, A., & Al Shorafa, A. (2016). Do Behavioral Finance Factors Influence Stock Investment Decisions of Individual Investors? (Evidences from Saudi Stock Market). American International Journal of Contemporary Research, 6(3), 159–169. www.aijcrnet.com

Anjum, M. S., & Khan, M. A. (2021). Role of Product Knowledge and Product Involvement in Determining Investment Intentions of Individual. September. https://doi.org/10.34218/IJM.11.11.2020.044

Arief, H. (2019). Pengaruh Kinerja Keuangan terhadap Harga Saham dengan Metode Diskriminan Springate pada Industri Migas di Pasar Saham Indonesia. Jurnal Ilmiah Manajemen Bisnis, 5(1).

Arifin, A. Z., Kevin, & Siswanto, H. P. (2017). The Influence of Financial Knowledge, Financial Confidence, and Income on Financial Behavior Among the Workforce in Jakarta. MIX: Jurnal Ilmiah Manajemen, VII(1), 37–47.

Armitage, C. J., & Conner, M. (2001). Efficacy of the theory of planned behaviour: A meta-analytic review. In British Journal of Social Psychology (Vol. 40, Issue 4). https://doi.org/10.1348/014466601164939

Aspara, J. (2013). The Role of Product and Brand Perceptions In Stock Investing: Effects On Investment Considerations, Optimism and Confidence. Journal of Behavioral Finance, 14(3), 195–212. https://doi.org/10.1080/15427560.2013.819803

Atif Sattar, M., Toseef, M., & Fahad Sattar, M. (2020). Behavioral Finance Biases in Investment Decision Making. International Journal of Accounting, Finance and Risk Management, 5(2), 69. https://doi.org/10.11648/j.ijafrm.20200502.11

Ayu Wulandari, D., & Iramani, R. (2014). Studi Experienced Regret, Risk Tolerance, Overconfidance Dan Risk Perception Pada Pengambilan Keputusan Investasi. Journal of Business and Banking, 4(1), 55. https://doi.org/10.14414/jbb.v4i1.293

Birău, F. R. (2013). the Impact of Behavioral Finance on Stock Markets University of Craiova , Faculty of Economics and Business Administration. Academica Brâncuşi” Publisher, 78421(3), 45–50.

Chaffai, M., & Medhioub, I. (2014). Behavioral finance: An empirical study of the Tunisian stock market. International Journal of Economics and Financial Issues, 4(3), 527–538.

Chakravarti, A., & Janiszewski, C. (2003). The Influence of Macro‐Level Motives on Consideration Set Composition in Novel Purchase Situations. In Journal of Consumer Research (Vol. 30, Issue 2). https://doi.org/10.1086/376803

Chaudhary, A. K. (2013). Impact of Behavioral Finance in Investment Decisions and Strategies-a Fresh Approach. http://www.ijmrbs.com/currentissue.php

Chiang, T., Tan, L., Li, J., & Nelling, E. (2013). Dynamic Herding Behavior in Pacific-Basin Markets: Evidence and Implications. Multinational Finance Journal, 17(3/4), 165–200. https://doi.org/10.17578/17-3/4-3

Cole, S. A., Paulson, A. L., & Shastry, G. K. (2011). Smart Money: The Effect of Education on Financial Behavior. In SSRN Electronic Journal. https://doi.org/10.2139/ssrn.1317298

Cuong, P. K., & Jian, Z. (2014). Factors Influencing Individual Investors’ Behavior: An Empirical Study of the Vietnamese Stock Market. American Journal of Business and Management, 3(2), 77–94. https://doi.org/10.11634/216796061403527

Dey, D. K., Chauhan, Y. K., & Chakraborti, R. (2015). Does advertising strategy matter in influencing mutual fund purchase? Journal of Financial Services Marketing, 20(1), 23–33. https://doi.org/10.1057/fsm.2014.29

Du, N., & Budescu, D. V. (2005). The Effects of Imprecise Probabilities and Outcomes in Evaluating Investment Options. Http://Dx.Doi.Org/10.1287/Mnsc.1050.0428, 51(12), 1791–1803. https://doi.org/10.1287/MNSC.1050.0428

East, R. (1993). Investment decisions and the theory of planned behaviour. Journal of Economic Psychology, 14(2), 337–375. https://doi.org/10.1016/0167-4870(93)90006-7

Fishbein, M., & Ajzen, I. (2011). Predicting and changing behavior: The reasoned action approach. Predicting and Changing Behavior: The Reasoned Action Approach. https://doi.org/10.4324/9780203838020

Ganzach, Y., Ellis, S., Pazy, A., & Ricci-Siag, T. (2008). On the perception and operationalization of risk perception. Judgment and Decision Making, 3(4), 317–324.

Grinblatt, M., Keloharju, M., & Linnainmaa, J. (2011). IQ and Stock Market Participation. Journal of Finance, 66(6), 2121–2164. https://doi.org/10.1111/j.1540-6261.2011.01701.x

Ham, M., Jeger, M., & Ivković, A. F. (2015). The role of subjective norms in forming the intention to purchase green food. Economic Research-Ekonomska Istrazivanja , 28(1), 738–748. https://doi.org/10.1080/1331677X.2015.1083875

Hamid, S. A. (2013). Tax Compliance Behaviour of Tax Agents : A Comparative Study of Malaysia and New Zealand. In Unpublished Doctoral thesis, University of Canterbury, New Zealand.

Harrison, T. (2016). Financial literacy and the limits of financial decision-making. In Financial Literacy and the Limits of Financial Decision-Making. https://doi.org/10.1007/978-3-319-30886-9

Ibrahim, Y., & Arshad, I. (2017). Examining the impact of product involvement, subjective norm and perceived behavioral control on investment intentions of individual investors in Pakistan. In Investment

Management and Financial Innovations (Vol. 14, Issue 4). https://doi.org/10.21511/imfi.14(4).2017.15

Iqbal, S., Hussain, N., Latif, M., & Aslam, S. (2013). Investor type and financial market anomalies: A comparison of individual, institutional and foreign investors and role of their behaviors in investing decisions. Middle East Journal of Scientific Research, 17(11), 1591–1596. https://doi.org/10.5829/idosi.mejsr.2013.17.11.11787

Jahanzeb, A., & . S.-R. (2012). Implication of Behavioral Finance in Investment Decision-making Process. Information Management and Business Review, 4(10), 532–536. https://doi.org/10.22610/imbr.v4i10.1009

Kahneman, D., & Tversky, A. (1981). The Framing of Decisions and the Psychology of Choice The Framing of Decisions and the Psychology of Choice. Science, 211(4481), 453–458. www.sciencemag.org

Keynes, J. M. (1933). <> treatise on money. In two volumes.

Kozup, J., Howlett, E., & Pagano, M. (2008). The effects of summary information on consumer perceptions of mutual fund characteristics. Journal of Consumer Affairs, 42(1), 37–59. https://doi.org/10.1111/j.1745-6606.2007.00093.x

Kuhn, K. M., & Budescu, D. V. (1996). The Relative Importance of Probabilities, Outcomes, and Vagueness in Hazard Risk Decisions. Organizational Behavior and Human Decision Processes, 68(3), 301–317. https://doi.org/10.1006/OBHD.1996.0107

Kurniawan, I. (2019). Analisa Keuntungan Investasi Emas Dengan IHSG. Jurnal Manajemen Bisnis Dan Kewirausahaan, 3(2). https://doi.org/10.24912/jmbk.v3i2.4955

Lestari, W. (2013). Religiusitas Dan Persepsi Risiko Dalam Pengambilan Keputusan Investasi Pada Perspektif Gender. Journal of Business and Banking, 3(2), 189. https://doi.org/10.14414/jbb.v3i2.236

Li, L. K. (2013). Investment Intentions: A Consumer Behaviour Framework. The University of Western Australia, 1–224. https://research-repository.uwa.edu.au/files/3235741/Lim_Kang_Li_2013.pdf

Lim, K. L., Soutar, G. N., & Lee, J. A. (2016). Factors affecting investment intentions: A consumer behaviour perspective. In Financial Literacy and the Limits of Financial Decision-Making (pp. 201–223). Springer International Publishing. https://doi.org/10.1007/978-3-319-30886-9_10

Luong, L. P., & Ha, D. T. T. (2011). Behavioral Factors Influencing Individual Investors’ Decision-Making and Performance: A Survey at the Ho Chi Minh Stock Exchange. In Umea: Umea Universitet (Issue October 2011, p. 115).

Mahastanti, L. A., & Hariady, E. (2014). Determining the factors which affect the stock investment decisions of potential female investors in Indonesia. International Journal of Process Management and Benchmarking, 4(2), 186–197. https://doi.org/10.1504/IJPMB.2014.060407

Malmendier, U., & Tate, G. (2005). Does Overconfidence Affect Corporate Investment? CEO Overconfidence Measures Revisited. European Financial Management, 11(5), 649–659. https://doi.org/10.1111/J.1354-7798.2005.00302.X

Manurung, A. H. (2012). Teori Perilaku Keuangan ( Behaviour Finance ). Economis Of Management, 41(4), 1–13. http://finansialbisnis.com/Data2/Riset/Teori Perilaku Keuangan.pdf

Mawardi, M. K., Sujarwoto, & Sahputri, R. A. M. (2022). A Multidimensional Model of Planned Behavior Theory and Its Prediction on Entrepreneurial Intention. MIX: Jurnal Ilmiah Manajemen, 12(2), 319–333. http://dx.doi.org/10.22441/jurnal_mix.2022.v12i2.011

Merawati, L. K., & Putra Semara, I. P. M. J. (2015). Kemampuan Pelatihan Pasar Modal Memoderasi Pengaruh Pengetahuan Investasi Dan Penghasilan Pada Minat Berinvestasi Mahasiswa. Jurnal Ilmiah Akuntansi Dan Bisnis, 10(2), 105–118.

Mohammad Reza Tavakoli Baghdadabad. (2011). A study on small investors’ behavior in choosing stock case study: Kuala-Lumpur stock market. African Journal of Business Management, 5(27), 11082–11092. https://doi.org/10.5897/ajbm11.832

Nugroho, A. C., Firdaus, M., Andati, T., & Irawan, T. (2018). Investment decision in the agency theory framework. Mix: Jurnal Ilmiah Manajemen, 8(1), 16-32.

Ngoc, L. T. B. (2013). Behavior Pattern of Individual Investors in Stock Market. International Journal of Business and Management, 9(1), 1–16. https://doi.org/10.5539/ijbm.v9n1p1

Pascual-Ezama, D., Scandroglio, B., & De-liaño, B. G.-G. (2014). Can we predict individual investors’ behavior in stock markets? A psychological approach* ¿Es posible predecir el comportamiento de los inversionistas en los mercados bursátiles? Una aproximación psicológica BárBara scanDroglio *** BEatriz gil-gomEz DE li. 13(1), 25–35. https://doi.org/10.11144/Javeriana.UPSY13-1.cwpi

Pohja, T. L. (2009). Searching for the entrepreneur–the role of social norms among entrepreneurs. 4th EDP Workshop, 2–3. http://webs2002.uab.es/edp/workshop09/Papers Workshop/9Pohja.pdf

Rasheed, M. H., Rafique, A., Zahid, T., & Akhtar, M. W. (2018). Factors influencing investor’s decision making in Pakistan: Moderating the role of locus of control. Review of Behavioral Finance, 10(1), 70–87. https://doi.org/10.1108/RBF-05-2016-0028/FULL/HTML

Rzepczynski, M. S. (2000). Beyond Greed and Fear: Understanding Behavioral Finance and the Psychology of Investing (a review). In Financial Analysts Journal (Vol. 56, Issue 6). https://doi.org/10.2469/faj.v56.n6.2407

Sadiq, & Khan. (n.d.). Impact of personality traits on investment intention: the mediating role of risk behaviour and the moderating role of financial literacy. Geistscience.Com. https://doi.org/10.20547/jfer1904101

Schmidt, N. (2010). What Drives Investments into Mutual Funds? Applying the Theory of Planned Behaviour to Individuals’ Willingness and Intention to Purchase Mutual Funds. Retail Investment Conference, July, 1–39. https://www.retailinvestmentconference.org/files/eric_submission_full_5_schmidt_v0.pdf

Shanmugham, R., & Ramya, K. (2012). Impact of Social Factors on Individual Investors’ Trading Behaviour. Procedia Economics and Finance, 2, 237–246. https://doi.org/10.1016/s2212-5671(12)00084-6

Shefrin, H., & Statman, M. (2000). Behavioral Portfolio Theory. In Journal of Financial and Quantitative Analysis (Vol. 35, Issue 2).

Shehryar, O. (2005). Buyer behavior and procedural fairness in pricing: Exploring the moderating role of product familiarity. Article in Journal of Product & Brand Management. https://doi.org/10.1108/10610420510609294

Sivaramakrishnan, S., Srivastava, M., & Rastogi, A. (2017). Attitudinal factors, financial literacy, and stock market participation. International Journal of Bank Marketing, 35(5), 818–841. https://doi.org/10.1108/IJBM-01-2016-0012

Tai, Y. M., & Ku, Y. C. (2013). Will stock investors use mobile stock trading? A benefit-risk assessment based on a modified utaut model. In Journal of Electronic Commerce Research (Vol. 14, Issue 1).

Ullah, S., Elahi, M. A., Ullah, A., Pinglu, C., & Subhani, B. H. (2020). Behavioral biases in investment decision making and moderating role of investor’s type. Intellectual Economics, 14(2), 87–105. https://doi.org/10.13165/IE-20-14-2-06

Wibowo, B. (2016). Pemodelan Determinan Niat Berwirausaha dan Efek Pengaruh Edukasi Kewirausahaan di Kalangan Mahasiswa. MIX: Jurnal Ilmiah Manajemen, VI(2), 152–170. http://dx.doi.org/10.22441/jurnal_mix.2022.v12i2.011

Yang, M., Al Mamun, A., Mohiuddin, M., Samer, S., Al-Shami, A., Zainol, N. R., Valls Martínez, C., Antonio, P., & Cervantes, M. (2021). Predicting Stock Market Investment Intention and Behavior among Malaysian Working Adults Using Partial Least Squares Structural Equation Modeling. Mdpi.Com. https://doi.org/10.3390/math9080873

Yuniningsih, & Taufiq, M. (2019). Investor Behavior In Determining Investment on Real Asset. MIX: Jurnal Ilmiah Manajemen, 9(2), 327–341. http://dx.doi.org/10.22441/mix.2019.v9i2.006

Zaichkowsky, J. L. (1985). Measuring the Involvement Construct. Journal of Consumer Research, 12(3), 341. https://doi.org/10.1086/208520

Zuckerman, M., Kolin, E. A., Price, L., & Zoob, I. (1964). Development of a sensation-seeking scale. Journal of Consulting Psychology, 28(6), 477–482. https://doi.org/10.1037/H0040995

Zuckerman, M., & Kuhlman, D. M. (2000). Personality and Risk-Taking: Common Bisocial Factors. Journal of Personality, 68(6), 999–1029. https://doi.org/10.1111/1467-6494.00124

Zuckerman, M., Murtaugh, T., & Siegel, J. (1974). Sensation Seeking and Cortical Augmenting-Reducing. Psychophysiology, 11(5), 535–542. https://doi.org/10.1111/J.1469-8986.1974.TB01109.X

DOI: http://dx.doi.org/10.22441/jurnal_mix.2022.v12.i3.004