The impact of heuristics on investment decision and performance: Exploring multiple mediation mechanisms

Syed Zain ul Abdin; Omer Farooq; Naheed Sultana; Mariam Farooq

doi:10.1016/j.ribaf.2017.07.010

The impact of heuristics on investment decision and performance: Exploring multiple mediation mechanisms

Syed Zain ul Abdin, Omer Farooq, Naheed Sultana, Mariam Farooq

Research output: Contribution to journal › Article › peer-review

47 Citations (Scopus)

Abstract

Previous studies have examined the impact of heuristics on the investment performance of individuals. This paper examines mediated links through fundamental and technical stock market anomalies. Findings rely on data collected through surveys of 324 investors. The results show that one mechanism, fundamental anomalies mediate the heuristics–investment performance link, and technical anomalies are not significant mediators of impact on investment performance of individuals. Of four heuristics components, Availability and representativeness is the strongest predictor of investment performance, followed by fundamental anomalies. Overconfidence is also a positive predictor of investment performance of individuals followed by fundamental anomalies.

Original language	English
Pages (from-to)	674-688
Number of pages	15
Journal	Research in International Business and Finance
Volume	42
DOIs	https://doi.org/10.1016/j.ribaf.2017.07.010
Publication status	Published - Dec 2017
Externally published	Yes

Keywords

Behavioral finance
Fundamental anomalies
Heuristics
Investment performance
Technical anomalies

ASJC Scopus subject areas

Business, Management and Accounting (miscellaneous)
Finance

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10.1016/j.ribaf.2017.07.010

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title = "The impact of heuristics on investment decision and performance: Exploring multiple mediation mechanisms",

abstract = "Previous studies have examined the impact of heuristics on the investment performance of individuals. This paper examines mediated links through fundamental and technical stock market anomalies. Findings rely on data collected through surveys of 324 investors. The results show that one mechanism, fundamental anomalies mediate the heuristics–investment performance link, and technical anomalies are not significant mediators of impact on investment performance of individuals. Of four heuristics components, Availability and representativeness is the strongest predictor of investment performance, followed by fundamental anomalies. Overconfidence is also a positive predictor of investment performance of individuals followed by fundamental anomalies.",

keywords = "Behavioral finance, Fundamental anomalies, Heuristics, Investment performance, Technical anomalies",

author = "Abdin, {Syed Zain ul} and Omer Farooq and Naheed Sultana and Mariam Farooq",

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year = "2017",

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doi = "10.1016/j.ribaf.2017.07.010",

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T2 - Exploring multiple mediation mechanisms

AU - Abdin, Syed Zain ul

AU - Farooq, Omer

AU - Sultana, Naheed

AU - Farooq, Mariam

PY - 2017/12

Y1 - 2017/12

N2 - Previous studies have examined the impact of heuristics on the investment performance of individuals. This paper examines mediated links through fundamental and technical stock market anomalies. Findings rely on data collected through surveys of 324 investors. The results show that one mechanism, fundamental anomalies mediate the heuristics–investment performance link, and technical anomalies are not significant mediators of impact on investment performance of individuals. Of four heuristics components, Availability and representativeness is the strongest predictor of investment performance, followed by fundamental anomalies. Overconfidence is also a positive predictor of investment performance of individuals followed by fundamental anomalies.

AB - Previous studies have examined the impact of heuristics on the investment performance of individuals. This paper examines mediated links through fundamental and technical stock market anomalies. Findings rely on data collected through surveys of 324 investors. The results show that one mechanism, fundamental anomalies mediate the heuristics–investment performance link, and technical anomalies are not significant mediators of impact on investment performance of individuals. Of four heuristics components, Availability and representativeness is the strongest predictor of investment performance, followed by fundamental anomalies. Overconfidence is also a positive predictor of investment performance of individuals followed by fundamental anomalies.

KW - Behavioral finance

KW - Fundamental anomalies

KW - Heuristics

KW - Investment performance

KW - Technical anomalies

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The impact of heuristics on investment decision and performance: Exploring multiple mediation mechanisms

Abstract

Keywords

ASJC Scopus subject areas

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