Investment Decision Making of Institutional Investor: What is Behind It?

International Journal of Research and Innovation in Social Science (IJRISS) | Volume IV, Issue VI, June 2020 | ISSN 2454–6186

Investment Decision Making of Institutional Investor: What is Behind It?

Candy¹, Guseriwan^2
1,2Faculty of Economy, Universitas Internasional Batam, Indonesia

Abstract: The purpose of this study is to analyze the relationship between financial behavior and investment decisions of institutional investors in Batam City. The importance of financial behavior and uncertainty of capital market information enables investors to use the obtained information for more significant result investment, but there are different situations to achieve the result. The study collected feedback from 80 investors from Insurance, Banking, Finance, and Securities companies using targeted sampling techniques. Data analysis used partial least squares structural equation model (PLS-SEM) by testing the inner and outer model. The result showed that financial tools and firm-level corporate governance have a significant positive effect on investment decisions. It allows financial instruments to make investment decisions through fundamental analysis, and firms with corporate governance levels can provide value to shareholders. Capital markets always reflect information and may have a positive or negative impact. The result also found that heuristic and risk a version do not affect investment decisions. It concluded that respondents tended to take rational actions when evaluating information and were not risk-averse investors.

Keywords: investment decision, financial behavior, institutional investor, corporate governance, financial tools

I. INTRODUCTION

The capital market is one element of a country’s economic growth. The role of community and government in the capital market is an element that provides a source of funding for national development. The analogy of a capital market is the same as that of other markets, where supply and demand activities occur between buyers and sellers. The event intended by the seller in the capital market is the securities offered by the issuer to investors so that the buying and selling of shares take place. Investors who invest in the capital market tend to wait a long time and expect large profits. One way for issuers to find sources of funds in the capital market is to be list on the stock exchange by issuing shares and bonds offered to the public.

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