The Effect of Experienced Regret and Overconfi-dence Based on Profession on Investment Decisions in Banda Aceh

International Journal of Research and Innovation in Social Science (IJRISS) | Volume V, Issue X, October 2021 | ISSN 2454–6186

The Effect of Experienced Regret and Overconfidence Based on Profession on Investment Decisions in Banda Aceh

Sri Wahyuni*, Said Musnadi, Faisal
Management Department, Universitas Syiah Kuala, Indonesia
*Corresponding author

Abstract: This study was to see the effect of Experience Regret and Overconfidence on investment decisions with Profession as moderating. the population is all the people of Banda Aceh City who are investors in the capital market, which amounted to 5,126 investors spread over several securities. The criteria for selecting the sample were those who have made financial investments through various existing financial instruments, amounting to 150 people. The allocation of the sample was each 50 from civil servants, State Own Enterprise (SOE) employees, and private employees. Data were analyzed using Structural Equation Modeling (SEM). The results show that experienced regret affects investment decisions, overconfidence affects investment decisions, and profession does not moderate the influence between experienced regret and overconfidence on investment decisions. This finding contributes academically, that the investment decision model in the Capital Market by the people in Banda Aceh City depends on their experienced regret and overconfidence, but does not depend on the type of their profession which consists of civil servants, SOE employees, and private employees. In the multi-group test results, although the effect is not significant, it can be seen that civil servants have experienced regrets that influence investment decisions more strongly than SOE employees and private employees. However, for overconfidence, SOE employees have overconfidence which influences investment decisions more strongly than civil servants and private employees.

Keywords: Experienced Regret, Overconfidence, Profession, Investment Decision.

I. INTRODUCTION

Good investment decision-making by investors is usually done rationally to maximize its utility. However, accounting infor-mation is not enough, even experts state that the role of in-vestor psychology has a very large role in investing (Fogel & Berry, 2006). The existence of these psychological factors affects the investment and the results to be achieved. There-fore, investment analysis that uses psychology and finance is known as behavioral finance. Behavioral finance tries to identify and learn from human psychological phenomena in financial markets and individual investors (Pompian, 2012). According to Pompian, behavioral finance is divided into be-havioral finance macro and behavioral finance micro, where the meaning is behavioral finance macro, namely whether the market is efficient or the market is affected by the impact of behavioral finance and behavioral finance micro, namely whether investors act rationally or can cognitive and emo-tional

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