Impact of Behavioral Biases on Fundamental Analysis Factors of Investment Decision: A Study on Retail Investors in Assam

This paper examines the impact of behavioral biases on fundamental analysis factors of investment decision of retail investors in Guwahati, Assam, India. The tested independent variables are anchoring, cognitive dissonance, confirmation and hindsight, Gambler's fallacy, herding, mental accounti...

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Bibliographic Details
Published in:The ICFAI journal of applied finance 2024-01, Vol.30 (1), p.59-80
Main Authors: Sharma, Dhruva Jyoti, Sarma, Nripendra Narayan
Format: Article
Language:English
Subjects:
Behavior
Behavioral economics
Bias
Capital assets
Cognitive dissonance
Debt to equity ratio
Decision making
Efficient markets
Emotions
Expected utility
Heuristic
Hypotheses
Investments
Investors
Rationality
Revenue
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Summary:This paper examines the impact of behavioral biases on fundamental analysis factors of investment decision of retail investors in Guwahati, Assam, India. The tested independent variables are anchoring, cognitive dissonance, confirmation and hindsight, Gambler's fallacy, herding, mental accounting, loss aversion bias, regret aversion bias, and overconfidence bias, and the dependent variable is fundamental analysis factors of investment decision making. Multinomial logistic regression is used to find out the impact of these biases on investment decision. The results reveal that herding bias and overconfidence bias impact investment decision. Overconfidence bias impacts investment decision of investors, which is based on company history, revenue growth, debt-to-equity ratio, and PE value.
ISSN:0972-5105