Behavioral biases on Investment Decisions: Moderated Moderation by Long-term Orientation and by Gender

Purpose: The influence of behavioral biases on the investment decisions of individual investors is an important issue in the fields of finance and psychology. This study aimed to investigate the moderated moderation effects of gender and long-term orientation on the relationship between behavioral biases and investment decisions in Indonesia stock market. Prior studies have shown that individual investors are susceptible to cognitive biases and emotional biases that can lead to a negative impact on their investment decisions. Investors can enhance the rationality and information of their investment decisions by acquiring knowledge about behavioral biases and establishing explicit investment goals. Design/methodology/approach: We conducted a thorough survey of 600 individuals who trade on Indonesia Stock Exchange. The relationship was assessed using the Moderated Moderation Regression Analysis test with Hayes Model. Findings: The findings indicate a positive correlation between behavioral biases and investment decisions. Specifically, the more irrational the investment decisions, the greater the level of behavioral biases. The moderation effect of long-term orientation (LTO) negatively impacts the relationship between behavioral biases and investment decisions. In addition, the three-way interaction term (behavioral biases x LTO x gender) is statistically significant. Research limitations/implications: Future research could expand on this study by examining other cultural values, using qualitative methods to explore gender-based financial decision-making, or conducting comparative studies across different countries or generational cohorts. Originality/value: Finally, as of today, our search finds that this research is the first to study gender using moderated moderation to gain more insight into whether long-term orientation can weaken the influence of behavioral biases on investment decisions.