Title: Representative bias and investment decision: the moderating role of accounting disclosure. An empirical study using structural equation modelling approach

Authors: Jafer Alsawalhah

Addresses: Department of Accounting, Faculty of Business, Philadelphia University, Jordan

Abstract: The purpose of this study is to clarify the relationship between representative bias and investment decision, along with the moderating role of accounting disclosure, as most literature conducted studies in well-developed financial markets, whereas less is known about investors in emerging-markets. The study proposes a novel model that suggests accounting disclosure as a moderating construct and is expected to moderate the negative effect of representative bias in shaping investment decision of investors during the investment-decision process. Collecting data, response from 258 active investors in the Amman Stock Exchange, through adopting a purposive convenience sampling was collected using a questionnaire-based-survey. To conduct a statistical analysis, structural equation modelling (SEM) was applied, and the result reported that representative bias negatively influenced investment decision, whereas accounting disclosure was a positive determinant for investment decision. Moreover, the proposed moderating role was able to reduce the negative effect of representative bias on investment decision. Accordingly, discussion and directions were provided.

Keywords: investment decision; representative bias; accounting disclosure; stock market; structural equation modelling; SEM; Jordan.

DOI: 10.1504/IJPQM.2022.124402

International Journal of Productivity and Quality Management, 2022 Vol.36 No.1, pp.46 - 65

Received: 13 Aug 2020
Accepted: 12 Dec 2020
Published online: 26 Jul 2022 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article