Factors Effecting Investment Decision Making Behavior: The Mediating Role of Information Searches

This study investigates the factors effecting the investment decision making behavior through the mediation role of information searches. Two factors i.e. overconfidence bias and economic expectations are used as independent variables while investment decision making behavior is taken as dependent variable. Information search is used as mediating variable. For this purpose, a survey questionnaire was used to test the hypotheses. The population in this survey was investors of Lahore Stock Exchange of Pakistan and Faisalabad Trading Floor. Total 270 questionnaires were distributed; only 245 of them were received back 11 were not included in the analyses as they were incomplete. Hence, 229 questionnaires were used in the analyses. Simple and multiple regression analysis were used as statistical tool. The results showed positive and significant relationship between economic expectations and investment decision making behavior but when information search was included as mediator the relationship became insignificant and negative; which suggests full mediation in case of economic expectations. Overconfidence bias was also found to have positive and significant relationship with investment decision making behavior which remained significant when information search was added as mediator; suggesting a partial mediation in case of overconfidence