EXAMINING BELIEF ADJUSTMENT MODEL AND INVESTORS OVERCONFIDENCE ON INVESTMENT DECISION MAKING - Perbanas Institutional Repository

  

EXAMINING BELIEF ADJUSTMENT MODEL AND INVESTORS

OVERCONFIDENCE ON INVESTMENT DECISION MAKING

U N D E R G R A D U A T E T H E S I S

  Submitted to Qualify the Requirement of Undergraduate Program of

  Accounting Department

  

Written by :

DYAH ERAS MITA

2013311078

SEKOLAH TINGGI ILMU EKONOMI PERBANAS

  

S U R A B A Y A

2017

  

EXAMINING BELIEF ADJUSTMENT MODEL AND INVESTORS

OVERCONFIDENCE ON INVESTMENT DECISION MAKING

U N D E R G R A D U A T E T H E S I S

  Submitted to Qualify the Requirement of Undergraduate Program of

  Accounting Department

  

Written by :

DYAH ERAS MITA

2013311078

SEKOLAH TINGGI ILMU EKONOMI PERBANAS

  

S U R A B A Y A

2017

  

MOTTO

“Stand by yourself, not your title.

  All you need is dream, believe, and make it happen ” “All we can do is live until the day we die, control what we can… and fly free ”

  “I don‟t know what‟ll happen to me in the future, but if something has fallen at my feet, then the least I can do is pick it up ”

  “Life is about getting knocked down over and over, but still getting up each time. If you keep getting up, you win”

• Dyah E. Mita- ……………………………………………………………………………………………

  “If you don‟t like the hand that fate‟s dealt with you, fight for a new one” “When you give up, your dreams and everything else, they‟re gone”

  “Every one of us must do what‟s in their power! If we‟re going to die anyway, then it‟s better to die fighting than to do nothing!” “Sometimes you must hurt in order to know, fall in order to grow, lose in order to gain. Because life‟s greatest lessons are learned through pain ”

• Uzumaki Naruto-

  

ACKNOWLEDGMENT

  I place on record, my sense of gratitude to one and all, who directly or indirectly. Because of you all this „Bachelor of Economy‟ will be granted. [Pardon for the informal sense which is going to happen. Because you will only find a serious reading after this part.] First of all, Alhamdulillahirobbil‟alamin, Allah always gives me a lot of mercy and guidance so that I can do this well. Every time I am looking at my last hope who flies away, YOU want me to know that life is a series of beginnings, not endings. Each time one door closes, YOU always open another doors and opportunities for me. Second of all, thanks to my father Maskuri and my mother Mutinah for always giving me permission to do all the things I have decided. No matter how hard for you to say „yes‟ but you let me going on. You have sacrificed in many ways and prayed all time to help me continue my undergraduate study. Finally, I can prove that rural girl also can be highly educated.

  Also being grateful to Kemristekdikti and STIE Perbanas Surabaya who gave me chance to study by Bidikmisi Scholarship, especially in my expected major, the Accounting undergraduate. Here I found many great people who inspires me a lot. Thank you for the presidential letter given to me, it always brings me up every time I am going to give up.

  I take this opportunity to express gratitude to all lecturers for sharing valuable encouragement. My honorable lecturer, Dr. Luciana, as my best semi-personal career tutor who gave me countless opportunity to represent Accounting undergraduate in various external events and competitions until I succeed my paper to join International Conference on Accounting, Economics and Social Sciences a year ago. Mrs. Dewi Murdiawati, as my best personal career counselor, travel mate and my sharing partner. Mrs. Titik Sumarni who support me in joining some events and competitions. Mrs. Riski as my co-thesis advisor who patiently gave me suggestion and guidance in my thesis writing. Mrs. Erida to become like mother in campus. And all who I cannot mention one by one. Thanks for inspiring me! I also want to express my sincere thanks to my sister, Lufi Y. Mursita who always be there both in happiness or sadness, becoming my single parent in this city. You show me that family is not about blood, but it‟s about someone who‟s willing to lift you up even when you‟re in your worst condition. Hopefully God bless us always and we can succeed in every way! Damar Nakagawa, who always be there both in supporting and mocking at me, becoming my personal life counselor, and also my mate in pursuing my dreams. You are the greatest man I‟ve ever known; the one who made me jealous because you are accepted in the top university in the world but you choose to study in Switzerland at the end. Good luck on your Ph.D courses. Hopefully I can be as successful as you and let‟s meet up one day! My sincere thanks goes to my best, Muhammad Andar Rahman, who always be there when I need motivation, becoming my sharing partner, and also my mate who always be matched in thinking. Thank you for sharing your writing course materials freely, it helps me so much in my thesis writing. Good luck on your thesis writing, soon to be Bachelor of Engineering. Hopefully we can always reach our dreams together! Dream, PRAY, Action! Thanks to my best rival in Accounting since high school, I Putu Agus Sugiri Putra, the one who always be bothered by me anytime, but luckily you never feel disturbed by me, now you are becoming my best counselor, both in Accounting and career-life. Thank you for all those

motivations and inspirations. Hopefully we will be success in our ways! Good Luck on your extension, Gigi! Thanks also to my forever best friend and brother, Nimas Pujianto, my best partner in Accounting since high school who always be there both in my ups and downs. Truly apologize for leaving you in our old campus for pursuing full scholarship in STIE Perbanas Surabaya. I am glad that we are still connected to each other until know even though we are in different city. I believe that we are going to be successful.

  Good luck on your semi-accounting technological research! Thanks to my best friends since the first day of my college-life until now: Isna, Theza, Evik, Nindita, Sandra, Laily, Eka, Jenny, Yasfin, Ryan, Hasan, Dao, Galih, and Andika. Thank you for all supports, kindness, and craziness. I am so overwhelmed with your support and kindness. My college-life has been completely messed-up and I think it could be worse without you all. I am so glad that we are still connected to each other until know. You‟ve colored my days, guys. I cannot say anything but love you. Let‟s reunite one day in the first marriage day of one of us! Haha Thanks also to my BPM-BEM family in the year 2015-2016. That should be unforgettable memories we have ever had along this life journey. We have done and succeed many work programs together. You also can understand me so much. I believe you all are going to be successful.

Let‟s reunite with a werewolf game one day! Haha. Cc: Laily, Dian

  Nindita, Ria, Ilhaq, Lukman, Anjar, Gaby, Cici, Gitta, Noisa, Dhyas, Ikbar, Reny, Iil, Iffah, and Sely.

  Truly appreciate all my team in HARMONI 2015. Thanks to Ms. Laila who gave me an experience to involve in the biggest student committee in STIE Perbanas Surabaya. And also for the guidance to improve my speaking and confidence before the audience.

  A lot of appreciation is also given to my collaboration research team: Fairita, Eva, Taufan, Zahid, Rika, Aulida, Riza, and Anita. We already have done guys! Thank you for the great teamwork, togetherness, and craziness. Let‟s come on holiday! Thanks also to Ria, Alif and Sinta as Mrs. Lucy‟s students.

  Thanks to my Amin-18 boardinghouse squad since 2013-2017: Diana, G race, Sicil, and Fitri. You are so nice guys! Let‟s gather again in our rooftop to keep gossiping! May our sins are forgiven by Allah. LOL! Thanks to all full-scholarshipers STIE Perbanas Surabaya 2013: Laily, Sandra, Ria, Maftuh, Dita, Anis, Rahayu, Agnes, Noisa, Dian, Nela, Reny, and Fiqhi. You all guys are definitely inspiring. Also my awesome partner for Accounting, Anis and Sandhi. I can not made it without you, guys. If those many occasions can be replayed, and we are back to the competition, let‟s do it once again with all sweat! I am always proud of our teamwork, although we just enjoyed our winning in the last days before my final study. Thank you for all the memories, the great experiences, the spirit, and all the fight. Let‟s chase a better future for a better life! I‟ll see you on the top, guys! Thanks to all my Accounting Competition Team (AccTion Team) 2014- 2016. I truly appreciate our togetherness. I entrust this lovable team to you all. Do not think to be the best, but think to do the best. All we need to do is simply trying to be better than the person we were yesterday. Keep solid and keep struggling for the periods ahead! Last but not the least, do not envy to one another! Finally, once again thanks to all of people surround me to help me much in my process of study. Alhamdulillah, finally I got these 2 letters behind my name in 3.5 years. Hello all, see you on the top!

•  ---

  

PREFACE

  The author would like to thank to the Most Merciful, Allah SWT who always give His grace for blessing me to finish this research entitled “Examining

  Belief Adjustment Model and Investors Overconfidence on Investment Decision

Making”. My sincere thanks and appreciation are also given to all parties who guided, helped, and prayed for me in completing this research, they are:

  1. Dr. Lutfi, S.E., M.Fin. as the Head of STIE Perbanas Surabaya who has given me motivation in learning English and pursue my dreams.

  2. Dr. Luciana Spica Almilia, S.E., M.Si, QIA, CPSAK as the Head of Accounting Undergraduate Department and my Thesis Advisor who has given her valuable guidance, patience, and suggestion in writing this thesis and also gives me support to push myself harder.

  3. Riski Aprillia Nita, S.E., M.A. as my Co. Thesis Advisor who always gives me support and also recommendation in writing this thesis.

  4. My parents who always support my effort and give me freedom to choose my own path.

  5. All friends who were willing to listen and share each other for the thesis writing.

  This research examined about the belief adjustment model and investors overconfidence on investment decision making. Although the belief adjustment model is the part of experimental research which has been examined by prior researchers, there is no prior study conducted in STIE Perbanas Surabaya which try to deeply and specifically identify this topic combined with the investors overconfidence characteristics. Therefore, this can be categorized as a new research topic in STIE Perbanas Surabaya.

  Since the emergence of stock market, it is considered to be paramount to study about the existence of overconfidence characteristics or bias judgment in investors belief revision on investment decision making. The result of this research is addressed to contribute to the accounting literature is the existence of belief adjustment model developed by Hogarth and Einhorn that will be examined in this research in setting the investment decision. The author expect this research is going to be useful and beneficial for all the parts who read this.

  Sincerely, The Author

  

TABLE OF CONTENT

  

  ……………………….………….……...………………………...xvii

  

  

  

  

  

  

  

  ………………………….……...…………………...…. xvi

  

  

  

  

  

  

  

  

  ABSTRACT

  LIST OF APPENDIX

  

  

  

  

  

  

  

  

  

  

  ………………………….…………………………...............xv

  

  

  

  

  

  LIST OF TABLE

  ………………….......……………………………….............xiv

  LIST OF FIGURE

  

  

  4.5 Examining The Effect of Information Order Presentation and End-of- Sequence Information Disclosure Pattern on Investment Decision Making………………………………………………………………….96

  5.3 Recommendations……………………………………………………..112

  5.2 Research Limitations…………………………………………………..111

  5.1 Conclusions……………………………………………………………108

  CHAPTER V CONCLUSIONS ………………………………………….108

  Sequence ….…………………….101

  4.6 Discussion on The Effect of Information Order Toward The Final Judgment of Participants in End-of-

  Step……………………………....90

  3.7 Data Analysis Technique……………………………………………….70

  4.4 Discussion on The Effect of Information Order Toward The Final Judgment of Participants in Step-by-

  4.3 Examining The Effect of Information Order Presentation and Step-by- Step Information Disclosure Pattern on Investment Decision Making....83

  4.2 Experimental Research Chronology…...……………………………….77

   4.1 Demographic Data and Manipulation Check…………………………...73

  ……...…...73

  CHAPTER IV HYPOTHESIS TESTING AND DISCUSSION

   APPENDICES

  

LIST OF TABLE

  Result……………..……………..…...91 Table 4.11

Table 4.19 Gained Order Effect based on Hypothesis Testing ResultTable 4.18 Expected Order Effect based on Belief Adjustment Model104

  ……. ………………………102

  ……..…...………………..…..102 Table 4.17 Hypothesis 4 Testing Result...

Table 4.16 Hypothesis 3 Testing Result

  ……………...……….….100

Table 4.15 Independent Sample T-Test for H4

  Whitney U Test Result for H3…………………..…...98

Table 4.14 Mann-

  ……………...……………..……97

Table 4.13 Normality Test Result for H4

  …………………………..…...96

Table 4.12 Normality Test Result for H3

  Hypothesis 2 Testing Result……….……………………......91

Table 4.10 Hypothesis 1 TestingTable 2.1 Expected Order Effect based on Belief Adjustment Model...40Table 4.5 Average Final Judgment on SBS Non-

  Table 3.1 Hypothesis Testing Cell………..…………………………….71

Table 4.1 List of Available and Eligible Participant……………..........75Table 4.2 List of Participant based on Research Scenarios

  …………....75

Table 4.3 Demographic Information of Research Participant..................76Table 4.4 Average Fina l Judgment on SBS Accounting……...……….84

  Accounting………..…..84

  Test for H2………….………………..89

Table 4.6 N ormality Test Result for H1………..……………………...85Table 4.7 Normality

  Test Result for H2……….………………………....86

Table 4.8 Independent Sample T-

  Test for H1…..…………………..…87

Table 4.9 Independent Sample T-

  ……104

  

LIST OF FIGURE

Figure 2.1 Theoretical Framework

  …………..……...…………......……46

Figure 4.1 Fishtail Pattern on Step-by-Step Accounting Information

  ……...92