| dc.description.abstract | Behavioral finance techniques look at how irrationality and behavioral bias influence
the decisions investors make. Behavioral finance makes use of knowledge from
various fields of study to comprehend investor choices. The primary goal of this
research was to establish the influence of behavioral finance biases on investment
decision of equity investors at NSE in Kenya. The study had four specific objectives; to
examine the influence of confirmation bias on investment decision of equity investors
at NSE in Kenya, to evaluate the impact of overconfidence prejudice on investment
decision of equity stockholders at NSE in Kenya, to determine the influence
familiarity bias on investment decision of equity investors at NSE in Kenya, and to
establish the influence of information processing bias on investment decision of
equity investors at NSE in Kenya. The study was anchored on the following theories;
Prospect theory, Regret theory, Behavioral Reasoning theory and the Heuristic theory.
Descriptive research design was utilized in this research. The target population was 136
and a sample size of 102. There were two respondents from each firm that is fund manager
and a trustee. To gather quantitative data, a survey containing both organized and
structured questions was used. Pilot study was done where validity was established
and the reliability of the questionnaires was established by Cronbach's alpha formula
to attain estimate’s reliability. The statistical package for social science, SPSS version
26, was utilized to analyze the data. To determine whether there are any substantial
correlations amongst the variables, a multiple regression analysis test was conducted.
The results of the research were displayed using graphs and tables. Regression
analysis and descriptive correlation were performed, and the results were presented
in tables along with relevant interpretation and discussion. In examining the
relationship model through regression coefficients, it was found that a 0.106 increase
in overconfidence bias led to a unit increase in investment decision. The regression
analysis coefficients, derived from the relationship model, illustrated that a 0.187
increase in familiarity bias led to a unit increase in investment decision. The results
did not support the null hypothesis at a 95% confidence level, p-value of 0.001 t-value
of 2.440, surpassing the critical threshold of 1.96 suggesting a high confidence in this
coefficient as a predictor variable. The null hypothesis, indicating no significant
influence, was not supported with a high level of confidence 95% due to the low p value of 0.042, t-value of 2.055 surpassing the critical benchmark score of 1.96. At 95%
confidence level, the null hypothesis was not supported, as indicated by an
exceptionally low p-value of 0.009, t-value of 2.650, surpassing the critical benchmark
score of 1.96. The null hypothesis, which posited no significant influence, was not
supported at a 95% confidence level, indicated by an extremely low p-value of 0.000,
t-value of 8.177, above the critical score of 1.96. The findings revealed a significant
relationship between behavioral finance biases and the investment decision of equity
investors at NSE. The study comes to the conclusion that equities investors at the
Nairobi Securities Exchange are significantly influenced by information processing
bias while making investment decisions. To optimize investment returns, investors
must carefully evaluate the characteristics of market competition. The study
recommends that, encouraging networking events, fostering mentorship programs,
and participating in industry-related associations can help investors build valuable
connections and access information that may positively impact investment decision. | en_US |
