How Your Understanding of Market Efficiency Determines Stock Performance - and Why Behavioral Bias Matters
DOI:
https://doi.org/10.47747/fmiic.vi2.2959Abstract
Capital market efficiency is an important factor in stock trading activities in a capital market. With high market efficiency, stock prices in the capital market reflect the information available in the capital market. This study aims to determine how market players perceive the level of capital market efficiency in Indonesia and to determine its effect on the investment performance of capital market players. This study also examines the role of finance in stock investment performance. In addition, perceptions of capital market efficiency can cause behavioral bias in capital market players which can have a positive or negative impact on investment performance. This study used a quantitative approach and uses a questionnaire as a data collection method distributed to 220 students in Indonesia. The sampling method in this study is purposive sampling method. This study used perceptions of market efficiency, financial behavioral bias and investment performance as variables. The analysis technique used in this study is SEM PLS. The results of the study indicated that perceptions of market efficiency have a significant effect on stock investment performance among students. However, financial behavioral bias does not affect stock investment performance among students and financial behavioral bias does not mediate the relationship between perceptions of market efficiency and stock investment performance among students.
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