Author(s): Ahmad Yousef Areiqat, Ayman Abu-Rumman, Yousef Satea Al-Alani, Alaa Alhorani
This study aims to explore the impact of a number of prominent behavioral finance variables covered by the financial literature (overconfidence, loss aversion, risk perception and herding) that may affect the stock investment decision-making at Amman Stock Exchange (ASE), as well as determining which of these variables has the relative importance. The importance of this study stems from the fact that local studies focusing on the issue of behavioral finance are rare and therefore, the researchers expect that such study will enrich awareness in this domain. The study consisted of 165 individual investors who were active in the trading halls at Amman Stock Exchange during the research period. The data were collected through a questionnaire prepared for the purpose of research and were analyzed by applying multiple statistical tests (Multiple regression and Hierarchal regression analysis) and by using statistical software (SPSS) after approving the reliability and validity of the questionnaire. The results showed that there was an impact of the behavioral finance at Amman Stock Exchange represented by three behavioral factors affecting the investment decisions of the individual investors which were: overconfidence, loss aversion, and herding, the results also showed that the variable overconfidence had the most relative significance. The research provided some recommendations for investors trading at ASE to adopt scientific bases in making stock investment decisions, and suggested to conduct further research to study the impact of behavioral finance on the different types of risks and yields at ASE.