INFLUENCE OF BEHAVIOURAL BIASES ON INVESTMENT DECISION-MAKING AMONG INVESTORS IN SABAH
Abstract
Retail investor participation in Sabah has increased considerably among Baby Boomers, Generation X, and Millennials, reflecting growing interest in financial markets and investment opportunities. As more individuals engage in investment activities, understanding the behavioural factors that influence investment decision-making becomes increasingly important. Investment decisions are often made under conditions of uncertainty, where cognitive and emotional biases may affect investors’ judgments and actions. Although behavioural finance has received substantial scholarly attention, empirical evidence examining behavioural biases among investors in Sabah remains limited. Furthermore, there is a need for greater understanding of how key behavioural biases influence investment decision-making within the Sabah context. This study investigates the influence of three behavioural biases, namely loss aversion bias, overconfidence bias, and herding bias, on investment decision-making among investors in Sabah. Guided by Prospect Theory, the study examines how these behavioural tendencies shape investors’ decisions in financial markets. Data were collected through an online survey using purposive and snowball sampling techniques. A total of 160 valid responses were obtained from retail investors in Sabah, exceeding the minimum sample size of 138 recommended by G*Power. The data were analysed using Partial Least Squares Structural Equation Modelling (PLS-SEM) through SmartPLS 4.1.1.6. The findings provide empirical evidence on the role of behavioural biases in influencing investment decision-making among investors in Sabah. The study contributes to the behavioural finance literature by extending the understanding of investor behaviour in a regional Malaysian context. The findings also offer practical implications for investors, financial educators, policymakers, and market practitioners by highlighting the importance of behavioural awareness in improving investment decision quality and supporting more informed investment decisions.