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Financing and Herd Behaviour in Financial Crises: Investment Decision

Author

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  • Raya Panjaitan
  • Ika Pratiwi Simbolon

Abstract

Purpose: The purpose of this study is to provide evidence related to the development of financing and herd behaviour in financial crisis arranging investment decision. Design/Methodology/Approach: This research is a type of literature study. The methodology used is through descriptive research with the support of theories and the findings from previous studies. Findings: Capital structure, as has been proven, affects investment decision in financial crisis period, as well as herd behaviour. The firm value can be influenced from the capital decision that gives signals to the market. However, researchers have not yet reached the optimum capital structure. In this paper, the authors find that recent literature on financing and herd behaviour provides some new insights into investment decision during financial crises. Practical Implications: Authors suggest further directions for increasing the investment strategy in stock market. Evaluating the financing and investment behaviour can lead to the expected return in terms of financial crises. Originality/Value: The authors’ approach can become the basis for investment decision in financial crises. The roles of financing and herd behaviour are really important for investment. There is still less research exploring the role of financial crises in funding decisions and herd behaviour in order to compose investment decision for investor in developed market context.

Suggested Citation

  • Raya Panjaitan & Ika Pratiwi Simbolon, 2020. "Financing and Herd Behaviour in Financial Crises: Investment Decision," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(4), pages 1089-1096.
    • Handle: RePEc:ers:ijebaa:v:viii:y:2020:i:4:p:1089-1096
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    References listed on IDEAS

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    More about this item

    Keywords

    Crisis; herd behaviour; financing behaviour; investment decisions.;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • G4 - Financial Economics - - Behavioral Finance

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