Influence of information processing bias on investment decision of equity investors at Nairobi securities exchange in Kenya

Abstract

The goal of the study was to established the influence of information processing bias on investment decision of equity investors at Nairobi Securities Exchange. The study improved the existing finance literature, which increased the body of general knowledge. Researchers and aspiring academics would utilize the findings as a future source of reference for expanding their understanding of behavioral finance. This study employed regret aversion theory, descriptive research design applied in this research and the stratified random sampling technique. In this study, primary data was also employed. SPSS version 26 (Statistical Package for Social Science) was used for data analysis. Descriptive, correlation as well as regression analysis were undertaken and outcome was offered in tables followed by pertinent interpretation and discussion. The most influential variable was Market’s competition-related information with a regression coefficient of 0.502 (p-value = 0.027) and lastly Product’s market potential-information with a coefficient of 0.403 (p-value = 0.041).  The study concludes that information processing bias holds a significant and influential role in shaping investment decisions among equity investors at the Nairobi Securities Exchange. Thus, it can be concluded that understanding and leveraging product market potential can positively impact investment decisions. It is crucial for investors to carefully assess market competition dynamics to maximize investment returns. This study also implies that by analyzing investor behavior, company management Can further evaluate capital markets' performance of stocks and adjust policies and strategies appropriately.