DETERMINANTS OF HERDING BEHAVIOR AMONG INDIVIDUAL STOCK INVESTORS IN INDONESIA
Herding behavior is a common phenomenon in the capital market, where investors make decisions by following groups and acting collectively while ignoring fundamental measures. Herding behavior often impacts market efficiency, causing the rapid increase and subsequent falls in share prices. Conventional studies of herding are mostly conducted using secondary data to prove the herding phenomenon, along with its impacts and influencing factors. The weakness of conventional herding studies is that they cannot examine the influence of psychosocial factors and the role of financial literacy on herding behavior. This research aims to examine the determinants of herding behavior using the Theory of Planned Behavior (TPB) to analyze investors’ herding behavior in psychosocial aspects by adding social referencing and social imitation (social-technological aspects) and the role of financial literacy. The research was conducted using an online survey method on 248 novice and experienced investors on the Indonesian Stock Exchange. Research variables were measured using indicators and instruments in the previous research. The data analysis method used was the Structural Equation Modeling technique based on Partial Least Square. The research results show that social referencing and social imitation have a positive influence on subjective norms. Herding behavior, subjective norms, and behavioral control have a positive influence on herding intentions. Furthermore, the herding intention has a positive influence on herding behavior. On the other hand, financial literacy has a negative influence on herding behavior. The higher the financial literacy, the lower the investor's tendency to make investment decisions by following other investors.
Herding Behavior, Financial Literacy, Theory of Planned Behavior.