Wendy Wendy

Rare events (RE) are substantial with significant impact but are difficult to predict, often deviating from regular expectations. These events trigger psychological reactions in the market and susceptible to irrational decisions that challenge logical assumptions. The rapidity of the crisis has led to highly volatile market conditions, fostering instances of asymmetric information. Therefore, this study aimed to explore the impact of attention on market dynamics by examining diverse possibilities over time. The article focused on all publicly listed industries on the Indonesian Stock Exchange (IDX/BEI). Using time series regression data from 1997 to 2020, the article comprised 5,615 observations across nine sectors. The primary model was based on three factors originating from the Fama-French and prospect theory, with attention serving as the main risk element to assess the impact of attention on abnormal returns (AR) during RE. The results disclosed that various events showed diverse effects on attention behavior, varying across all sectors. Additionally, moderation analysis showed a correlation between attention and AR. The results signified that RE mitigates the negative relationship between attention and AR. The adverse impact of attention on AR diminishes during RE. These results contributed to the literature by providing insights into the excessive attention to specific information disrupts market mechanisms, triggers disproportionate emotional responses, and alters investor preferences. Furthermore, this study established that events prompting excessive attention have varying effects on attention behavior across all sectors.

Financial literacy is an essential factor for individuals or households in making investment decisions. However, the problem of insufficient financial literacy is still considered one of the factors limiting the creation of successful investments, especially in relation to risk perception. Some investors have financial losses due to their limited financial literacy, making inefficient investment decisions and implicating high-risk investment choices. Hence, this study aims to explore the interconnection between financial literacy, risk perception and investment decisions. Moderated regression analysis was used for 233 investors in Indonesia who completed financial management training. The results showed that financial literacy has a positive and significant impact on investment decisions, which means that it could be used to improve the quality of investment decisions. On the other hand, risk perception as a moderating variable weakened the impact of financial literacy on investment decisions; this confirmed the consistent results before and after financial training. Overall, financial literacy across three dimensions (knowledge, skills, and attitude) plays an important role in investors allocating more funds to investment instruments than respondent groups with lower financial literacy levels. In addition, the level of financial literacy also influences the choice of investment product.