Implementation of Transactional Theory to Unlock the Secrets of Investor Behavior in the Capital Market
Satia Nur Maharani, Setya Ayu Rahmawati

Universitas Negeri Malang

Abstract

When traditional financial theory is tested in an actual context, various anomalies have been discovered. Such anomalies are the result of deviations from the norms established by standard financial theory. Further analysis of the anomaly leads to the understanding that the actual observed behavior is not as modeled in traditional financial theory. Through a qualitative approach using the perspective of Lazarus Folkman^s transactional theory, this article presents research findings that investors do not always behave rationally and/or always emotional. The character of human cognitive and affective potentials presents a very wide space of possibilities for collaboration and competition against these two potentials. In the end, the behavior of investors in making economic decisions is very complex and varied. Maximum cognitive with limited affective and vice versa maximal affective with limited cognitive is one of the findings that reflects the collaboration and competition of the potential that produces several kinds of investor behavior. The conceptual framework found in this study has the potential to be tested in subsequent research with a different method approach.

Keywords: Traditional Finance Theory, Behavior Finance, Transactional Theory

Topic: Accounting