Investor Judgments: Linking Dependent Measures to Constructs

65 Pages Posted: 27 Aug 2021

See all articles by H. Scott Asay

H. Scott Asay

University of Iowa - Department of Accounting

Jeffrey Hales

University of Texas at Austin - Department of Accounting

Cory Hinds

University of Iowa - Department of Accounting

Kathy Rupar

Georgia Institute of Technology

Date Written: August 23, 2021

Abstract

The literature on investor judgments and decisions has grown substantially in recent years. With that growth has come an increase in the number and types of dependent measures used by researchers, but the construct validity of these measures has received relatively little attention. In this paper, we first survey the literature to understand the types of dependent measures typically used by researchers. We then conduct factor analyses to uncover linkages between the dependent measures and investor judgment constructs. Our results suggest that, while the wide variety of dependent measures used by researchers can appear on their face to represent many nuanced economic constructs, these measures load onto three distinct factors that represent inputs to investors’ decision-making process. The three factors relate to (1) expectations regarding future firm performance and value, (2) investment preferences towards and general perceptions of the firm, and (3) evaluations of the risk associated with investing in the firm. Based on this empirical data, we conclude with a discussion of the implications of our findings for future research on investor judgments and provide recommendations to guide experimental researchers, reviewers, and editors as this literature continues to move forward.

Keywords: investor judgments, construct validity, experimental design

Suggested Citation

Asay, Hamilton Scott and Hales, Jeffrey and Hinds, Cory and Rupar, Kathy, Investor Judgments: Linking Dependent Measures to Constructs (August 23, 2021). Available at SSRN: https://ssrn.com/abstract=3910069 or http://dx.doi.org/10.2139/ssrn.3910069

Hamilton Scott Asay

University of Iowa - Department of Accounting ( email )

S232 Pappajohn Business Building
Iowa City, IA 52242-1000
United States

Jeffrey Hales

University of Texas at Austin - Department of Accounting ( email )

Austin, TX 78712
United States
512-471-2163 (Phone)
512-471-3907 (Fax)

Cory Hinds (Contact Author)

University of Iowa - Department of Accounting ( email )

W347 Pappajohn Business Building
Iowa City, IA 52242-1000
United States

Kathy Rupar

Georgia Institute of Technology ( email )

800 W Peachtree St NW
Suite 445
Atlanta, GA 30308-1149
United States
4043855713 (Phone)

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