How Personal Cognitive Boost Their Decision to Invest in Pharmacy Industries During Pandemic Covid-19: Cognitive Dissonance Theory Perspective

Abstract

This study aims to investigate the anomaly of investor behaviour in investment behaviour during the COVID-19 pandemic. This study idealizes investor behaviour as it can be studied through the perspective of signal theory by providing internal information to the market. From the perspective of signal theory, the market responds according to information obtained from within the company, which indicates that market performance is in line with the company's internal performance information. However, the COVID-19 pandemic conditions have led to a decline in the internal performance of most companies, which is in line with the decline in the company's performance. This study highlights that one of the industries that has survived is the pharmaceutical industry, which has had various health supplies during the pandemic. Looking at the perspective of the pandemic conditions, investors tend to behave defensively and "wait and see" related to economic conditions that affect the company's market performance. This study constructs novelty using cognitive dissonance theory, which describes investors' hesitation in making biased investments in uncertain pandemic conditions. Furthermore, this study provides novelty to identifying investor behaviour in Indonesia, especially when experiencing economic uncertainty. This study collected samples from 13 developing countries in the Asia Pacific Region. Hypothesis testing uses generalized least square (GLS) regression to ensure this research model has achieved linear unbiased estimation (LUE), considering this heterogeneous research sample. This study found that when the performance of pharmaceutical companies increased during the pandemic, people still tended to dare to invest in pharmaceutical companies, thus encouraging an increase in the company's external performance. This is interesting because people still dare to invest despite uncertain pandemic conditions. Cognitive dissonance theory emphasizes that individuals will experience a dilemma when facing market pressure from other investments that decline by considering making high-risk investments. Hence, this research becomes a process of legitimizing investor behaviour during the Covid-19 pandemic.