• Grace Turangan Universitas Pelita Harapan
  • Sung Suk Kim Universitas Pelita Harapan



mental accounting, loss aversion, Covid-19


The world shocked by the found of new virus COVID-19 which impact the firm’s performance. The objective of this study is to examine the effect of mental accounting behavior and loss aversion on the performance of companies in Indonesia listed on KOMPAS100 during the period of pandemic COVID-19. The Ordinary Least Square (OLS) regression model on panel data was formed using the two dependent variables ROA and Tobin’s Q. The results show that loss aversion behavior gives a negative impact on company performance, both on variable ROA and Tobin's Q variables and that behavior generally has an increasing impact when the crisis due to the COVID-19 pandemic occurs. While mental accounting behavior also influence on a negative impact on company performance by using the ROA variable along COVID-19 pandemic period, this behavior significantly increased giving a negative impact on company performance. However, these results are not in line with research using Tobin's Q which shows significant results that mental accounting behavior gives positive impact on company performance and the impact increases when crisis period due to COVID-19 pandemic. The research concluded previous research shows that both mental accounting and loss aversion gave impact to the company performance.


Fitzgerald, A., K. Kwiatkowski, V. Singer, and S. Smit. 2020. The Coronavirus Effect on Global Economic Sentiment. McKinsey & Co. New York.

Alessandri, T. M., J. Mammen, and K. Eddleston. 2018. Managerial Incentives, Myopic Loss Aversion, and Firm Risk: A Comparison of Family and Non-Family Firms. Journal of Business Research 91: 19–27.

Aliaga-Diaz, R., G. Renzi-Ricci, A. Daga, and H. Ahluwalia. 2020. Portfolio Optimization with Active, Passive, and Factors: Removing the Ad Hoc Step. The Journal of Portfolio Management 46(4): 39–51. DOI: 10.3905/jpm.2020.1.127.

Almari, M. O. S., S. R. S. Weshah, M. M. A. Saleh, H. H. H. Aldboush, and B. J. Ali. 2021. Earnings Management, Ownership Structure and the Firm Value: an Empirical. Journal of Management Information and Decision Sciences 24(7): 1–14.

Banerjee, P., P. Chatterjee, S. Mishra, and A. A. Mishra. 2019. Loss is a Loss, Why Categorize It? Mental Accounting Across Cultures. Journal of Consumer Behaviour 18(2): 77–88.

Bank Indonesia. 2020. Krisis Kemanusiaan COVID-19 dan Implikasinya pada Tatanan Perekonomian Global.

Barberis, N. and M. Huang. 2001. Mental Accounting, Loss Aversion, and Individual Stock Returns. The Journal of Finance 56(4): 1247–1292.

Barberis, N. 2018. Psychology-Based Models of Asset Prices and Trading Volume. Handbook of Behavioral Economics (1st ed., Vol. 1).

Baucells, M., Y. Grushka-Cockayne, and W. Hwang. 2023. Managerial Mental Accounting and Downstream Project Decisions. Darden Business School Working Paper No. 3265724.

Bikas, E. and V. Saponaitė. 2018. Behavior of the Lithuanian Investors at the Period of Economic Growth. Entrepreneurship and Sustainability Issues 6(1): 44–59.

Bouteska, A. and B. Regaieg. 2020. Loss Aversion, Overconfidence of Investors and Their Impact on Market Performance Evidence from the US Stock Markets. Journal of Economics, Finance and Administrative Science 25(50): 451-478.

Cherono, I. 2020. Investor Behaviour and Stock Market Reaction in Kenya. European Journal of Economic and Financial Research 4(2): 89-127.

Cook, D. O., X. Fu, and T. Tang. 2016. Are Target Leverage Ratios Stable? Investigating the Impact of Corporate Asset Restructuring. Journal of Empirical Finance 35: 150–168.

Cucinotta, D. and M. Vanelli. 2020. WHO Declares COVID-19 a Pandemic. Acta bio medica: Atenei Parmensis 91(1): 157–160.

Das, S. R., D. N. Ostrov, A. Radhakrishnan, and D. Srivastav. 2018. A New Approach to Goals-Based Wealth Management. SSRN Electronic Journal: 1–34.

Ghelichi, M. A., B. Nakhjavan, and M. Gharehdaghi. 2016. Impact of Psychological Factors on Investment Decision Making in Stock Exchange Market. Asian Journal of Management Sciences & Education 5(3): 36–44.

Gregory, R. P. 2021. Why ROE, ROA, and Tobin’s Q in Regressions Aren’t Good Measures of Corporate Financial Performance for ESG Criteria. SSRN Electronic Journal.

Hahnel, U. J. J., G. Chatelain, B. Conte, V. Piana, and T. Brosch. 2020. Mental Accounting Mechanisms in Energy Decision-Making and Behaviour. Nature Energy 5(12): 952–958.

Hoffmann, C. and K. Thommes. 2020. Using Loss Aversion to Incentivize Energy Efficiency In a Principal–Agent Context-Evidence from a Field Experiment. Economics Letters 189, 108984.

Hu, S. and Y. Zhang. 2021. COVID-19 Pandemic and Firm Performance: Cross-Country Evidence. International Review of Economics and Finance 74(2020): 365–372.

Huber, C., J. Huber, and M. Kirchler. 2021. Market Shocks and Professionals’ Investment Behavior – Evidence from the COVID-19 Crash. Journal of Banking and Finance 133, 106247.

Junida, A. I. 2021. Luhut: Industri Kesehatan Prioritas Investasi Di Tengah Pandemi.

Kahneman, D. and A. Tversky. 1979. Prospect Theory: an Analysis of Decision under Risk. Econometrica 47(2): 263–292.

Khan, A. R., M. Azeem, and S. Sarwar. 2017. Impact of Overconfidence and Loss Aversion Biases on Investment Decision: Moderating Role of Risk Perception. International Journal of Transformation in Accounting, Auditing & Taxation 1(1): 23–35.

Koohkan, F., M. R. Shourvarzi, A. Masihabadi, and A. Mehrazin. 2021. Investigating the Effect of Investors' Mental Accounting on Investment and Financing Policies. Journal of Accounting Knowledge 12(4): 137-153. DOI: 10.22103/JAK.2021.17368.3453.

Koumou, G. B. 2020. Diversification and Portfolio Theory: a Review. Financial Markets and Portfolio Management 34(3): 267–312.

Kremer, M., G. Rao, and F. Schilbach. 2019. Behavioral Development Economics. Handbook of Behavioral Economics: Applications and Foundations 1, 2: 345–458.

Li, D., Y. Zeng, and H. Yang. 2018. Robust Optimal Excess-of-Loss Reinsurance and Investment Strategy for an Insurer in a Model with Jumps. Scandinavian Actuarial Journal 2018(2): 145–171.

Liu, H. and H. Chou. 2019. The Effects of Promotional Package Frames and Price Strategies on Inaction Inertia. Psychology & Marketing 36(3): 214–228.

Martina, R. A. 2020. Toward a Theory of Affordable Loss. Small Business Economics 54(3): 751–774.

Mascareñas, J. and F. Yan. 2017. How People Apply Mental Accounting Philosophy to Investment Risk? International Journal of Economics and Financial Issues 7(3): 145–151.

Ortmann, R., M. Pelster, and S. T. Wengerek. 2020. COVID-19 and Investor Behavior. Finance Research Letters, 37, 101717.

Otuteye, E. and M. Siddiquee. 2020. Underperformance of Actively Managed Portfolios: Some Behavioral Insights. Journal of Behavioral Finance 21(3): 284–300.

Ouzan, S. 2020. Loss Aversion and Market Crashes. Economic Modelling 92(July): 70–86.

Petriella, Y. 2020. Properti Terdampak Pandemi Covid-19, Ini Harapan DPD RI.

Rashata, H. 2022. Investors’ Behavior in the Pakistan Financial Market during the COVID-19 Pandemic. SSRN Electronic Journal.

Ren, Z., X. Zhang, and Z. Zhang. 2021. New Evidence on COVID-19 and Firm Performance. Economic Analysis and Policy 72: 213–225.

Riaz, S., P. Riaz Ahmed, R. Parkash, and M. Javed Ahmad. 2020. Determinants of Stock Market Investors’ Behavior in COVID-19: A Study on the Pakistan Stock Exchange. International Journal of Disaster Recovery and Business Continuity 11(3): 977–990.

Roel, M. and Z. Chen. 2021. The Silver Lining of Crises – a Loss Aversion Based Model of Reform. SSRN Electronic Journal, 71903046.

Schleich, J., X. Gassmann, T. Meissner, and C. Faure. 2019. A Large-Scale Test of the Effects of Time Discounting, Risk Aversion, Loss Aversion, and Present Bias on Household Adoption of Energy-Efficient Technologies. Energy Economics 80: 377–393.

Shafqat, S. I. and I. R. Malik. 2021. Role of Regret Aversion and Loss Aversion Emotional Biases in Determining Individual Investors’ Trading Frequency: Moderating Effects of Risk Perception. Humanities & Social Sciences Reviews 9(3): 1373–1386.

Shah, S. F., M. T. Alshurideh, A. Al-Dmour, and R. Al-Dmour. 2021. Understanding the Influences of Cognitive Biases on Financial Decision Making During Normal and COVID-19 Pandemic Situation in the United Arab Emirates. Studies in Systems, Decision and Control, 334: 257-274. Springer, Cham.

Shen, H., M. Fu, H. Pan, Z. Yu, and Y. Chen. 2020. The Impact of the COVID-19 Pandemic on Firm Performance. Emerging Markets Finance and Trade 56(10): 2213–2230.

Smales, L. A. 2021. Investor Attention and Global Market Returns during the COVID-19 Crisis. International Review of Financial Analysis 73(June 2020), 101616.

Sun, L., W. Zhan, Y. Hu, and M. Tomizuka. 2019. Interpretable Modelling of Driving Behaviors in Interactive Driving Scenarios based on Cumulative Prospect Theory. 2019 IEEE Intelligent Transportation Systems Conference (ITSC): 4329–4335.

Surana, S. 2021. Indian Retail Investors and Initial Public Offers: Pre and Post Covid Analysis. Information Technology in Industry 9(2): 345–352.

Susanto, V. Y. 2021. REI: Efek Pandemi Terhadap Penjualan Properti Akan Terasa 2 Tahun Ke Depan.

Thaler, R. 1999. Mental Accounting Matters. Journal of Behavioral Decision Making 12(3): 183–206.;2-F.

Wang, T., H. Li, X. Zhou, B. Huang, and H. Zhu. 2020. A Prospect Theory-Based Three-Way Decision Model. Knowledge-Based Systems, 203, 106129.

Yang, B. and L. Gan. 2021. Contingent Capital, Tobin’s Q and Corporate Capital Structure. The North American Journal of Economics and Finance, 55, 101305.

Yang, L. 2019. Loss Aversion in Financial Markets. Journal of Mechanism and Institution Design 4(1): 119–137.

Zamzamir Zamzamin, Z., R. Haron, and A. H. A. Othman. 2021. Hedging, Managerial Ownership and Firm Value. Journal of Asian Business and Economic Studies 28(4): 263–280.

Zandi, G., J. Singh, S. Mohamad, and S. Ehsanullah. 2020. Ownership Structure and Firm Performance. International Journal of Financial Research 11(2): 293–300.

Zhang, L., H. Zhang, and S. Hao. 2018. An Equity Fund Recommendation System by Combing Transfer Learning and the Utility Function of the Prospect Theory. The Journal of Finance and Data Science 4(4): 223–233.