The Face and Content Validity of an Instrument for Measuring Financial Risk Tolerance

Accurate evaluation of investment risk tolerance is critical in an investment decision-making process because a mismatch between the risk an investor could tolerate and the risk-return expectations could lead to frustration towards the actual financial gains or financial losses. This study aims to d...

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Main Authors: Abdul Hadi, Nadia Edmaz, Shafidan, Nur Anis Juliana, Razali, Siti Rauhati, Mohammed Abdulateef, Qusay, Abdul Hamid, Mohamad Shukri
Format: Article
Language:English
Published: UUM Press 2023
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Online Access:https://repo.uum.edu.my/id/eprint/29744/1/JCIA%2002%2001%202023%2057-88.pdf
https://doi.org/10.32890/jcia2023.2.1.4
https://repo.uum.edu.my/id/eprint/29744/
https://e-journal.uum.edu.my/index.php/jcia/article/view/15573
https://doi.org/10.32890/jcia2023.2.1.4
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Institution: Universiti Utara Malaysia
Language: English
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spelling my.uum.repo.297442023-09-10T14:53:57Z https://repo.uum.edu.my/id/eprint/29744/ The Face and Content Validity of an Instrument for Measuring Financial Risk Tolerance Abdul Hadi, Nadia Edmaz Shafidan, Nur Anis Juliana Razali, Siti Rauhati Mohammed Abdulateef, Qusay Abdul Hamid, Mohamad Shukri QA75 Electronic computers. Computer science Accurate evaluation of investment risk tolerance is critical in an investment decision-making process because a mismatch between the risk an investor could tolerate and the risk-return expectations could lead to frustration towards the actual financial gains or financial losses. This study aims to develop a valid instrument (or scale) for self-directed Malaysian investors to measure financial risk tolerance based on four main constructs, i.e., risk attitude, risk propensity, risk capacity, and financial literacy. An initial 36-item instrument was developed based on the assessment framework from Cordell (2001), which subsequently was examined by four lay experts for face validity. Consequently, according to Andrian et al. (2018), seven professional experts, comprising theoretical, industry practitioner, and psychometric experts, were involved in reviewing the relevancy of the content of each item towards measuring financial or investment risk tolerance level. As a result, the instrument is deemed to have a good face value, with 94.4% of the items rated highly at 4 or 3 (out of the maximum rating of 4) by lay experts. Out of the 36 items, only 5.56% are rated 1 or 2, and 16.7% of the items require revision in terms of their face value and clarity. The content validity exercise resulted in high scores of more than 0.83 cut scores based on Lynn (1986) for the scale content validity index (S-CVI), with nine items recorded as item content validity index (I-CVI) below 0.83. The S-CVI improved further to 0.90 after the removal of items with low I-CVI. The findings have also successfully produced a valid instrument that can measure the financial risk tolerance level of investors in Malaysia. UUM Press 2023 Article PeerReviewed application/pdf en cc4_by https://repo.uum.edu.my/id/eprint/29744/1/JCIA%2002%2001%202023%2057-88.pdf Abdul Hadi, Nadia Edmaz and Shafidan, Nur Anis Juliana and Razali, Siti Rauhati and Mohammed Abdulateef, Qusay and Abdul Hamid, Mohamad Shukri (2023) The Face and Content Validity of an Instrument for Measuring Financial Risk Tolerance. Journal of Computational Innovation and Analytics (JCIA), 2 (1). pp. 57-88. ISSN 2821-3408 https://e-journal.uum.edu.my/index.php/jcia/article/view/15573 https://doi.org/10.32890/jcia2023.2.1.4 https://doi.org/10.32890/jcia2023.2.1.4
institution Universiti Utara Malaysia
building UUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Utara Malaysia
content_source UUM Institutional Repository
url_provider http://repo.uum.edu.my/
language English
topic QA75 Electronic computers. Computer science
spellingShingle QA75 Electronic computers. Computer science
Abdul Hadi, Nadia Edmaz
Shafidan, Nur Anis Juliana
Razali, Siti Rauhati
Mohammed Abdulateef, Qusay
Abdul Hamid, Mohamad Shukri
The Face and Content Validity of an Instrument for Measuring Financial Risk Tolerance
description Accurate evaluation of investment risk tolerance is critical in an investment decision-making process because a mismatch between the risk an investor could tolerate and the risk-return expectations could lead to frustration towards the actual financial gains or financial losses. This study aims to develop a valid instrument (or scale) for self-directed Malaysian investors to measure financial risk tolerance based on four main constructs, i.e., risk attitude, risk propensity, risk capacity, and financial literacy. An initial 36-item instrument was developed based on the assessment framework from Cordell (2001), which subsequently was examined by four lay experts for face validity. Consequently, according to Andrian et al. (2018), seven professional experts, comprising theoretical, industry practitioner, and psychometric experts, were involved in reviewing the relevancy of the content of each item towards measuring financial or investment risk tolerance level. As a result, the instrument is deemed to have a good face value, with 94.4% of the items rated highly at 4 or 3 (out of the maximum rating of 4) by lay experts. Out of the 36 items, only 5.56% are rated 1 or 2, and 16.7% of the items require revision in terms of their face value and clarity. The content validity exercise resulted in high scores of more than 0.83 cut scores based on Lynn (1986) for the scale content validity index (S-CVI), with nine items recorded as item content validity index (I-CVI) below 0.83. The S-CVI improved further to 0.90 after the removal of items with low I-CVI. The findings have also successfully produced a valid instrument that can measure the financial risk tolerance level of investors in Malaysia.
format Article
author Abdul Hadi, Nadia Edmaz
Shafidan, Nur Anis Juliana
Razali, Siti Rauhati
Mohammed Abdulateef, Qusay
Abdul Hamid, Mohamad Shukri
author_facet Abdul Hadi, Nadia Edmaz
Shafidan, Nur Anis Juliana
Razali, Siti Rauhati
Mohammed Abdulateef, Qusay
Abdul Hamid, Mohamad Shukri
author_sort Abdul Hadi, Nadia Edmaz
title The Face and Content Validity of an Instrument for Measuring Financial Risk Tolerance
title_short The Face and Content Validity of an Instrument for Measuring Financial Risk Tolerance
title_full The Face and Content Validity of an Instrument for Measuring Financial Risk Tolerance
title_fullStr The Face and Content Validity of an Instrument for Measuring Financial Risk Tolerance
title_full_unstemmed The Face and Content Validity of an Instrument for Measuring Financial Risk Tolerance
title_sort face and content validity of an instrument for measuring financial risk tolerance
publisher UUM Press
publishDate 2023
url https://repo.uum.edu.my/id/eprint/29744/1/JCIA%2002%2001%202023%2057-88.pdf
https://doi.org/10.32890/jcia2023.2.1.4
https://repo.uum.edu.my/id/eprint/29744/
https://e-journal.uum.edu.my/index.php/jcia/article/view/15573
https://doi.org/10.32890/jcia2023.2.1.4
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