Come together: trust, sociability and individual investors' stock-portfolio returns
ISSN: 1940-5979
Article publication date: 8 July 2020
Issue publication date: 22 October 2021
Abstract
Purpose
Previous studies have found that trusting and sociable individuals are more likely to participate in the stock market and hold risky assets. The purpose of this paper is to explore if trust and sociability also are related to individual investors' stock-portfolio returns.
Design/methodology/approach
The authors study the questions in the paper by linking survey measures of trust and sociability to investors' actual stock portfolios.
Findings
The authors find that trusting investors acquire higher raw and risk-adjusted stock-portfolio returns, but that the returns do not differ depending on how sociable investors are. These results suggest that trust is important for investors' stock-portfolio decisions, and that trusting investors tend to perform better in the stock market than less-trusting investors.
Originality/value
This is, to the best of the authors’ knowledge, the first paper that relates survey measures of trust and sociability to investors' actual stock-portfolio holdings. This is important to increase the understanding for how trust and sociability are related to the financial decisions individuals makes.
Keywords
Acknowledgements
The author thank Valia Velli and participants at the SABE/IAREP 2018 Conference for their useful comments on an earlier version of this paper. The author also grateful to Stefan Anchev, Jörgen Hellström, and Rickard Olsson for their work in the data-collection process.
Citation
Stålnacke, O. (2021), "Come together: trust, sociability and individual investors' stock-portfolio returns", Review of Behavioral Finance, Vol. 13 No. 5, pp. 647-662. https://doi.org/10.1108/RBF-11-2019-0160
Publisher
:Emerald Publishing Limited
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