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1 – 10 of over 4000Muhammad Zubair Tauni, Muhammad Ansar Majeed, Sultan Sikandar Mirza, Salman Yousaf and Khalil Jebran
The purpose of this paper is to investigate the role of financial advice on investor trading behavior by analyzing the influence of advisor personality.
Abstract
Purpose
The purpose of this paper is to investigate the role of financial advice on investor trading behavior by analyzing the influence of advisor personality.
Design/methodology/approach
The study utilized the Big Five personality framework from Costa and McCrae (1992) to measure personality traits of advisors and examined the data collected from 314 stock investor–advisor dyads. Personality traits of advisors were measured by the NEO-Five Factor Inventory (Costa and McCrae, 1989). Confirmatory factor analysis was conducted to assess the fitness of the Big Five model. We followed two-stage least square method for estimating endogenous covariate by employing instrumental variable analysis. Probit model was used to evaluate the moderating influence of advisor personality traits on the association between the usage of financial advice and trading behavior.
Findings
The authors found that financial advice positively impacts investors’ stock trading frequency. The authors also provide empirical evidence that financial advice is more likely to increase trading frequency when advisor personality tends to be openness, conscientiousness and agreeableness. On the other hand, information acquired from financial advisors causes fewer adjustments in investors’ portfolios when the personality of advisors is likely to be extraverted and neurotic.
Research limitations/implications
The theoretical model in our study seeks to explain that a psychological factor, namely, advisor personality, influences the way an investor interprets information signals from financial advice, which, in turn, influences the investor’s decision to trade in securities.
Practical implications
This research suggests that characteristics of advisors other than those of investors can be of relevance for policy makers in their attempts to improve their business in the financial services industry.
Originality/value
Survey-based studies in finance are lacking. This study adds to the existing literature of behavioral finance that accounts for the observed variations in investors’ financial decision making explained by psychological factors. No previous study has been conducted so far exploring variations in the impact of financial advice on investors’ stock trading behavior by the Big Five advisor personality, and this paper strives to fill this research gap in Chinese stock market.
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Daria Plotkina, Hava Orkut and Meral Ahu Karageyim
Financial services industry is increasingly showing interest in automated financial advisors, or robo-advisors, with the aim of democratizing access to financial advice and…
Abstract
Purpose
Financial services industry is increasingly showing interest in automated financial advisors, or robo-advisors, with the aim of democratizing access to financial advice and stimulating investment behavior among populations that were previously less active and less served. However, the extent to which consumers trust this technology influences the adoption of rob-advisors. The resemblance to a human, or anthropomorphism, can provide a sense of social presence and increase trust.
Design/methodology/approach
In this paper, we conduct an experiment (N = 223) to test the effect of anthropomorphism (low vs medium vs high) and gender (male vs female) of the robo-advisor on social presence. This perception, in turn, enables consumers to evaluate personality characteristics of the robo-advisor, such as competence, warmth, and persuasiveness, all of which are related to trust in the robo-advisor. We separately conduct an experimental study (N = 206) testing the effect of gender neutrality on consumer responses to robo-advisory anthropomorphism.
Findings
Our results show that consumers prefer human-alike robo-advisors over machinelike or humanoid robo-advisors. This preference is only observed for male robo-advisors and is explained by perceived competence and perceived persuasiveness. Furthermore, highlighting gender neutrality undermines the positive effect of robo-advisor anthropomorphism on trust.
Originality/value
We contribute to the body of knowledge on robo-advisor design by showing the effect of robot’s anthropomorphism and gender on consumer perceptions and trust. Consequently, we offer insightful recommendations to promote the adoption of robo-advisory services in the financial sector.
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Evan H. Offstein, Miriam B. Larson, Andrea L. McNeill and Hasten Mjoni Mwale
Following approaches consistent with the qualitative research tradition, attempts to capture the essence of the full‐time graduate student experience. Using the constant…
Abstract
Following approaches consistent with the qualitative research tradition, attempts to capture the essence of the full‐time graduate student experience. Using the constant comparative method, analyzes several sources of data to arrive at a grounded theoretical model of the graduate student experience. Findings suggest that stress is at the core of the graduate student experience and is amplified by conflicting demands and internal conflict unique to this type of student. Additionally, international graduate students appear to face some tremendous obstacles that span both their personal and professional lives. Also identified are several of the tactics and mechanisms that students adopt to reduce hardship as they proceed through their respective programs. Finally, implications for current administrative practice and future research are discussed.
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Muhammad Zubair Tauni, Hong Xing Fang and Amjad Iqbal
This paper aims to investigate the impact of sources of information on trading behavior by analyzing the influence of investor personality in Chinese futures market.
Abstract
Purpose
This paper aims to investigate the impact of sources of information on trading behavior by analyzing the influence of investor personality in Chinese futures market.
Design/methodology/approach
The authors adopted the Big Five personality framework and examined the survey results of individual investors (n = 333) in Chinese futures market. Personality traits of futures investors were measured by the NEO-Five Factor Inventory (Costa and McCrae, 1989) which is a shortened version of revised NEO personality inventory of the Big Five model (Costa and McCrae, 1992). Confirmatory factor analysis was conducted to assess the fitness of model. Structural equation modeling was used to evaluate the moderating influence of investor personality traits on the association between source of information and trading behavior.
Findings
The results confirm the previous findings that the sources of information used by investors as a foundation of their financial choices have a significant impact on trading frequency. The authors also provide an empirical evidence that investor personality traits moderate the relationship between sources of information and trading behavior. Financial advice from professionals is likely to increase trading frequency in investors with neuroticism and openness personality traits, and to reduce trading frequency in conscientious and extravert investors. Similarly, financial information acquired via word-of-mouth communication results in more trading in extravert and agreeable investors. Finally, information acquisition from specialized press causes more adjustment of conscientious investors’ portfolios. Theoretical explanations, implications and recommendations for future research are discussed.
Originality/value
This study combines information search and behavioral finance literature to demonstrate that the impact of various sources of market information on asset allocation decisions is influenced by investor personality. No previous study has been conducted yet to explain variations in the impact of sources of information on trading behavior by the Big Five personality traits and this paper seeks to fill this gap in Chinese futures market.
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Ian Chaston and Sue Baker
Over the last few years, research on customer behaviour in both industrial markets and service environments has caused some academics to posit that in many situations, the…
Abstract
Over the last few years, research on customer behaviour in both industrial markets and service environments has caused some academics to posit that in many situations, the application of traditional transactional marketing concepts is ineffective. Most of the research on identification of factors influencing the supplier‐customer relationship has been concerned with the commercial sector. The aims of this study, therefore, are to determine the influence of relationship factors in the not‐for‐profit sector by examining the situation of advisory assistance offered to small businesses by government‐funded support agencies. Interviews with advisors and owner/managers have been used to construct a qualitative model of factors influencing the client/advisor relationship. The implications of the study are discussed in relation to the future operation of not‐for‐profit support agencies.
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Andrea Lippi, Laura Barbieri and Federica Poli
The purpose of this paper is to examine which individual traits of financial advisors influence portfolio transfer speed when a financial advisor recommends investors to migrate…
Abstract
Purpose
The purpose of this paper is to examine which individual traits of financial advisors influence portfolio transfer speed when a financial advisor recommends investors to migrate to a new financial intermediary.
Design/methodology/approach
With reference to the years 2014–2016, one of the three leading Italian tied-agent banks provided the authors with an exclusive and unique data set containing information regarding the financial advisors who had become tied agents, transferring their existing portfolios from their previous banks (traditional or tied-agent banks). The authors observed the ability of the migrant financial advisor in successfully transferring the entire portfolio declared within 12 months of observation. To investigate empirically which personal traits of financial advisors determine their success in the rapid transfer of clients’ portfolios to a new financial intermediary, the authors applied a Cox proportional hazards model.
Findings
The authors find that factors such as age, type of bank of origin and size of the managed financial portfolio positively affect the speed transfer.
Practical implications
The obtained results may be interesting for guiding recruiting policies of financial intermediaries.
Social implications
Regulators should closely examine the phenomenon analyzed in this paper to avoid conflict of interests.
Originality/value
The literature on this topic is scarce, mainly due to the lack of available data. This paper represents an original contribution to open a new field of research.
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H. Kent Baker, Sujata Kapoor and Tanu Khare
Financial professionals are increasingly important in the Indian financial system. Our study examines the association between the Big Five personality traits and Indian financial…
Abstract
Purpose
Financial professionals are increasingly important in the Indian financial system. Our study examines the association between the Big Five personality traits and Indian financial professionals' behavioral biases when making investment decisions.
Design/methodology/approach
After testing our questionnaire's reliability and validity, we used it to obtain the sample responses. We used multiple regression analysis and other statistical tools to identify the relationships between the Big Five personality traits and behavioral biases.
Findings
Our findings reveal a high level of extraversion and conscientiousness, a moderate level of agreeableness and openness and a low neuroticism level among financial professionals. The results show a significant association between neuroticism, extraversion, openness and all behavioral biases except anchoring bias. The neuroticism trait has a statistically significant relationship with all behavioral biases examined, whereas agreeableness and conscientiousness traits lack a significant association with behavioral biases. The openness trait is associated with many emotional biases and cognitive heuristics, while the extraversion trait has a significantly positive relationship with availability bias.
Research limitations/implications
Future researchers could analyze primary (survey) and secondary investor data from brokerage houses. Using a larger sample could provide more generalizable findings. Researchers could also consider other aspects of investment decision-making using various asset classes. Understanding financial professionals' personality traits and behavioral biases could help them develop strategies to suit client needs.
Originality/value
This study provides the first comprehensive examination of the association between personality traits and behavioral biases of Indian financial professionals.
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Jyoti M. Kappal and Shailesh Rastogi
The purpose of this paper is to understand the new kind of investors – women entrepreneurs – and to find out the factors that drive their investment behaviour and investment…
Abstract
Purpose
The purpose of this paper is to understand the new kind of investors – women entrepreneurs – and to find out the factors that drive their investment behaviour and investment decisions.
Design/methodology/approach
The approach of qualitative enquiry was used for the research in which 18 in-depth exploratory interviews were conducted to identify the determinants of the investment behaviour shown by women entrepreneurs, a growing segment in investment. The accumulated data was analysed using open coding.
Findings
The research show that women entrepreneurs consider investment as a long-term instrument are risk averse and quite conservative. They are willing to take risks in business but not for making investment decisions. The reasons for this low-risk behaviour include lack of time to understand investments and lack of knowledge about various products. The research asserts that if they spend time to be informed about the nuances of investment instruments, they are likely to take risks for their investments as well. The interviews also reflect that women entrepreneurs often mimic the investment behaviour of their parents.
Research limitations/implications
The sample for this research was taken from only two cities in India and a broader research in other cities as well will expand the understanding of investment behaviours demonstrated by women entrepreneurs. The differences in women entrepreneurs’ investment behaviour due to culture and ethnicity of the respondent are also not considered.
Practical implications
The outcomes of the research will help the investment manager to get a better insight into the psychology of women entrepreneurs as investors. This will help them develop personalized and relevant portfolio recommendations. Second, the findings will help service providers to develop training modules for their investment advisors by sensitizing them to needs and wants of women entrepreneurs as potential investors. Third, the research will be of interest for policymakers and researchers to understand the determinants of personal investment decision-making amongst women entrepreneurs. Finally, it will help women entrepreneurs understand and mitigate their biases while taking investment decisions. It will lead them to take wiser investment decisions, thereby reducing the risk and maximizing opportunities of returns.
Social implications
The research will provide opportunities for enhancing gender equality amongst investors. This can be achieved by educating the investment advisors on the traits and preferences of women entrepreneurs as investors. Designing and delivering specific workshops on investment awareness for women entrepreneurs can also be accomplished based on the findings of this research.
Originality/value
To the researcher’s best knowledge, the investment behaviour of women entrepreneurs in India has been little investigated. This study appears to be the first qualitative research attempt in that direction. This paper will be useful in understanding the behavioural biases by women entrepreneurs in considering their personal investment decisions.
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Marija Vuković and Snježana Pivac
Investors' behavior in financial markets is often under the influence of various psychological and cognitive factors, as well as personality characteristics. This research…
Abstract
Purpose
Investors' behavior in financial markets is often under the influence of various psychological and cognitive factors, as well as personality characteristics. This research explores which behavioral factors and personality traits affect investment decisions and, consequently, investment performance.
Design/methodology/approach
A survey analysis was conducted on a sample of 310 investors in Croatia. Partial least squares structural equation modeling was used to obtain the results.
Findings
Overconfidence heuristic, prospect theory elements, emotions and stability and plasticity (as big two personality dimensions) positively affect investment decisions, while herding has a negative effect. Investment decisions, observed through the preference for long-term investments, consequently have a positive effect on the investment performance satisfaction.
Originality/value
This research proposes a unique comprehensive model of the effect of numerous different cognitive and psychological behavioral factors on investment decisions. Furthermore, the influence of investment decisions on investment performance is observed simultaneously. Understanding human behavior based on their personal characteristics can help investors to make better investment decisions. Advisors can learn from human behavior and guide their clients in the right direction when it comes to stock investment. Scientists will be able to replicate the model with other data and make comparative analyses.
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Aims to provide an assessment of the role of external business advice for small to medium‐sized enterprises (SMEs), comparing “soft” outcomes (improved ability to manage, ability…
Abstract
Purpose
Aims to provide an assessment of the role of external business advice for small to medium‐sized enterprises (SMEs), comparing “soft” outcomes (improved ability to manage, ability to cope), “hard” outcomes (profitability, turnover, reduced costs), and overall satisfaction levels.
Design/methodology/approach
A telephone survey using a stratified random sample frame provides a representative sample that allows comparison of the benefits of advice to SMEs in different size categories.
Findings
The paper demonstrates a large and varied supply of advice with no evidence of reluctance by owners/managers to seek advice. “Hard” and “soft” outcomes tend to be combined for many SMEs, but the widest effects of external advice seem to be intangible, such as reassurance or reducing uncertainty. There is less variation between SMEs of different size than expected, but strong variation between types of external suppliers of advice. The level of regulation of suppliers and extent of their reputation or brand appear to have positive association with the level of their use, impact and satisfaction levels. Public sector advisers have special difficulties of managing quality and better relating marketing to what they can reliably deliver.
Originality/value
The research provides to researchers a better understanding of the form of intangible benefits that businesses receive from advice, and how these interrelate with “hard” benefits of reduced costs and increased profits. Private sector advisers need to note the interaction between feelings‐based and “hard” outcomes. Public sector advisers need significantly to improve their consistency and better relate marketing to their capacity to deliver.
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