Search results

1 – 10 of over 9000
Click here to view access options
Article
Publication date: 4 March 2014

Rayenda Brahmana, Chee-Wooi Hooy and Zamri Ahmad

This article aims to examine how investor moods and aggressiveness differ in their state and influence investor stock market performance associated with the moon phase…

Downloads
1349

Abstract

Purpose

This article aims to examine how investor moods and aggressiveness differ in their state and influence investor stock market performance associated with the moon phase. The mechanisms and impact of full moon gravity on investor stock trading performance are explored through an experimental approach and econometrics model.

Design/methodology/approach

A time-series quasi-experimental study, using the full moon and new moon time periods, was coupled with a psychometric test of investors' behaviours, administered through an online survey, similar to a pre-post experiment. Confirmation of the results was achieved by using an econometric model, adopted from Dichev and Janes.

Findings

This research found that investor psychology is influenced by the full moon, but no effect was recorded during the new moon phase. Confirmed by the paired t-difference test, the small correlation, in addition to the quantitative model, the results show the full moon impacts market behaviour during its orbital phase. Consequently, the authors surmise that the full moon does influence investor cognition and emotion disarray, mood disorders, and aggressiveness, resulting in poor stock trading performance.

Practical implications

The need for an active investment strategy is the major implication of this study. During the full moon phase, investors tend to be more aggressive and moody and seek hedonic utility instead of the traditional economics utility, meaning that they tend to follow the sentiment of the market.

Originality/value

This paper fulfils an identified need to study how the full moon affects investor stock trading performance.

Details

International Journal of Social Economics, vol. 41 no. 3
Type: Research Article
ISSN: 0306-8293

Keywords

Click here to view access options
Book part
Publication date: 4 July 2019

Çağatay Başarir and Özer Yilmaz

Starting in the 1980s, financial liberalization and technological developments have enabled individual investors to participate in financial markets and carry out easy…

Abstract

Starting in the 1980s, financial liberalization and technological developments have enabled individual investors to participate in financial markets and carry out easy transactions. With these developments, academics began to wonder how the individual investors decide to invest and what factors affect these decisions.

According to traditional finance theory, it is suggested that markets are efficient and investors show rational behaviors in their financial purchasing decisions. However, in many studies conducted in recent years, it was determined that investors included emotional elements as well as rational elements in their decision-making process and therefore exhibited irrational behaviors by believing rumors instead of real information. It is thought that many factors such as personal characteristics, psychological factors, demographic and socio-economic factors play a role in the behavior of investors in purchasing a financial product.

In this study, the importance of herd behavior, which is one of the psychological factors that play a very important role in financial markets, on financial product purchasing process is examined in the light of the behavioral finance theory. It is thought that information included in the study will be useful for researchers who want to study herd behavior and for those who are interested in the subject.

Click here to view access options
Article
Publication date: 1 October 2006

Sajeev Varki, Sanjiv Sabherwal, Albert Della Bitta and Keith M. Moore

The paper seeks to show that marketing and psychology literature can shed light on why investors exhibit preferences for certain price ends. The perspective adopted is…

Downloads
1400

Abstract

Purpose

The paper seeks to show that marketing and psychology literature can shed light on why investors exhibit preferences for certain price ends. The perspective adopted is that the stock market is a marketplace in which investors, as consumers, buy and sell (i.e. exchange) financial products such as stocks.

Design/methodology/approach

The paper analyzes trading data from the stock exchanges to empirically test propositions about investor behavior vis‐à‐vis certain price ends of interest derived from the marketing and psychology literature.

Findings

Investors, as consumers, favor price‐ends of 0 and 5 more than price‐ends of 9, in that they trade more frequently and more aggressively at these price ends. Further, even price ends of 0 are favored more than odd price ends of 5.

Practical implications

The results of the study shed light on how the cognitive bias of the consumer thwarts the otherwise efficient functioning of the financial market.

Originality/value

The paper uses market‐level data to gain insights into the cognitive process of the individual investor, in addition to teasing out specific biases that have not been identified earlier in the literature. It extends the study of consumer behavior to non‐traditional, but consequential, marketplaces such as the stock market.

Details

Journal of Product & Brand Management, vol. 15 no. 6
Type: Research Article
ISSN: 1061-0421

Keywords

Click here to view access options
Article
Publication date: 6 September 2021

Muskan Sachdeva, Ritu Lehal, Sanjay Gupta and Aashish Garg

In recent years, significant research has focused on the question of whether severe market periods are accompanied by herding behavior. As herding behavior is a…

Abstract

Purpose

In recent years, significant research has focused on the question of whether severe market periods are accompanied by herding behavior. As herding behavior is a considerable cause of the speculative bubble and leads to stock market deviations from their basic values it is necessary to examine the motivators which led to herding behavior among investors. The paper aims to discuss this issue.

Design/methodology/approach

In this study, the authors performed a two-phase analysis to address the research questions of the study. In the first phase, for text analysis NVivo software was used to identify the factors driving herding behavior among Indian stock investors. The analysis of a text was performed using word frequency analysis. While in the second phase, the Fuzzy-AHP analysis techniques were employed to examine the relative importance of all the factors determined and assign priorities to the factors extracted.

Findings

Results of the study depicted Investor Cognitive Psychology (ICP), Market Information (MI), Stock Characteristics (SC) as the top-ranked factors driving herding behavior, while Socio-Economic Factors (SEF) emerged as the least important factor driving herding behavior.

Research limitations/implications

The current study was undertaken among stock investors from North India only. Moreover, numerous factors are not part of the study but might significantly influence the investors' herding behaviors.

Practical implications

Comprehending the influences of the different factors discussed in the study would enable stock investors to be more aware of their investment choices and not resort to herd behavior. This research enables decision-makers to understand the reasons for herd activity and helps them act accordingly to improve the stock market's performance.

Originality/value

The current study will provide an inclusive overview of herding behavior motivators among Indian stock investors. This study's results can be extremely useful for both academics and policymakers to gain some insight into the functioning of the Indian stock market.

Details

Review of Behavioral Finance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1940-5979

Keywords

Click here to view access options
Article
Publication date: 27 November 2019

Hossein Sayyadi Tooranloo, Pedram Azizi and Ali Sayyahpoor

Changes in economic markets have made it necessary to understand the psychology of individual investors. Conducting effective studies on the decision of investors to buy…

Abstract

Purpose

Changes in economic markets have made it necessary to understand the psychology of individual investors. Conducting effective studies on the decision of investors to buy stock in the stock market can be useful. Therefore, it is necessary to identify and prioritize the factors affecting the decision-making of investors to purchase shares of the stock exchange. The purpose of this study was to analyze causal relationships and to weight effective factors on individual investment to purchase shares of Tehran Stock Exchange.

Design/methodology/approach

The present study is applied research in the term of its purposes and a descriptive-survey one in the term of data gathering methods. The data required in this study was collected through library and field studies. The study population included 35 investment experts. In present study, multi-criteria decision-making techniques in type-2 fuzzy environments have been used to analyze the causal relationships and weighing the factors affecting individual investment in purchasing stock in the stock market.

Findings

In the study, 4 indicators and 20 sub-indicators influencing individual investors’ decision to purchase shares of Tehran Stock Exchange were selected based on the literature review in the field of investment in the stock exchange, as well as interviews with experts. Analyzing the opinions of experts showed that they have much paid attention to financial index compare to the economic, political and psychological indicators of the market in determining the priority of indicators. In analyzing sub-indicators, it was identified that Iranian investors pay special attention to economic and political developments, political news and international economic developments.

Research limitations/implications

The present study has been carried out in Iran, and therefore, is geographically limited to Iran. In thematic terms, it is limited to effective factors of individual investments in Tehran Stock Exchange. The statistical population of present study was limited to investing experts in Tehran Stock Exchange. The difference in financial, economic, social and political conditions of individuals was another limitation of present study. The main consequences of research were the explanation of causes of investors’ higher attention to financial factors than economic, political and mental factors of market in buying stocks.

Originality/value

Given the uncertainty in the market status, using multi-criteria decision-making techniques in financial analysis can help decision-makers to make better decisions. In addition, it would be possible to take into account many variables that do not have a mathematical aspect but are important in decision-making and lead to increased decision-making satisfaction. The research initially analyzed causal relationships of determinants of individual investment on stock exchange for buying stocks through a type-2 fuzzy approach.

Details

International Journal of Ethics and Systems, vol. 36 no. 1
Type: Research Article
ISSN: 2514-9369

Keywords

Click here to view access options
Article
Publication date: 7 October 2021

Xuebing Dong, Xin Wen, Kui Wang and Chuangneng Cai

Negative media coverage has important impacts on firm financial performance, but existing studies have inconsistent views of this relationship and lack a unified…

Abstract

Purpose

Negative media coverage has important impacts on firm financial performance, but existing studies have inconsistent views of this relationship and lack a unified theoretical framework to explain how such impacts arise. This study aims to bridge this gap in the literature.

Design/methodology/approach

This study uses two sets of data encompassing publicly listed companies in Shanghai and Shenzhen stock exchanges from 2013 to 2019, which are covered by the China Stock Market and Accounting Research Database.

Findings

This study finds that the number of negative news coverages has an inverted U-shaped relationship with firm financial performance; this relationship is weakened by the proportion of shares held by institutional investors and strengthened by advertising intensity.

Practical implications

This study suggests that corporate executives should be aware of the potential value of a limited amount of negative news coverage and react with tolerance and caution when their companies encounter it.

Originality/value

This study uses two different routes provided in the elaboration likelihood model theory to fully explain the processes underlying changes in investors’ attitudes toward firms experiencing negative media coverage.

Details

Journal of Business & Industrial Marketing, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0885-8624

Keywords

Click here to view access options
Article
Publication date: 10 June 2020

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…

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.

Details

Qualitative Research in Financial Markets, vol. 12 no. 4
Type: Research Article
ISSN: 1755-4179

Keywords

Click here to view access options
Article
Publication date: 14 November 2016

Hani El-Chaarani

The main purpose of this research is to empirically test the impacts of emotional intelligence score and emotional intelligence processing on the performance of investor’s…

Downloads
1427

Abstract

Purpose

The main purpose of this research is to empirically test the impacts of emotional intelligence score and emotional intelligence processing on the performance of investor’s portfolio.

Design/methodology/approach

A mail questionnaire survey was conducted on a sample of 983 international investors. The total number of usable responses received was 197 giving a response rate of 20.4 per cent. From 197 investors, 46 accepted to complete the experiment study during two trading hours for each investor from January first until February 19, 2015.

Findings

The results reveal a positive impact of emotional intelligence on portfolio performance. Additional analysis shows that the emotional intelligence process has a significant impact on the portfolio performance. The higher impact is revealed when the investors understand the markets tendency, manage their own emotions, take their financial decisions and finally control their personnel emotions during market fluctuations. The lower impact is detected when investors take reactive decisions after perceiving the markets tendency. This research also reveals that the investors have high capacity to manage and control their emotions during market fluctuations especially who are characterized by high emotional intelligence level.

Research limitations/implications

The first limit of this research is the exploration of limited number of investors and financial operations during limited period. Therefore, the results could not be generalized, and further studies should include larger samples during larger period. The second limitation concerns the used variables to measure the portfolio performance and the emotional intelligence level. For future studies, it will be preferred to use other quantitative and qualitative variables lead to measure the different analytical dimensions of portfolio performance and emotional intelligence.

Practical implications

The results hold implications for investors that seek to enhance efficiently and effectively the portfolio performance. It also prompts investors to focus on effort that can improve the management and the control of personnel emotions.

Originality/value

This paper presents one of the first empirical studies that attempt to explore how emotional intelligence and, particularly, emotional process serve to sustain the performance of portfolio during market fluctuations.

Details

Humanomics, vol. 32 no. 4
Type: Research Article
ISSN: 0828-8666

Keywords

Click here to view access options
Article
Publication date: 17 December 2018

H. Kent Baker, Satish Kumar, Nisha Goyal and Vidhu Gaur

The purpose of this paper is to examine how financial literacy and demographic variables (gender, age, income level, education, occupation, marital status and investment…

Downloads
3311

Abstract

Purpose

The purpose of this paper is to examine how financial literacy and demographic variables (gender, age, income level, education, occupation, marital status and investment experience) related to behavioral biases.

Design/methodology/approach

The study uses one-way analysis of variance (ANOVA), factor analysis and multiple regression analysis to examine survey data from more than 500 individual investors in India.

Findings

The results reveal the presence of different behavioral biases including overconfidence and self-attribution, the disposition effect, anchoring bias, representativeness, mental accounting, emotional biases and herding among Indian investors. Hence, the findings support the view that individual investors do not always act rationally. The results also show that financial literacy has a negative association with the disposition effect and herding bias, a positive relation with mental accounting bias, but no significant relation with overconfidence and emotional biases. Age, occupation and investment experience are the most important demographic variables that relate to the behavioral biases of individual investors in the sample. Regarding gender, males are more overconfident than are females about their knowledge of the stock market.

Research limitations/implications

The study does not test for causality, only association between the variables. Thus, the findings in this study should not be interpreted as suggesting causality. The study may have implications for financial educators in promoting the financial awareness programs for individuals. Financial advisors can potentially become more effective by understanding their clients’ decision-making processes.

Originality/value

Despite an extensive literature on behavioral finance, limited academic research attempts to unravel the relation of how financial literacy and demographic variates relate to behavioral biases. This study contributes to this literature by trying to fill this gap.

Details

Managerial Finance, vol. 45 no. 1
Type: Research Article
ISSN: 0307-4358

Keywords

Click here to view access options
Article
Publication date: 28 September 2012

Shalini Kalra Sahi

The purpose of this paper is to present a review as well as a synthesis of the extant literature in the field of Neurofinance. The paper has been divided into eight parts…

Downloads
3932

Abstract

Purpose

The purpose of this paper is to present a review as well as a synthesis of the extant literature in the field of Neurofinance. The paper has been divided into eight parts. The first and second parts introduce the paper and dwell upon the brain functions in financial decisions. Part three presents the origin of Neurofinance and part four explains the difference between traditional finance, behavioural finance and neurofinance. Part five and six of the paper look into the research studies in Neurofinance and their application. Part seven gives a brief discussion on the limitations of neurofinance studies and part eight gives the conclusion.

Design/methodology/approach

The existing body of academic literature pertinent to the domain of Neurofinance was reviewed so as to provide an integrated portrayal and synthesis of the current level of knowledge in this field. This paper covers the insights on the subject for developing a deeper understanding of the investor's psychology.

Findings

Neurofinance is a very young discipline. It tries to relate the brain processes to the investment behaviour. Most of the researches in the domain of neurofinance focus on trading behaviour. It would be interesting to explore the workings of the brain for other investment behaviours too like personal financial planning decisions, etc.

Originality/value

Neurofinance is emerging as an alternate field of study and practice and this paper is an attempt to look at the development of Neurofinance and its role in developing a better understanding of the investor behaviour.

Details

Studies in Economics and Finance, vol. 29 no. 4
Type: Research Article
ISSN: 1086-7376

Keywords

1 – 10 of over 9000