Journal articles: 'Investor psychology'

1

Kahneman, Daniel, and Mark W. Riepe. "Aspects of Investor Psychology." Journal of Portfolio Management 24, no. 4 (July 31, 1998): 52–65. http://dx.doi.org/10.3905/jpm.1998.409643.

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Asmilia, Nur. "TECHNICAL ANALYSIS: THE ROLE OF INVESTOR PSYCHOLOGY MEDIATING ON STOCK INVESTMENT BEHAVIOR." EAJ (ECONOMICS AND ACCOUNTING JOURNAL) 2, no. 1 (April 4, 2019): 26. http://dx.doi.org/10.32493/eaj.v2i1.y2019.p26-34.

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The purpose of this study is to prove empirically whether the technical factors represented by stock price indicators, trading volume and market capitalization have an influence on investor psychology. In addition, it is also to determine the effect of investor psychology on the behavior of stock investment. The number of data samples in this study that is as many as 108 respondents from the population of investors who have been chosen as the object of research. The sampling technique in this study is random sampling. The use of the technique is due to the population that is unknown to the researcher. Testing the hypothesis is tested by structural equation modeling. The results showed that stock prices, trading volume and market capitalization have a significant influence on investor psychology, and investor psychology is known to have a significant effect on stock investment behavior

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Brahmana, Rayenda, Chee-Wooi Hooy, and Zamri Ahmad. "Moon phase effect on investor psychology and stock trading performance." International Journal of Social Economics 41, no. 3 (March 4, 2014): 182–200. http://dx.doi.org/10.1108/ijse-04-2012-0134.

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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.

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Gennaioli, Nicola, Andrei Shleifer, and Robert Vishny. "Neglected Risks: The Psychology of Financial Crises." American Economic Review 105, no. 5 (May 1, 2015): 310–14. http://dx.doi.org/10.1257/aer.p20151091.

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We model a financial market in which investor beliefs are shaped by representativeness. Investors overreact to a series of good news, because such a series is representative of a good state. A few bad news do not change investor minds because the good state is still representative, but enough bad news leads to a radical change in beliefs and a financial crisis. The model generates debt over-issuance, “this time is different” beliefs, neglect of tail risks, under- and over-reaction to information, boom-bust cycles, and excess volatility of prices in a unified psychological model of expectations.

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Statman, Meir. "Investor Psychology and Market Inefficiencies." ICFA Continuing Education Series 1988, no. 2 (January 1988): 29–35. http://dx.doi.org/10.2469/cp.v1988.n2.6.

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Hirshleifer, David. "Investor Psychology and Asset Pricing." Journal of Finance 56, no. 4 (August 2001): 1533–97. http://dx.doi.org/10.1111/0022-1082.00379.

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Cross, Rod, Michael Grinfeld, Harbir Lamba, and Tim Seaman. "A threshold model of investor psychology." Physica A: Statistical Mechanics and its Applications 354 (August 2005): 463–78. http://dx.doi.org/10.1016/j.physa.2005.02.029.

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Inaishi, Ryota, Kaoru Toya, Fei Zhai, and Eisuke Kita. "Effect of Overconfident Investor Behavior to Stock Market." Journal of Advanced Computational Intelligence and Intelligent Informatics 14, no. 6 (September 20, 2010): 661–68. http://dx.doi.org/10.20965/jaciii.2010.p0661.

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Behavioral finance theory has been presented to explain the phenomena not explainable by conventional finance theory based on efficient market hypothesis from the investor psychology. We focused on overconfidence – an important psychological bias –, and analyzed the effect of overconfident investor behavior in stock market using multiagent simulation. We found that, based on the increase in overconfident market investors, market dealing increases and rising trends occur more often. An analysis of the relationship between overconfidence and rising trends shows that rising trends make investors even more overconfident.

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Archilles, Wendy, Jennifer Blaskovich, and Terence Pitre. "Corporate governance and reporting frequency: Hazards of more frequent reporting." Corporate Ownership and Control 6, no. 2 (2008): 298–303. http://dx.doi.org/10.22495/cocv6i2c2p4.

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There has been little research that has examined any of the possible consequences of frequent financial reporting. In this paper, we discuss and provide theoretical explanations for two negative consequences associated with more frequent reporting. Based on search from psychology and sociology we theorize how more frequent reporting can lead to (1) goal seeking behavior by managers, (2) inaccurate predictions from investors (3) higher dispersion of investor beliefs and (4) higher uncertainty of investor beliefs

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Majors, Tracie M. "The Interaction of Communicating Measurement Uncertainty and the Dark Triad on Managers' Reporting Decisions." Accounting Review 91, no. 3 (September 1, 2015): 973–92. http://dx.doi.org/10.2308/accr-51276.

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ABSTRACT I conduct an interactive experiment with participants in manager- and investor-like roles to examine whether and how mandating range disclosures for uncertain estimates will influence managers' reporting decisions. I find that managers report less aggressively when ranges are disclosed, such that investors have little aggressive reporting to identify using range disclosures. However, consistent with psychology theory, range disclosures have the greatest effect on managers with stronger levels of psychopathy, narcissism, or Machiavellianism (“the Dark Triad” of personality in psychology). Range disclosures discipline these managers' aggressive reporting, while managers with lower levels of all of these personalities have less aggressiveness to discipline and are insensitive to range disclosure. Consequently, mandating range disclosures should have the greatest effect on managers most in need of reining in—and is unlikely to reveal aggressive reporting to investors (as might be expected) because these managers reduce aggressiveness in anticipation of investor actions.

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Chamberlain, Trevor W., and Lewis D. Johnson. "Information and the Psychology of Investor Behaviour." Journal of Interdisciplinary Economics 5, no. 1 (January 1994): 55–62. http://dx.doi.org/10.1177/02601079x9400500106.

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In behavioural psychology the relationship between the information provided by a stimulus and an individual’s reaction thereto is widely accepted as parabolic and commonly referred to as a Wundt curve. The present paper invokes this relationship in order to examine the apparent failure of the efficient markets model as a paradigm for describing security price behaviour. Discrepancies between the prices and intrinsic values of securities are explained in terms of the amount of information entering the price determination process, with the amount required for an efficient market found to have an interior solution. The social invention of the stock market provides a convenient meeting ground in which to study the nexus between the psychology of investor behaviour and the economics of asset pricing.

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Wurgler, Jeffrey. "Comment on: Investor psychology in capital markets." Journal of Monetary Economics 49, no. 1 (January 2002): 211–14. http://dx.doi.org/10.1016/s0304-3932(01)00092-7.

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Caginalp, Gunduz. "The Real Year 2000 Problem: Investor Psychology." Journal of Psychology and Financial Markets 2, no. 1 (March 2001): 2–5. http://dx.doi.org/10.1207/s15327760jpfm0201_1.

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Baker, Malcolm, and Jeffrey Wurgler. "Investor Sentiment in the Stock Market." Journal of Economic Perspectives 21, no. 2 (April 1, 2007): 129–51. http://dx.doi.org/10.1257/jep.21.2.129.

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Investor sentiment, defined broadly, is a belief about future cash flows and investment risks that is not justified by the facts at hand. The question is no longer whether investor sentiment affects stock prices, but how to measure investor sentiment and quantify its effects. One approach is “bottom up,” using biases in individual investor psychology, such as overconfidence, representativeness, and conservatism, to explain how individual investors underreact or overreact to past returns or fundamentals The investor sentiment approach that we develop in this paper is, by contrast, distinctly “top down” and macroeconomic: we take the origin of investor sentiment as exogenous and focus on its empirical effects. We show that it is quite possible to measure investor sentiment and that waves of sentiment have clearly discernible, important, and regular effects on individual firms and on the stock market as a whole. The top-down approach builds on the two broader and more irrefutable assumptions of behavioral finance—sentiment and the limits to arbitrage—to explain which stocks are likely to be most affected by sentiment. In particular, stocks that are difficult to arbitrage or to value are most affected by sentiment.

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Abul, Sadeq J. "Factors influencing Individual Investor Behaviour: Evidence from the Kuwait Stock Exchange." Asian Social Science 15, no. 3 (February 28, 2019): 27. http://dx.doi.org/10.5539/ass.v15n3p27.

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This study investigates the effects of psychological factors on investor behaviour regarding the Kuwait Stock Exchange (KSE). These psychological factors are, namely: excessive optimism vs pessimism, herd behaviour and risk appetite. The data for this study obtained from KSE and a survey of a random sample of 398 individual investors. By using qualitative analysis and based on the theory of behavioural finance, the study findings show that herd behaviour, optimism and psychology risk have an impact on the individual investors’ decisions. However, we did not find any evidence of overconfidence behaviour’s effects on investors’ decisions. To our knowledge, KSE has been examined by several researchers without taking into consideration the effects of psychological factors on individual investor decisions. This study finds that psychological factors play a significant role in individual investors’ decisions regarding KSE. This study might contribute positively to the development of this field of research in (KSE).

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De Bondt, Werner F. M. "Investor Psychology and the Dynamics of Security Prices." AIMR Conference Proceedings 1995, no. 7 (December 1995): 7–13. http://dx.doi.org/10.2469/cp.v1995.n7.3.

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17

Wilcox, Stephen E. "Investor Psychology and Security Market Under- and Overreactions." CFA Digest 29, no. 2 (May 1999): 69–71. http://dx.doi.org/10.2469/dig.v29.n2.480.

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Daniel, Kent, David Hirshleifer, and Avanidhar Subrahmanyam. "Investor Psychology and Security Market Under- and Overreactions." Journal of Finance 53, no. 6 (December 1998): 1839–85. http://dx.doi.org/10.1111/0022-1082.00077.

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Murphy, Austin. "Biology-induced effects on investor psychology and behavior." International Review of Financial Analysis 24 (September 2012): 20–25. http://dx.doi.org/10.1016/j.irfa.2012.07.001.

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Yuniningsih, Yuniningsih, and Muhamad Taufiq. "INVESTOR BEHAVIOR IN DETERMINING INVESTMENT ON REAL ASSET." MIX: JURNAL ILMIAH MANAJEMEN 9, no. 2 (August 9, 2019): 327. http://dx.doi.org/10.22441/mix.2019.v9i2.006.

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Behavior in determining investment is influenced by factors from the fundamental side or individual psychology. This study aims to determine how psychological factors influence investor behavior in determining future investments. This research is a field experimental study using questionnaire data. The variables used in investment decision making include loss aversion, regret aversion and illusion of control bias with 15 total indicators. The sample is an investor in the real asset field and the data is processed using the Structural Equation Model (SEM) with the AMOS program. The results showed that psychological factors both loss aversion and illusion of control bias had a significant effect on investment decisions in a positive direction. While regret aversion has a significant effect with negative direction with investment decisions. Novelty in this study, that psychological factors in behavior finance not only affect securities investors but also real asset investors.

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Yang, Guang, Xinwang Liu, Jindong Qin, and Ahmed Khan. "An analytical approach for behavioral portfolio model with time discounting preference." RAIRO - Operations Research 52, no. 3 (July 2018): 691–712. http://dx.doi.org/10.1051/ro/2017039.

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This paper presents a behavioral portfolio selection model with time discounting preference. Firstly, we discuss the portfolio selection problem and then modify this model based on cumulative prospect theory (CPT) as well as considering investors’ time discounting preference in psychology. Furthermore, an analytical solution with satisfying behavior is given for our proposed model, the results show that when investors’ goals are very ambitious, they put a high proportion of their wealth in long-term goals and adopt aggressive investment strategies with high leverage to reach short-term goals and the overall investment strategy also displays high leverage. Finally, numerical analysis is given and it is shown that investor who tends to future bias performs adequate confidence and patience whereas investor with present bias is apt to the immediate interests.

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Hamza, Fadhila, and Anis Jarboui. "Investor’s psychology commitment level and escalatory behavior in investment decision." Corporate Ownership and Control 9, no. 4-4 (2012): 369–80. http://dx.doi.org/10.22495/cocv9i4c4art1.

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This study examines the reasons of investor’s escalatory behavior in firm’s investment decision. It shows the possible influence of three closely related features which are: firm’s financial indicators, investor’s risk profile, and investor’s psychology commitment level, on a firm’s investment decisions escalation. This study aims to provide evidence as to whether investor considers the financial and risk’s perception features (financial strength and risk profile) in his escalatory behavior while he notes a high psychology commitment level. The proposed model of this paper uses GLM univariate data analyses to examine this relationship. Investor’s risk profile and his psychology commitment level have been measured by means of a questionnaire comprising several items. As for the selected sample, it has been composed of some 360 Tunisian individual investors. Our results have revealed that investors pay more attention to keep their psychology comfort than their financial comfort. It exposed the importance of the investor’s commitment bias and its risk perception in explaining his investment decision escalation. Moreover results shows that there is strong and significant empirical relationship linking the investment decision escalation and the interaction effects between the three independent variables. This means that, in practice, investors consider the three factors simultaneously.

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Rebonato, Riccardo. "A Crisis of Beliefs: Investor Psychology and Financial Fragility." Quantitative Finance 19, no. 11 (September 9, 2019): 1767–69. http://dx.doi.org/10.1080/14697688.2019.1649885.

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Rystrom, David S., and Earl D. Benson. "Investor Psychology and the Day-of-the-Week Effect." Financial Analysts Journal 45, no. 5 (September 1989): 75–78. http://dx.doi.org/10.2469/faj.v45.n5.75.

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Daniel, Kent, David Hirshleifer, and Siew Hong Teoh. "Investor psychology in capital markets: evidence and policy implications." Journal of Monetary Economics 49, no. 1 (January 2002): 139–209. http://dx.doi.org/10.1016/s0304-3932(01)00091-5.

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Ahmad, Zamri, Haslindar Ibrahim, and Jasman Tuyon. "Institutional investor behavioral biases: syntheses of theory and evidence." Management Research Review 40, no. 5 (May 15, 2017): 578–603. http://dx.doi.org/10.1108/mrr-04-2016-0091.

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Purpose This paper aims to review the theory and empirical evidence of institutional investor behavioral biases in the lenses of behavioral finance paradigm. It surveys the research specifically focusing on behavioral biases among institutional investors in investment management activities worldwide. Design/methodology/approach A literature survey is done to gather and synthesize evidence on behavioral biases of institutional investors. Findings The survey and analysis reveal the following findings. First, the theoretical underpinning of investors’ irrational behavior has been neglected in behavioral finance research. Second, the behavioral heuristics and biases are dynamic and complex. Third, understanding behavioral biases’ origin, causes and effects requires interdisciplinary perspectives from the fields of psychology, sociology and biology. Originality/value The analysis and alternative perspectives drawn in this paper provide new insights into the field of behavioral finance and aims to suggest researchers, practitioners and regulators on the next course of actions.

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Pascual Ezama, David, Beatriz Gil-Gómez De Liaño, and Barbara Scandroglio. "Economy, psychology and stock investment: analysis of variables that participate in the process of decision making." International Journal of Psychological Research 5, no. 1 (June 30, 2012): 5–17. http://dx.doi.org/10.21500/20112084.744.

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The ININBE questionnaire has been recently validated in order to measure the variables that affect individual investor behavior in stock exchange. The lack of information about the methodology, items selection and psychometric properties of the instruments used in other researches has shown the necessary to elaborate and validate a questionnaire. In the present work we have applied the ININBE questionnaire to 257 individual investors. We have found interesting results about the relationship between the “psychological” and “economical” variables with individual investor’s characteristics.

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Rehan, Muhammad, Jahanzaib Alvi, Lubna Javed, and Baber Saleem. "Impact of Behavioral Factors in Making Investment Decisions and Performance: Evidence from Pakistan Stock Exchange." Market Forces 16, no. 1 (June 9, 2021): 22. http://dx.doi.org/10.51153/mf.v16i1.435.

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Market irregularities and irrational behavior triggered investor’s changes in the stock market, and this has led to an investigation into the impact of various behavioral biases and factors affecting decision-making for individual investors. The quality of individual investor behavior in making stock investment decisions is very important to be understood as a reference of the movement of the capital market. This study investigated the role of behavioral finance and investor psychology in investment decision-making at the Pakistan Stock Exchange (PSE). Using a sample of 147 individual investors, the study established that behavioral factors such as Herding, Heuristic, Market and Prospect that affected the decisions of the investors operating at the Pakistan Stock Exchange (PSE). As there are a few studies in Pakistan related to behavioral finance, so this study mainly contributes to the field of behavioral finance in Pakistan. This study focusses on existing theories of behavioral finance which led to develop the hypothesis. The result of the analysis is that the four variables have greatly influenced the investment decision and return on investment. All behavioral variables have a significant impact on the decision-making process of investors, which led to the acceptance of all assumptions regarding the level of influence of behavioral factors in decision making for individual investors

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Yang, Wenqi, Chenzi Yang, Bing Yang, and Guoqiang Feng. "Time-Varying Research on Investors’ Trading Psychology Rational and Irrational Market Sentiment Based on the Perspective of 5G Networks and Information Economics." Wireless Communications and Mobile Computing 2022 (February 25, 2022): 1–11. http://dx.doi.org/10.1155/2022/3594213.

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Amid the ongoing rapid digitalization, consistent advancements in technologies such as 5G have become crucial. The demand for 5G technologies is expected to surge owing to the continued hybrid work culture, and 5G stock will emerge from the stocks of older tech and telecom companies. However, the COVID-19 epidemic continues to spread globally, causing a major impact on China’s macroeconomy and the stock market. It has a significant impact on the trading behavior of investors in 5G stock. Based on the framework of information economics and 5G Networks, we use the TVP-VAR model to empirically analyze the time-varying effects of rational and irrational market sentiment on investor herd behavior and overconfidence. The results show that rational market sentiment can always suppress herding behavior and overconfidence, while irrational market sentiment intensifies investors’ herd behavior most of the time, suppressing overconfidence in the short term and turning it into a positive effect in the medium term, and its long-term effects have almost disappeared. Compared with rational market sentiment, irrational market sentiment has a more direct and significant impact on herd behavior. The absolute values of the impulse responses of both market sentiments to the impact of overconfidence are relatively close. In addition, both market sentiments have typical characteristics of vulnerability to investor psychology. After the epidemic spread, both market sentiments accelerate the generation of overconfidence, while the positive impact on herd behavior gradually decreases. Our research shows that in the environment of information asymmetry, although investors will restrain their irrational conformity psychology, they still have not demonstrated their reasonable investment capabilities. Our conclusions will provide some references for government regulatory agencies and market investors under the background of the epidemic.

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De Bondt, Werner. "Investor and market overreaction: a retrospective." Review of Behavioral Finance 12, no. 1 (March 9, 2020): 11–20. http://dx.doi.org/10.1108/rbf-12-2019-0175.

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PurposeAre the capital markets of leading industrialized nations rational and efficient? This powerful hypothesis was badly dented by the work of De Bondt and Thaler (1985) on stock market overreaction and by subsequent research on momentum and reversals in prices and earnings.Design/methodology/approachHuman psychology, at times predictably irrational, drives the markets. This paper investigates this issue.FindingsThe author reviews the origins of the idea of overreaction, how behavioral insights modify standard asset pricing theory and how they contribute to our understanding of the world of finance.Originality/valueThe paper reveals the origins of the idea of overreaction, how behavioral insights modify standard asset pricing theory and how they contribute to our understanding of the world of finance.

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Frank, AG. "Stock market over and under-reaction: Evidence from investor psychology." Investment Analysts Journal 33, no. 59 (January 2004): 5–14. http://dx.doi.org/10.1080/10293523.2004.11082454.

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Loibl, Cäzilia, and Tahira K. Hira. "Investor information search." Journal of Economic Psychology 30, no. 1 (February 2009): 24–41. http://dx.doi.org/10.1016/j.joep.2008.07.009.

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Mehmood, Faisal, Taqadus Bashir, and Altamash Khan. "Financial Literacy as a Life-Saver: Moderating the Contribution of Behavioral Biases towards Investment Decisions." Global Social Sciences Review IV, no. III (September 30, 2019): 106–14. http://dx.doi.org/10.31703/gssr.2019(iv-iii).14.

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The assumption of investor rationality had been central to developing an understanding of financial markets and decision outcomes. But the formation and consequent burst of tech-stock bubble changed the paradigm and shifted towards the behavioral interruption aspect of investor psychology. The study aimed to investigate the relationship of two heuristics and one emotional bias with financial decisions and the moderating effect of financial literacy on the said relationship. Primary data is gathered through questionnaire from 208 clients of national savings. Moderation analysis was done and the effect of biases on the financial decisions was found significant enough. Furthermore, financial literacy moderates this relationship positively only for heuristics but no moderation found for selfcontrol. The policymakers can design their financial instruments and strategies by keeping in view the implication of biases on investor’s decision. Moreover, periodic financial literacy sessions can be arranged to create awareness among investors and advisors.

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Burke, Ronald J., and Gene Deszca. "Career Orientations, Satisfaction and Health among Police Officers: Some Consequences of Person-Job Misfit." Psychological Reports 62, no. 2 (April 1988): 639–49. http://dx.doi.org/10.2466/pr0.1988.62.2.639.

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Four career orientations proposed by Cherniss (1980) were related to measures of satisfaction and well-being among men and women in police work. The career orientations were Self-investors, Social Activists, Careerists, and Artisans. Self-investors, a type of nonwork orientation, reported greater burnout, greater stress, and the least satisfying work setting. In addition, Self-investors exhibited poorer individual well-being (more psychosomatic symptoms, greater negative feeling states). Careerists and Artisans reported greater work satisfaction, least burnout, the least stress, and the most positive work setting. The concept of person-job fit, with the development of the Self-investor career orientation as a consequence of person-job misfit, is proposed as an explanation of these findings.

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Gyanwali, Inju, and Geeta Neupane. "Individual Investors Psychology and Investment Decision in NEPSE." Lumbini Journal of Business and Economics 9, no. 1-2 (June 30, 2021): 43–53. http://dx.doi.org/10.3126/ljbe.v9i1-2.45986.

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This study attempts to examine individual investor’s psychology and their investment decision in NEPSE with an objective to identify whether the individual psychological factors and their biases influence decision making in Nepalese stock market. The sample size of 347 was taken from broker office located in Butwal city for this study. Psychological factors named anchoring, herding, mental accounting, overconfidence; regret aversion and loss aversion were undertaken. These factors were further categorized as cognitive bias (anchoring, herding and mental accounting) and emotional bias (overconfidence, regret aversion and loss aversion). Self-administered questionnaire were used to collect data. In the same way descriptive and analytical research design were used to analyze the data. Multiple regression analysis showed that overconfidence, herding and loss aversion have impact on investment decision whereas anchoring, mental accounting and regret aversion does not have an impact on individual investors investment decision. The result further showed that cognitive and emotion biases both have positive and significant influence on the investment decision making of individual investor in Nepalese stock exchange.

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Wong, Elaine M., Margaret E. Ormiston, and Michael P. Haselhuhn. "A Face Only an Investor Could Love." Psychological Science 22, no. 12 (October 31, 2011): 1478–83. http://dx.doi.org/10.1177/0956797611418838.

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Researchers have theorized that innate personal traits are related to leadership success. Although links between psychological characteristics and leadership success have been well established, research has yet to identify any objective physical traits of leaders that predict organizational performance. In the research reported here, we identified leaders’ facial structure as a specific physical trait that correlates with organizational performance. Specifically, we found that firms whose male CEOs have wider faces (relative to facial height) achieve superior financial performance. Decision-making dynamics within a firm’s leadership team moderate this effect, such that the relationship between a given CEO’s facial measurements and his firm’s financial performance is stronger in firms with cognitively simple leadership teams.

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Hamilton, Erin L., and Jennifer Winchel. "Investors' Processing of Financial Communications: A Persuasion Perspective." Behavioral Research in Accounting 31, no. 1 (July 1, 2018): 133–56. http://dx.doi.org/10.2308/bria-52211.

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ABSTRACT In this paper, we provide a comprehensive summary of persuasion theories from a variety of fields (e.g., psychology, marketing, and economics) and describe how these theories can enhance our understanding of how investors process and respond to financial communications (e.g., firm disclosures and analyst research reports). We draw on dual-process theories of persuasion to describe the circumstances under which an investor's response to a financial disclosure is likely to represent the investor's intuition or reflect more deliberate and analytical processing of financial information. Examples from the financial accounting literature are used to illustrate how dual-process thinking and reasoning operate within a financial reporting domain. In addition, we offer broad suggestions on how financial accounting researchers can use the psychology of persuasion to understand and form empirical predictions about investor processing of and reaction to managers' and analysts' financial disclosures.

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Jain, Nidhi, and Bikrant Kesari. "Impact of Behavioral Biases in Financial Risk Tolerance Ability of Mutual Fund Investors." Tobacco Regulatory Science 7, no. 5 (September 30, 2021): 2748–65. http://dx.doi.org/10.18001/trs.7.5.1.45.

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Objective: The Behavioral bias is the term that deals with the investors’ psychology about their investment decision with their investment expertise. Every individual is biased, according to standard economic theory by his behavior and experiences which are rational. Methods: This research seeks to segregate mutual fund holders into various groups (persons and professionals) based on Behavioral biases and then investigates whether these Behavioral biases are influencing the level of knowledge of investors and the financial risk tolerance of certain mutual funds. Statistical tools compare investors characteristics and analyse how Behavioral biases are associated. Results: The factors analysed are financial circumstance, Type of Investors, Asset class preference, Time Horizon and Purpose of Investment. The primary information was gathered from 250 Central India mutual fund investors dependent on Judgment sampling. CFA, Correlation, MANOVA and Regression. Conclusions: Findings shows the effect of the behavior bias has positive impact on mutual fund investor awareness and financial risk tolerance.

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Sui, Yunyun, Jiangshan Hu, and Fang Ma. "A Mean-Variance Portfolio Selection Model with Interval-Valued Possibility Measures." Mathematical Problems in Engineering 2020 (August 29, 2020): 1–12. http://dx.doi.org/10.1155/2020/4135740.

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In recent years, fuzzy set theory and possibility theory have been widely used to deal with an uncertain decision environment characterized by vagueness and ambiguity in the financial market. Considering that the expected return rate of investors may not be a fixed real number but can be an interval number, this paper establishes an interval-valued possibilistic mean-variance portfolio selection model. In this model, the return rate of assets is regarded as a fuzzy number, and the expected return rate of assets is measured by the interval-valued possibilistic mean of fuzzy numbers. Therefore, the possibilistic portfolio selection model is transformed into an interval-valued optimization model. The optimal solution of the model is obtained by using the order relations of interval numbers. Finally, a numerical example is given. Through the numerical example, it is shown that, when compared with the traditional possibilistic model, the proposed model has more constraints and can better reflect investor psychology. It is an extension of the traditional possibilistic model and offers greater flexibility in reflecting investor expectations.

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Powell, Philip A., Kaisa Puustinen-Hopper, Martin de Jode, Panagiotis Mavros, and Jennifer Roberts. "Heart versus head: Differential bodily feedback causally alters economic decision-making." Quarterly Journal of Experimental Psychology 71, no. 9 (January 1, 2018): 1949–59. http://dx.doi.org/10.1080/17470218.2017.1373359.

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Metaphorically, altruistic acts, such as monetary donations, are said to be driven by the heart, whereas sound financial investments are guided by reason, embodied by the head. In a unique experiment, we tested the effects of these bodily metaphors using biofeedback and an incentivized economic decision-making paradigm. Participants played a repeated investment game with a simulated partner, alternating between tactical investor and altruistic investee. When making decisions, participants received counterbalanced visual feedback from their own or a simulated partner’s heart or head, as well as no feedback. As investor, participants transferred a greater proportion of their endowments when exposed to visual feedback from their own head than to feedback from their own heart or no feedback at all. These effects were not observed when the source of the feedback was the simulated partner. As investee, heart feedback predicted greater altruistic returns than head or no feedback, but this effect did not differ based on source (own vs partner). Consistent with a dual-process framework, we suggest that people may be encouraged to invest more or be more altruistic when receiving bodily feedback from conceptually diametric sources.

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Prosad, Jaya Mamta, Sujata Kapoor, and Jhumur Sengupta. "Behavioral biases of Indian investors: a survey of Delhi-NCR region." Qualitative Research in Financial Markets 7, no. 3 (August 3, 2015): 230–63. http://dx.doi.org/10.1108/qrfm-04-2014-0012.

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Purpose – The purpose of this paper is to examine the presence the behavioral biases in Indian investors specifically, overconfidence, excessive optimism (pessimism), herd behavior and the disposition effect. It further investigates the role of demographics and investor sophistication in influencing the biases. Finally, it reveals which bias is most prevalent in the Indian context. Design/methodology/approach – For this purpose, a survey has been conducted on the investors of the Delhi/NCR area. The data have been collected with the help of a structured questionnaire that is analyzed with the help of relevant statistical tools. Findings – The survey evidence shows that behavioral biases are dependent on investors’ demographics and their trading sophistication with highest influencing factors being age, profession and trading frequency. Each bias corresponds to a specific set of investor characteristics and overconfidence comes out to be the most important bias in the Indian context. Research limitations/implications – The potential limitations of the present survey can be ascribed to socially desirable responses and their difference with actual market behavior. Further, due to time and resource constraint, the data set is limited to investors of only Delhi/NCR. Practical implications – This study is most relevant for financial advisors, as it facilitates them in gaining a better understanding of their clients’ psychology. It can aid them in developing behaviorally modified portfolio, which best suits their clients’ predisposition. Originality/value – The paper gives a unique insight on the investors’ profile corresponding to each bias under consideration. It not only updates the evidence on behavioral biases but also highlights which bias is the most influential in the Indian context.

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Burke, Ronald J. "Career Orientations and Type a Behavior in Police Officers." Psychological Reports 57, no. 3_suppl (December 1985): 1239–46. http://dx.doi.org/10.2466/pr0.1985.57.3f.1239.

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This study investigated the career orientations of Type A men and women in police work. Four career orientations (Social Activist, Self-investor, Careerist, Artisan) were related to a measure of Type A behavior. 370 men and 36 women (and 20 others) completed questionnaires. Type A behavior was positively related to Careerist and negatively related to Self-investor and Artisan orientations. However, significant differences between men and women were found. Among women, Type A behavior was positively related to Social Activist and negatively related to Self-investor orientations. Among men, Type A behavior was positively related to Careerist and negatively related to Artisan orientations.

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Cheng, Chiao-Ming, Alex YiHou Huang, and Ming-Che Hu. "Investor Attention and Stock Price Movement." Journal of Behavioral Finance 20, no. 3 (December 20, 2018): 294–303. http://dx.doi.org/10.1080/15427560.2018.1513404.

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Clark-Murphy, Marilyn, and Geoffrey Soutar. "Individual Investor Preferences: A Segmentation Analysis." Journal of Behavioral Finance 6, no. 1 (March 2005): 6–14. http://dx.doi.org/10.1207/s15427579jpfm0601_2.

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Cianci, Anna M. "The Impact of Investor Status on Investors' Evaluation of Negative and Positive, Separate and Combined Information." Journal of Behavioral Finance 9, no. 3 (September 8, 2008): 117–31. http://dx.doi.org/10.1080/15427560802333589.

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Qi, Sheng. "How do Institutional Investors Influence Corporate Governance under Legal Psychology." Journal of Environmental and Public Health 2022 (August 8, 2022): 1–10. http://dx.doi.org/10.1155/2022/5004309.

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In order to give full play to the role of field research of legal psychology institutional investors in promoting enterprise environmental governance, this article puts forward the research on how legal Psychology institutional investors affect the corporate governance environment. Taking the listed companies in the A-share heavy pollution industry of Shenzhen Stock Exchange from 2018 to 2021 as a sample, this article tests the impact and action mechanism of legal Psychology institutional investors’ field research on corporate environmental governance. Hypothesis 1: the field research of legal Psychology institutional investors can promote the environmental governance of enterprises. Hypothesis 2: for enterprises with poor environmental information disclosure, the impact of field research of legal Psychology institutional investors on enterprise environmental governance is more obvious. Hypothesis 3: for enterprises with more concentrated distribution, the impact of field research of legal Psychology institutional investors on enterprise environmental governance is more obvious. Leadership power has the three attributes of management, social psychology, and law, and its essence is the socialization of legal psychology. Under the perspective of legal psychology, the psychological mechanism of leadership power is mainly manifested in three aspects: increasing the social distance, activating the approach system, and inducing the control illusion. The cumulative number of field investigations conducted by the enterprise in the current year +1 is adopted, and the logarithm is taken as the measurement index of the field investigation of legal Psychology institutional investors, which is expressed by Investigate. In the robustness test part, the virtual variables are set by whether the enterprise is investigated in the field in that year. The results show that in uncontrolled years and industries, the regression coefficients of legal Psychology institutional investor investigation and enterprise environmental protection capital investment are 0.0703 and 0.2416, respectively, which are significant at the level of 5%. After controlling the year and industry, the regression results show that the field investigation of legal Psychology institutional investors and enterprise environmental capital investment are still positive, significantly at the level of 5% and 1%, respectively. The environmental capital investment of enterprises with poor environmental information disclosure (0.479 and 1.161) is higher than that of enterprises with good environmental information disclosure (0.252 and 0.618), and the mean t-test maintains the significance level of 1%, indicating that the impact of field research on enterprise environmental governance is more obvious in enterprises with poor environmental information disclosure, which preliminarily verifies Hypothesis 2 of this article. Similarly, when the distribution of enterprises is more concentrated, the environmental capital investment of enterprises is 0.536 and 1.286, which is higher than that of enterprises with a more dispersed distribution (0.315 and 0.778) and maintains a significant level of 1%. The results show that obtaining environmental information is helpful for stakeholders to supervise enterprise environmental governance. Therefore, we should formulate and issue policies and regulations that require enterprises to disclose environmental information as soon as possible, improve the standards of environmental information disclosure, establish an enterprise environmental information disclosure platform, and improve the level and quality of environmental information disclosure.

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Goethner, Maximilian, Lars Hornuf, and Tobias Regner. "Protecting investors in equity crowdfunding: An empirical analysis of the small investor protection act." Technological Forecasting and Social Change 162 (January 2021): 120352. http://dx.doi.org/10.1016/j.techfore.2020.120352.

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Rout, Biswajit, Ayesha Mohanty, and Akash Kumar Kacharia. "BULL VS BEAR MARKET- AN INVESTMENT GAME ANALYSIS USING MOVING AVERAGE METHOD." International Journal of Research -GRANTHAALAYAH 5, no. 11 (November 30, 2017): 425–43. http://dx.doi.org/10.29121/granthaalayah.v5.i11.2017.2376.

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This paper aims to analyse and interpret the investor perception about investing in stock market. The market is often referred as to bull or bear market. This is key importance for financial decisions and economic analysis. The market behaves differently in these two phase. The bull market is identified when there is constant rise of stock prices whereas bear market is referred when there is fall in stock prices. These phases occur due to different trends of market or economy. Investor sentiments get affected by this. The paper tries to identify and provides understanding about the factors that causes and how it affects the psychology of investors. There are different analysis techniques used by analysts. The popular and common analysis theories are Fundamental Analysis and Technical Analysis. This paper is based on technical analysis of different category of stock with respect to wide spread industry like FMCG sector, Banking sector, Oil and Natural Gas sector, Automobiles sector and Pharmaceutical Sector etc. The paper also tries to establish whether the market is having a Bull Run or bear. The movement of stock prices is analysed in technical analysis. The data of stock prices are collected from NSE official site. The analysis in done for 5 years span starting from April 2012 to Mar 2017. Even to understand better, analysis of the stock is done on 100days moving average. Prevailing news during those times are also considered to interpret the behaviour of the investors.

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Jiang, Miao. "The Impact of Financial Information on Noise Traders: Based on the Perspective of Behavioral Finance." Financial Forum 9, no. 1 (May 27, 2020): 28. http://dx.doi.org/10.18282/ff.v9i1.811.

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<p>In China's incomplete stock market which mainly consists of retail games and short-term operations, both of the high stock turnover rate and P/E ratios reflect excessive noise trading. This article focuses on the characteristic that individual investors are susceptible to financial media information, combined with the development and characteristics of financial media. From the perspective of behavioral finance, this paper analyzes the impact of financial media on noise trading. Using behavioral finance and psychology-related knowledge, investor behavior can be better understood, so as the motivation behind noise trading. Finally, in order to promote the healthy development of the stock market, this paper makes recommendations to improve the efficiency of the capital market.</p>

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José García, C., Begoña Herrero, and Ana M. Ibáñez. "Information and Investor Behavior Surrounding Earnings Announcements." Journal of Behavioral Finance 15, no. 2 (April 3, 2014): 133–43. http://dx.doi.org/10.1080/15427560.2014.908882.

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Journal articles on the topic 'Investor psychology'

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