.png)
Influence of Demographic Variables on the Personality Traits of Retail Investors – An Empirical Study
Author(s) : Dr. Prabha Rajagopalan, Dr. S. GurusamyVolume & Issue : VOLUME 2 / 2014 , ISSUE 2
Page(s) : 25
Abstract
Currently, stock markets are undergoing bearish phase and investors are not enthusiastic about their current expectation and merely adopting ‘wait and watch’ strategy. So, the individual investors ought to ponder and reexamine their investment blunders. The study confirms that males are more active in the financial market but have the tendency to ride the momentum with increase in their portfolio value. Factor analysis by principal component method has been applied to reduce the number of personality traits into ten meaningful factors respectively. The multiple regression analysis is brought to bear on the problem of establishing the collective influence of socio-demographic variables, financial knowledge, investment objectives, appraisal techniques and strategies, portfolio composition pattern on the personality traits. Results reveal that annual rate of return on equity significantly determines the occurrence of self enhancement bias, illusion of control and performance attribution bias. Time spent for investment analysis influences self enhancement bias and illusion of control. Shares held for speculation in the portfolio of retail investors the occurrence of self enhancement bias. Number of shares traded by the investor determines cognitive dissonance and performance attribution bias of the investors. Investment experience influences illusion of control and performance attribution bias.
Keywords
financial Knowledge, personality traits, performance attribution bias, illusion of control, ‘wait and watch’ strategy.
References
Arvid O. I. Hoffmann,HershShefrin,Joost M. E . P e n n i n g s ( 2 0 1 0 ) B e h a v i o r a l Portfolio Analysis of Indi vidu al Investors http://papers.ssrn.com/sol3/paper s.cfm? abstract_id=1629786
Asch, S. E. (1956). Studies of independence and conformity: A minority ofone against a unanimous majority. Psychological Monographs: General and Applied, 70, 1– 70 [whole no. 416].
Asendorpf, J. B., &Wilpers, S. (1998). Personality effects on social relationships. Journal of Personality and Social Psychology, 74, 1531–1544.
Ashkanasy, N., &Gallois, C. (1987) Locus of control and attributions for academic performance of self and others. Aust ralia n Journal of Psychology, 39, 293-305.
Audrey Lim Li Chin (2012),Psychological Biases and Investor Behaviour: Survey Evidence from Malaysian Stock Market, International Journal on SocialScience, Economics & Art,Vol.2 (2012)No.2, ISSN:2088-5342,pp.74-80.
Bloch, H.A. The sociology of gambling. American Journal of Sociology 57 3 (1951), pp. 215–221.
Campbell,W. K., &Sedikides, C. (1999). Selfthreat magnifies the self-serving bias: A meta-analytic integration. Review of General Psychology, 3, 23–43.
Cantor, J., and R. W. Engle, 1993, Working memory capacity as long-term memory activation: An individual-differences approach, Journal of Experimental Psychol ogy: Learning, Memory and Cognition 19, 1101- 1114.
Costa, T. T., & McCrae, R. R. (1992). Revised NEO Personality Inventory manual. Odessa, FL: Psychological Assessment Resources.
Coval, Joshua D. and Tyler Shumway (2005): Do behavioral biases affect prices?, Journal of Finance,60, 1–34.
Cronbach, L. J. (1957). The two disciplines of scientific psychology.American Psycho logist, 12, 671–684.
Da Costa N, Mineto C, Da Silva S (2008). Disposition effect and gender. Appl. Econ. Lett., 15(6): 411-416.
Daniel Nettle and Bethany Liddle (2008) Agreeableness is Related to Social-cognitive, but Not Social-perceptual, Theory of Mind , European Journal of Personality Eur. J. Pers. 22: 323– 335
Daniel, K., Hirshleifer, D., Subrahmanyam, A. (1998). Investor psychology and
security market under- and overreactio ns. Journal of Finance 53 (6),1839–1885.
DeNeve, K. M., & Cooper, H. (1998). The happy personality: A meta-analysis of 137 personality traits and subjective well-being. Psychological Bulletin, 124(2), 197–229.
Deutsch, M. & Gerard, H. B. (1955). A study of normative and informative social influences upon individual judgment. Journal of Abnormal and SocialPsychology, 51, 629-636.
Hoffmann, A. O. I., W. Jager, and E. J. H. V. Eije. Social simulation of stock markets: Taking it to the next level. Journ al of Artificial Societies and Social Simulation, 10(2), 2007.
Kim, K. A. and Nofsinger, J. R. (2003). The Behavior and Performance of Individual Investors in Japan‘, Working Paper.
King, L. A., & Broyles, S. J. (1997). Wishes, gender, personality, and well-being. Journal of Personality, 65 (1), 49-76.
Lundeberg, Mary A., Paul W. Fox, and Judith Puncochar. (1994). “Highly Confident but Wrong: Gender Differences and Similarities in Confidence Judgments.” Journal of EducationalPsychology, vol. 86, no. 1 (March):114–121.
McCrae, R., & Costa, P. T. (1991). Adding Liebe und Arbeit: The full five-factor model and well-being. Personality and Social Psychology Bulletin, 17(2), 227–232.
McCrae,R.R& Costa : P.T. , J r. (2006). Personality in adulthood : A five factor
theory perspective (2nd edition). NewYark: Guilford press.
Medill Colleen (2007), “Participant Perceptions and Decision-Making Concerning
Retirement Benefits, “paper present to the 9th Annual Joint Conference of the
Retirement Research Consortium, Washington, D.C., August 9-10, 2007.
Meier, B. P., & Robinson, M. D. (2004). Does quick to blame mean quick to anger? The role of Agreeableness in dissociating blame and anger. Personality and Social Psychology Bulletin, 30,856–867.
Menkhoff L, Schmidt U, Brozynski T (2006). The impact of experience on risk taking, overconfidence, and herding of fund Complementary survey evidence. Eur. Econ. Rev., 50:1753-1766.
Miculincer, M. (1997). Adult attachement style and information processing: individual differences in curiosity and cog niti ve closure. Journal of Personality and Social Psychology, 72(5), 1217-1230.
Miller Dale T., and Michael Ross,(1975), “Selfserving biases in attribution of causality: Fact or fiction?” PsychologicalBulletin 82, 213-225.
Miller, D. T, & Ross, M. (1975). Self-serving biases in attribution of causality: Fact or fiction? Psychological Bulletin, 82,213-225.
Olson, K. R., & Weber, D . A. (2004). Relations between big five traits and
fundamental motives. Psychological Repor ts, 95 (3), 795-802.
Roberts, B. W., Jackson, J. J., Fayard, J. V., Edmonds, G.W., &Meints, J. (2009). Conscientiousness. In M. R. Leary & R. H. Hoyle (Eds.), Handbook of individual differences in social behavior (pp. 369– 381). New York: Guilford Press.
Simon, H. A. (1991).Bounded rationality and organizational learning. Organization Science, 2(1): 125-134.
Slovic, P. (1972).Psychological study of human judgment: Implications for investment decision making. Journal of Finance, 27(4):779-799.
Solt, M., and M. Statman. (1989). “Good Companies, Bad Stocks.” Journal of Portfolio Management, pp. 39 – 44.
Spigelman, A., Spigelman, G.,&Englesson, I. L. (1991). Cross cultural differences between American and Swedish children regarding
their egocentricity index. Tidsskrift for Norsk Psykologforening, 28, 316-319.
Stango, Victor and Jonathan Zinman (2007), “Fuzzy Math and Red Ink: When the Opportunity Cost of Consumption is Not What It Seems,” Working Paper, Dar tmouth College.
Statman, M. (1999). Behavioral Finance: Past Battles and Future Engagements‘, Fina ncial Analysts Journal, 55 (6), pp. 18-27.
Statman, M. (2004). What Do Investors Want? Journal of Portfolio Management, 153-161.
Watson, D., & Clark, L. A. (1997). Extraversion and its positive emotional core. In R. Hogan, J. Johnson,& S. Briggs (Eds.), Handbook of personality psychology (p. 767- 793). San Diego,CA: Academic Press.
Weber M, Camerer C (1998). The disposition effect in securities trading: An experimental analysis. J. Econ. Behav. Organ., 33(2): 167-184.
Weber, E.U., Blais, A.-R., & Betz, N.E. (2002). A domain-specific risk-attitude scale: Measuring risk perceptions and risk behaviors.Journal of Behavioral Decision Making, 15, 263–290.
Wong, Alan and Bernardo J. Carducci.(1991). Sensation Seeking and Financial Risk Taking in Everyday Money Matters. Journal of Business and Psychology, 5#4, Summer: 525-530.
Zoghalami, Faten, and HamadiMatoussi (2009), A Survey of Tunisian Investors, Internatio nal Research Journal of Finance and Economics, Issue 31, pp. 66-81.
Zuchel H (2001) What drives the disposition effect? SFB 504 discussion paper no. 01–39.University of Mannheim.
Zuckerman, M. (1979). Attribution of success and failure revisited, or: The motivational bias is alive and well in attribution theory. Journal of Personality, 47, 245-287.
