Evaluating stock trading behaviour: Information sources nexus through intrinsic and extrinsic motivation

Abstract

This study examines the effects of sources of information, including word‐of‐mouth (WOM) communication, and financial advice, on intrinsic and extrinsic motivations and stock trading behaviour in Pakistan. To test the model, we gathered 477 survey responses from individual stock investors. Our results exhibit that WOM communication and financial advice significantly influence stock trading behaviour. We also find that intrinsic motivations significantly mediate between financial advice and stock trading behaviour. Extrinsic motivations have significant mediation effects between sources of information and stock trading behaviour. Taken together, the results indicate that financial advice indirectly sparks stock trading through intrinsic and extrinsic motivations, whereas WOM communication performs the same function only through extrinsic motivations. The study results have several theoretical and practical implications for investors, stock brokerage firms, regulators, and governments.