Personality Traits and Stock Investment of Individuals

Abstract

Behavioral finance has been widely applied in the financial realm from psychological perspectives focusing on herding and disposition effects. However, little research is devoted to the influences of personality traits on the stock investment intentions of individuals. This study extends the theory of planned behavior incorporating the big five personality taxonomies to investigate the effects of the personality traits of individual investors on stock investment intention. Utilizing partial least squares based on structural equation modeling techniques with a sample of 385 subjects, empirical results indicate that the stock investment intentions of individuals are significantly affected by subjective norm, attitude, and perceived behavioral control, and subjective norm significantly affects attitude. Individuals with open and agreeable personalities tend to have influences on subjective norm. Neurotic individuals tend to have negative attitudes toward stock investment. The perceived behavioral control of individuals regarding stock investment is influenced by the personality traits of agreeableness, extroversion, conscientiousness, and openness. Prior stock trading experiences significantly affect the relationships between attitude and stock investment intention, as well as on the linkages between extroversion and subjective norm, attitude, and perceived behavioral control. This study concludes with the discussion of the findings, with insights into theory and managerial implications.

Psychological and behavioural responses to Coronavirus disease 2019: The role of personality

“…For instance, individuals higher in extraversion reported shorter duration estimates until the USA recovers from financial losses. These individuals may be more likely to invest in the stock markets (Lai, 2019) and may also have greater consumer confidence, which may both positively contribute to the recovery of the US economy. Furthermore, duration estimates were interrelated with precautions and preparations (Table S3), suggesting that perceptions about the duration affect people’s actual engagement in precautions and preparations.…”

Analysis of Young Generations toward Stock Investment Intention: A Preliminary Study in an Emerging Market

“…The development process results in a new theory explaining the relationship between one's intention and behavior more in-depth, called TPB (Ajzen, 1991). As shown in Figure 3, in TPB, perceived behavioral control is added as a new factor or construct to explain one's intentions comprehensively (Lai, 2019). The addition of this construct is intended to overcome the limitations and lack of resources used by someone in behaving (Panggalih & Baridwan, 2012).…”

“…Moreover, a study about how an accountant practitioner behavior from TPB perspective on managing the firm's earnings has also been conducted (Yen, Chang, & Wu, 2016). Furthermore, in the context of stock investment, those TPB proxies were found to have a significant influence in explaining individual investment intentions (Lai, 2019). In another context of stock investment, someone would be happy to participate in activities, such as seminars and workshops related to investment, learn about investment offers, or do anything that can support one's investment activities, if someone already has an intention to it (Situmorang, Andreas, & Natariasari, 2015).…”

“…Several distinct works of literature have been published, which revealed that psychological and emotional factors had influences on investors' decision to invest (Griffith, Najand, & Shen 2020;Lo, Repin, & Steenbarger, 2005;Statman et al, 2008). According to Lai (Lai, 2019), in which studied the effect of an individual's personality traits on a stock investment by examining investor's intention, all stakeholders involved, like the government as the policymaker and managers of security firms, would have a better picture about how to encourage people awareness regarding stock investment effectively with better regulations, campaigns or programs, and services (security firms). In short, studying people's intention to involve in any investment activity must have several good implications, such as improving the national economy level.…”

Religiosity as a Moderator of the Relationship between Personality Trait and Perceived Risk: A Conceptual Framework

“…The neurotics tend to experience negative emotions such as anger, anxiety, depression, self-consciousness, and vulnerability, typically associated with amplified perceptions of risk or danger (Chauvinet al, 2007). Individual with this type of personality unwilling to invest in the short term (Mayfield et al,2008), have lower net value change over time (Asebedo, 2016a) andtend to have a negative attitude toward stock investment (Lai, 2019).Individuals who have low score neuroticism have confidence in themselves which means emotional stability. There are facets of emotional health, such as calmness, impulse control, cool-headedness, and peacefulness.…”