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Investment characteristics, stock characteristics and portfolio diversification of finance professionals

Author

Listed:
  • Mohammad Tariqul Islam Khan
  • Siow-Hooi Tan
  • Lee-Lee Chong
  • Hway-Boon Ong

Abstract

This study estimates if Malaysian finance professionals' investment characteristics and stock characteristics' preferences affect their portfolio diversification, and whether the effects of these predictors vary across professionals' gender, income and experience. Employing a survey and ordinal regression models, the findings demonstrate that investment characteristics such as active trading, usage of internet and telephone, and saving for retirement objective are likely to improve diversification, whereas diversification worsens with the spending less time on researching investment. With respect to stock's characteristics, trading volume and return on asset are related to better diversification, whereas profit margin and return on equity are related to least diversification. The predictors are found to vary across professionals' gender, income and experience. The results suggest that finance professionals need to consider spending more time on researching investment and stock's characteristics in portfolio composition.

Suggested Citation

  • Mohammad Tariqul Islam Khan & Siow-Hooi Tan & Lee-Lee Chong & Hway-Boon Ong, 2017. "Investment characteristics, stock characteristics and portfolio diversification of finance professionals," Borsa Istanbul Review, Research and Business Development Department, Borsa Istanbul, vol. 17(3), pages 164-177, September.
    • Handle: RePEc:bor:bistre:v:17:y:2017:i:3:p:164-177
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    Citations

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    Cited by:

    1. Mohammad Tariqul Islam Khan, 2022. "Prior perceived losses and investment objectives after stock market crisis: a moderated-mediation model of risk tolerance and loss aversion," SN Business & Economics, Springer, vol. 2(7), pages 1-22, July.
    2. Zain UI Abideen & Zeeshan Ahmed & Huan Qiu & Yiwei Zhao, 2023. "Do Behavioral Biases Affect Investors’ Investment Decision Making? Evidence from the Pakistani Equity Market," Risks, MDPI, vol. 11(6), pages 1-32, June.
    3. Prince T. Medina, 2018. "Equity Analysis in Buying Company Shares on the Philippine Stock Exchange," GATR Journals jfbr148, Global Academy of Training and Research (GATR) Enterprise.
    4. Geetika Madaan & Sanjeet Singh, 2019. "An Analysis of Behavioral Biases in Investment Decision-Making," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 10(4), pages 55-67, July.

    More about this item

    Keywords

    Investment characteristics; Stock characteristics; Finance professionals;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles

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