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Personality traits and investor sentiment

Author

Listed:
  • H. Kent Baker
  • Satish Kumar
  • Nisha Goyal

Abstract

Purpose - This paper examines the relation between the Big Five model of personality traits and behavioral biases (overconfidence, disposition effect, anchoring, representativeness, metal accounting, emotional bias and herding) of Indian individual investors when making investment decisions. Design/methodology/approach - The authors use a structured questionnaire to obtain responses from 515 stock investors in India between August 2016 and January 2017. Based on components identified through factor analysis, the authors use structural equation modeling to examine the effect of specific personality traits. Findings - The findings indicate a significant association between the traits of neuroticism, extroversion and conscientiousness as well as behavioral biases of individual investors. Openness has a significant relation with only mental accounting and the agreeableness trait has no relation with the behavioral biases examined. Research limitations/implications - The findings imply that understanding investor personality differences and investment psychology can help financial advisors and wealth managers modify products and services to better suit client needs. Originality/value - To the best of the authors’ knowledge, no previous study has examined the impact of the Big Five model of personality traits on various behavioral biases among Indian investors.

Suggested Citation

  • H. Kent Baker & Satish Kumar & Nisha Goyal, 2019. "Personality traits and investor sentiment," Review of Behavioral Finance, Emerald Group Publishing Limited, vol. 13(4), pages 354-369, June.
    • Handle: RePEc:eme:rbfpps:rbf-08-2017-0077
    DOI: 10.1108/RBF-08-2017-0077
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    Citations

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    Cited by:

    1. Sangita Choudhary & Mohit Yadav & Anugamini Priya Srivastava, 2024. "Cognitive Biases Among Millennial Indian Investors: Do Personality and Demographic Factors Matter?," FIIB Business Review, , vol. 13(1), pages 106-117, January.
    2. Joyita Banerji & Kaushik Kundu & Parveen Ahmed Alam, 2023. "The Impact of Behavioral Biases on Individuals’ Financial Choices under Uncertainty: An Empirical Approach," Business Perspectives and Research, , vol. 11(3), pages 401-424, September.
    3. Yogita Singh & Mohd. Adil & S. M. Imamul Haque, 2023. "Personality traits and behaviour biases: the moderating role of risk-tolerance," Quality & Quantity: International Journal of Methodology, Springer, vol. 57(4), pages 3549-3573, August.
    4. Shakira Mukhtar & Anisa Jan & Hadiya Altaf & Danish Mehraj, 2023. "Mindset to Money: How Gender Impacts the Relationship between Self-Efficacy and Financial Satisfaction," The Review of Finance and Banking, Academia de Studii Economice din Bucuresti, Romania / Facultatea de Finante, Asigurari, Banci si Burse de Valori / Catedra de Finante, vol. 15(2), pages 137-148, December.

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