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Investment Beliefs and Portfolio Risk-Taking — A Comparison between Industry Professionals and Non-Professionals

In: Behavioral Finance A Novel Approach

Author

Listed:
  • Magnus Jansson
  • Sven Hemlin
  • Doron Sonsino
  • Carl-Christian Trönnberg

Abstract

Investment beliefs, serving as a bridge between high-level objectives and practical decision-making, are increasingly implemented in the investment industry. The present web-based study compares the beliefs of Swedish professional (N = 64) and non-professional (N = 278) investors, testing the links between investment beliefs and portfolio risk-taking in both samples. The results expose significant differences between the beliefs of professionals and others, also showing that the portfolio risk-taking of non-professionals is susceptible to self-confidence and emotional effects while the professionals respond to investment beliefs and risk attitude. The results confirm that disclosure of investment beliefs may reduce tensions between stakeholders and investment managers for the industry’s benefit.

Suggested Citation

  • Magnus Jansson & Sven Hemlin & Doron Sonsino & Carl-Christian Trönnberg, 2020. "Investment Beliefs and Portfolio Risk-Taking — A Comparison between Industry Professionals and Non-Professionals," World Scientific Book Chapters, in: Itzhak Venezia (ed.), Behavioral Finance A Novel Approach, chapter 10, pages 239-266, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789811229251_0010
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    Keywords

    Analysts Recommendations; Behavioral Biases; Behavioral Economics; Behavioral Finance; Board of Directors ; Compensation; Compensation Committee; Control; Coronavirus; Corporate Governance; COVID-19; Decision Making; Disposition Effect; Earnings Management; Elections; Emotions; Financial Crises; Financial Market Anomalies; Financial Markets; Forecast-Accuracy; Gender Differences; Heuristics; Interval Forecasting; Investment; Investor Horizon; Investors' Beliefs; IPO Under-Pricing; Life Expectancy; Myopia; Overconfidence; Pensions Industry; Policy Reforms; Polls; Portfolio Risk; Prediction Markets; Regulation; Stock Price Drifts; Time Preferences;
    All these keywords.

    JEL classification:

    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • G4 - Financial Economics - - Behavioral Finance
    • G3 - Financial Economics - - Corporate Finance and Governance
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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