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.
Highlights
Sustainable development has emerged as the latest catchphrase over the last decades and has become an essential part of the strategic planning processes of firms
This study provides empirical evidence on how personality traits influence individual perceptions, which in turn affect their intentions to participate in the stock markets
The findings of this study provide suggestions for governments and security practitioners to have good policies and promotion to encourage individual investors to invest in the stock markets, which would provide financial support for firms in pursuing sustainable development
Summary
Sustainable development has emerged as the latest catchphrase over the last decades and has become an essential part of the strategic planning processes of firms. Capital markets should facilitate the raising of capital at low costs for firms to finance their efforts to become sustainable [1]. The inability of the predictive power of investors is the main reason for market inefficiency, which results in the failure of the market to recognize and reward the right conduct of firms to become sustainable. Shantha [1] suggested that the information on the sustainable development efforts of companies is not completely and rapidly included into these company stock prices if the participants in the stock market have biases in their behaviors. Individual investors tend to use simple heuristics or rules of thumb in making decisions, which become maladaptive in the real dynamic stock markets [3,4]
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