The influence of personality traits on investment decision-making: a moderated mediation approach

Abstract

PurposeBehavioral finance proposes that psychology of the individual plays a vital role in investment decisions. Therefore, this study aims to examine the influence of one of the important disciplines of psychology, i.e. personality on investment decision-making by incorporating financial satisfaction as an intervening variable and gender as a moderator.Design/methodology/approachThe data of 406 valid responses were collected through structured questionnaires from individual investors of Indian stock market and analyzed using structural equation modeling. Several invariance tests were also conducted to perform the multigroup analysis of gender on the mediated model.FindingsThe results revealed that extraversion, agreeableness, conscientiousness and neuroticism significantly influence investment decision-making through financial satisfaction. While financial satisfaction significantly mediates the indirect relationships between personality traits and investment decision-making for both males and females, no significant differences among males and females were found in the mediated model.Research limitations/implicationsThe current study covers a limited geographical area of North India. In addition to this, it is cross-sectional in nature and incorporates only limited factors for predicting investment decisions.Practical implicationsThe study possesses numerous significant implications for financial practitioners, advisors, investors, academicians and researchers in the field of behavioral finance.Originality/valueThis study suggests a moderated mediation approach, which incorporates financial satisfaction as a mediator and gender as a moderator. To the best of the authors’ knowledge, so far, no study has been conducted in this context, and it will enhance the understanding of investment decisions of individual investors.