Personality traits and motivation of individual investors towards herding behaviour in Indian stock market

Kybernetes ◽  
2019 ◽  
Vol 49 (2) ◽  
pp. 384-405
Author(s):  
Sharda Kumari ◽  
Bibhas Chandra ◽  
J.K. Pattanayak
Keyword(s):  
Stock Market ◽  
Personality Traits ◽  
Structural Equation ◽  
Small Sample ◽  
Individual Investors ◽  
Motivating Factors ◽  
Content Type ◽  
Emotional Factors ◽  
Cognitive Capability ◽  
Indian Stock Market

Purpose The purpose of this paper is to investigate the relationships between personality, motivating factors and herding behaviour of individual investors. Investors’ personality has been classified consonant to the personality traits (compliant, aggressive and detached) encapsulated in Horney’s tripartite model. Design/methodology/approach To carry out this study, the author surveyed 363 individual investors of the Indian stock market using a structured questionnaire. Structural equation modelling is used to empirically test the relationships between personality, three motivating factors (cognitive capability, emotional factors and social factors) and herding behaviour. Findings The result reveals that, expect compliant personality, none shows proclivity towards herding behaviour. Investors possessing compliant personality are more influenced by social motivating factors; however, cognitive factor motivates aggressive personality, inhibiting herding behaviour. Furthermore, investors having detached personality are not influenced by any motivating factors of herding. Research limitations/implications The limitation is the difficulty in generalizing the results to overall country populations as the Indian stock market has a huge turnover every day, and the author’s survey consisted of only small sample of individual investors. Practical implications The outcomes of this study could possibly unveil a new insight to discern the behaviour of individual investors in the Indian stock market. Originality/value The influences of personality on investment choices have been investigated before, but the influence of personality specifically on herding behaviour has not being adequately investigated in an emerging economy like India, as very scanty literature is available on the influence of personality on herding behaviour. The study addresses this gap and further explores the association of personality with different motivating factors that cause herding bias.

Artificial intelligence in financial services: a qualitative research to discover robo-advisory services

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ankita Bhatia ◽  
Arti Chandani ◽  
Rizwana Atiq ◽  
Mita Mehta ◽  
Rajiv Divekar
Keyword(s):  
Artificial Intelligence ◽  
Stock Market ◽  
Financial Services ◽  
Future Research ◽  
Individual Investors ◽  
Content Type ◽  
Advisory Services ◽  
Wealth Management ◽  
Management Scenario ◽  
Indian Stock Market

Purpose The purpose of this study is to gauge the awareness and perception of Indian individual investors about a new fintech innovation known as robo-advisors in the wealth management scenario. Robo-advisors are comprehensive automated online advisory platforms that help investors in managing wealth by recommending portfolio allocations, which are based on certain algorithms. Design/methodology/approach This is a phenomenological qualitative study that used five focussed group discussions to gather the stipulated information. Purposive sampling was used and the sample comprised investors who actively invest in the Indian stock market. A semi-structured questionnaire and homogeneous discussions were used for this study. Discussion time for all the groups was 203 min. One of the authors moderated the discussions and translated the audio recordings verbatim. Subsequently, content analysis was carried out by using the NVIVO 12 software (QSR International) to derive different themes. Findings Factors such as cost-effectiveness, trust, data security, behavioural biases and sentiments of the investors were observed as crucial points which significantly impacted the perception of the investors. Furthermore, several suggestions on different ways to enhance the awareness levels of investors were brought up by the participants during the discussions. It was observed that some investors perceive robo-advisors as only an alternative for fund/wealth managers/brokers for quantitative analysis. Also, they strongly believe that human intervention is necessary to gauge the emotions of the investors. Hence, at present, robo-advisors for the Indian stock market, act only as a supplementary service rather than a substitute for financial advisors. Research limitations/implications Due to the explorative nature of the study and limited participants, the findings of the study cannot be generalised to the overall population. Future research is imperative to study the dynamic nature of artificial intelligence (AI) theories and investigate whether they are able to capture the sentiments of individual investors and human sentiments impacting the market. Practical implications This study gives an insight into the awareness, perception and opinion of the investors about robo-advisory services. From a managerial perspective, the findings suggest that additional attention needs to be devoted to the adoption and inculcation of AI and machine learning theories while building algorithms or logic to come up with effective models. Many investors expressed discontent with the current design of risk profiles of the investors. This helps to provide feedback for developers and designers of robo-advisors to include advanced and detailed programming to be able to do risk profiling in a more comprehensive and precise manner. Social implications In the future, robo-advisors will change the wealth management scenario. It is well-established that data is the new oil for all businesses in the present times. Technologies such as robo-advisor, need to evolve further in terms of predicting unstructured data, improvising qualitative analysis techniques to include the ability to gauge emotions of investors and markets in real-time. Additionally, the behavioural biases of both the programmers and the investors need to be taken care of simultaneously while designing these automated decision support systems. Originality/value This study fulfils an identified gap in the literature regarding the investors’ perception of new fintech innovation, that is, robo-advisors. It also clarifies the confusion about the awareness level of robo-advisors amongst Indian individual investors by examining their attitudes and by suggesting innovations for future research. To the best of the authors’ knowledge, this study is the first to investigate the awareness, perception and attitudes of individual investors towards robo-advisors.

Elucidating investors rationality and behavioural biases in Indian stock market

2019 ◽  
Vol 11 (2) ◽  
pp. 201-219 ◽  
Author(s):  
Venkata Narasimha Chary Mushinada ◽  
Venkata Subrahmanya Sarma Veluri
Keyword(s):  
Structural Equation ◽  
Negative Impact ◽  
Personal Characteristics ◽  
Primary Data ◽  
Individual Investors ◽  
Content Type ◽  
Comprehensive Survey ◽  
Attribution Bias ◽  
Indian Stock Market ◽  
The Relationship

Purpose The purpose of this paper is to empirically test the relationship between investors’ rationality and behavioural biases like self-attribution, overconfidence. Design/methodology/approach The study applies structural equation modelling to understand whether individual investors, besides being rational, are subjected to self-attribution bias and overconfidence bias. Findings The study shows the empirical evidence in the support of behavioural biases like self-attribution and overconfidence existing besides investors’ rationality. Moreover, there is a statistically significant positive covariance found between self-attribution and overconfidence, implying that an increase/decrease in self-attribution results in the increase/decrease in overconfidence and vice versa. It is also observed that the personal characteristics of an investor such as gender, age, occupation, annual income and their trading experience have an impact on behavioural biases. Research limitations/implications The study focused on rational decision making, self-attribution and overconfidence biases using primary data. Further studies can be encouraged to test the existence of behavioural biases based on both market level and individual account data simultaneously. Practical implications Insights from the study suggest that the investors should perform a post-analysis of each investment, so that they become aware of past behavioural mistakes and stop continuing the same. This might help investors to minimise the negative impact of self-attribution and overconfidence on their expected utility. Originality/value To the best of the authors’ knowledge, this is the first study to examine the relationship among investors’ rationality, self-attribution and overconfidence in the Indian context using a comprehensive survey.

Personality traits and investor sentiment

2019 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
H. Kent Baker ◽  
Satish Kumar ◽  
Nisha Goyal
Keyword(s):  
Personality Traits ◽  
Big Five ◽  
Structural Equation ◽  
Investor Sentiment ◽  
Equation Modeling ◽  
Individual Investors ◽  
Content Type ◽  
Behavioral Biases ◽  
Big Five Model ◽  
The Impact

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.

The unspoken facets of buying by individual investors in Indian stock market

2019 ◽  
Vol 11 (3) ◽  
pp. 324-351
Author(s):  
Ripsy Bondia ◽  
Pratap Chandra Biswal ◽  
Abinash Panda
Keyword(s):  
Stock Market ◽  
Lived Experiences ◽  
Design Methodology ◽  
Building Blocks ◽  
Process Approach ◽  
Individual Investors ◽  
Content Type ◽  
Behavioral Biases ◽  
Indian Stock Market ◽  
Variance Approach

PurposeThe purpose of this paper is to develop an in-depth contextualized understanding of individual investors’ buying decision in Indian stock market. Specifically, it provides answers to: how do individual investors make buying decision in stock market; and how and when do biases set in during such decisions. The paper also brings forward some aspects of individual’s journey as an investor.Design/methodology/approachGiven the exploratory nature of this study, the paper takes a step away from typically used variance approach and instead uses a process approach. The authors do in-depth one-on-one interview, where each respondent shares his/her lived experiences as an investor retrospectively. To understand buying decision, each respondent is asked to elaborate three significant buying transactions carried out by him/ her in stock market.FindingsSocio-cultural factors are found to have significant influence in inducing respondents to enter market. “Safe” vs “Risky” mental account emerges as the prominent stock categorization done by Indian investors. Three building blocks, namely, Identification, Rationalization and Further Validation emerge as the building blocks that culminate into buying decision of individual investors. The biases are seen to play a dual role in such decisions; as Attention Boosters and Rationales.Originality/valueThis study, to the best of authors’ knowledge, is first of its kind which amalgamates behavioral biases with phenomenon such as attention and Rationalization, to understand “how” behavioral biases set in during buying decision of individual investors.

Impact of herding on the returns in the Indian stock market: an empirical study

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sunaina Kanojia ◽  
Deepti Singh ◽  
Ashutosh Goswami
Keyword(s):  
Stock Market ◽  
Stock Returns ◽  
Market Condition ◽  
Individual Investors ◽  
Herd Behavior ◽  
Market Conditions ◽  
Absolute Deviation ◽  
Cross Sectional ◽  
Content Type ◽  
Indian Stock Market

PurposeHerd behavior has been studied herein and tested based on primary respondents from Indian markets.Design/methodology/approachThe paper expounds the empirical evidence by applying the cross-sectional absolute deviation method and reporting on herd behavior among decision-makers who are engaged in trading in the Indian stock market. Further, the study attempts to analyze the market-wide herding in the Indian stock market using 2230 daily, 470 weekly and 108 monthly observations of Nifty 50 stock returns for a period of nine years from April 1, 2009 to March 31, 2018 during the normal market conditions, extreme market conditions and in both increasing and decreasing market conditions.FindingsIn a span of a decade witnessing different market cycles, the authors’ results exhibit that there is no evidence of herding in any market condition in Indian stock market primarily due to the dominance of institutional investors and secondly because of low market participation by individual investors.Originality/valueThe results reveal that there is no impact of herd behavior on the stock returns in the Indian equity market during the normal market conditions. It highlights that the participation of individuals who are more prone to herding is more evident for short-run investments, contrary to long-term holdings.

Dynamic prediction of Indian stock market: an artificial neural network approach

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Himanshu Goel ◽  
Narinder Pal Singh
Keyword(s):  
Neural Network ◽  
Artificial Neural Network ◽  
Stock Market ◽  
Institutional Investors ◽  
Time Series Data ◽  
Gradient Algorithm ◽  
Series Data ◽  
Content Type ◽  
Artificial Neural ◽  
Indian Stock Market

Purpose Artificial neural network (ANN) is a powerful technique to forecast the time series data such as the stock market. Therefore, this study aims to predict the Indian stock market closing price using ANNs. Design/methodology/approach The input variables identified from the literature are some macroeconomic variables and a global stock market factor. The study uses an ANN with Scaled Conjugate Gradient Algorithm (SCG) to forecast the Bombay Stock Exchange (BSE) Sensex. Findings The empirical findings reveal that the ANN model is able to achieve 93% accuracy in predicting the BSE Sensex closing prices. Moreover, the results indicate that the Morgan Stanley Capital International world index is the most important variable and the index of industrial production is the least important in predicting Sensex. Research limitations/implications The findings of the study have implications for the investors of all categories such as foreign institutional investors, domestic institutional investors and investment houses. Originality/value The novelty of this study lies in the fact that there are hardly any studies that use ANN to forecast the Indian stock market using macroeconomic indicators.

Does employee willingness to take risks affect customer loyalty? A moderated mediation examination of innovative behaviors and decentralization

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mohd Ahmad Al-Hawari ◽  
Shaker Bani-Melhem ◽  
Faridahwati Mohd. Shamsudin
Keyword(s):  
Personality Traits ◽  
Customer Loyalty ◽  
Structural Equation ◽  
Positive Impact ◽  
Equation Modeling ◽  
Frontline Employees ◽  
Content Type ◽  
Mediating Role ◽  
Hotel Managers ◽  
Innovative Behaviors

Purpose This study aims to build on the trait activation and interactionist perspective theories to investigate the effect of frontline employees’ (FLEs) willingness to take risks on hotel guest loyalty by assessing the mediating role of their innovative behaviors. It also examines whether decentralization strengthens the positive impact of willingness to take risks on innovative behavior and, subsequently, customer loyalty. Design/methodology/approach The authors collected multilevel data from various sources – hotel FLEs (n = 183), hotel operation managers (n = 46) and hotel guests/customers (n = 266) – from five-star hotels operating in Dubai. Structural equation modeling and PROCESS macro (version 3.5) were used to analyze the data. Findings The findings showed that willingness to take risks indirectly (via innovative behaviors) affects guest/customer loyalty positively. This effect is strengthened when the hotel is decentralized. Practical implications This study provides insight into how hotel managers can foster customer loyalty. More specifically, they can do so by establishing employees’ innovative behaviors triggered by employees’ positive personality traits and by giving employees more autonomy. Originality/value The present study addresses recent calls to investigate the positive impact of FLEs’ personality traits, attitudes and behaviors on customer loyalty.

The intersectionality of teacher immediacy, emotioncy and willingness to communicate in higher education context

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Asieh Amini ◽  
Hiwa Weisi
Keyword(s):  
Second Language ◽  
Second Language Acquisition ◽  
Structural Equation ◽  
English Language ◽  
Pearson Correlation ◽  
Small Sample ◽  
Willingness To Communicate ◽  
Equation Modeling ◽  
Teacher Immediacy ◽  
Content Type

PurposeGiven the significance of willingness to communicate and its integral role in the field of foreign/second language acquisition (F/SLA), this quantitative study intends to examine the relationship between sensory emotioncy types and teacher immediacy with second language learners' willingness to communicate (WTC).Design/methodology/approachA total number of 280 students majoring in teaching English as a Foreign Language (TEFL), and English Language and Literature completed three scales of Sensory Emotioncy Type (SET), Willingness to Communicate and Teacher Immediacy (TI). For data analysis, Pearson correlation coefficient, multiple regression analysis and structural equation modeling (SEM) were employed.FindingsThe results of SEM showed that learners' WTC was significantly predicted by emotioncy and teacher immediacy. Further, reports from correlational and regression analyses revealed a significantly positive correlation, first, between teacher immediacy and learners' WTC, secondly, between emotioncy and learners' WTC.Research limitations/implicationsThe main limitation of this study was that the participants were selected from one context with relatively a small sample which might restrict the generalization. Nonetheless, the present study findings might extend ancillary horizons and provided worthwhile insights into the perception of teacher immediacy and emotioncy on students' willingness to communicate.Practical implicationsThe significance of the current study lies in its theoretical contribution to the notion of WTC and its pedagogical implications and suggestions to the benefits of rejuvenating second language teaching and learning. Findings of this study help pre-service and in-service teachers in providing them more robust picture of learners' individual differences; and hence exert the most appropriate tasks which learners have the most degree of familiarity and better to say, emotioncy.Originality/valueIn the current study notable results were obtained which would be efficacious to the present literature on the EFL teacher immediacy, emotioncy and willingness to communicate. First and foremost, the findings added to a growing body of literature on emotioncy as a relatively novel concept in academic settings and teacher immediacy , and willingness to communicate which have gained scant attention in the field.

The impact of manager’s personality traits on project success through affective professional commitment: the moderating role of organizational project management maturity system

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Aqsa Ameer ◽  
Farah Naz ◽  
Bushra Gul Taj ◽  
Iqra Ameer
Keyword(s):  
Project Management ◽  
Personality Traits ◽  
Structural Equation ◽  
Project Success ◽  
Professional Commitment ◽  
Experimental Proof ◽  
Content Type ◽  
Relationship Of ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this study is to determine the effect of conscientiousness and extraversion personality traits on project success. The relationship is mediated by affective professional commitment, whilst the relationship between personality traits and project success is moderated by organizational project management maturity. Design/methodology/approach The deductive approach is used to achieve the objectives of this study. Data were collected through a purposive sampling technique from 250 respondents with the help of questionnaires from information technology sectors. The structural equation modelling (SEM) in partial least squares-SEM and SPSS is used to analyse the data and to examine the hypothesis. Findings The outcomes demonstrate the partial mediating impact of affective professional commitment between the relationship of conscientiousness and extraversion personalities with project success. Additionally, it proves the moderating effects of project management maturity between the relationship of conscientiousness and extraversion personalities with project success. Practical implications This study reflects that employee personality appears to be a reliable indicator of how an employee is faithful to his profession. This faithfulness or duty decides the employee’s execution in terms of offering a successful project. Thus, achieving employee commitment needs to be done by completing the project successfully by the organizations in the presence of project management maturity systems. Originality/value It is the first study of its kind to provide experimental proof of the impact of a manager’s personality traits on project success in the presence of affective professional commitment (mediator) and organizational project management maturity (moderator).

Personality traits and firm innovation performance: the mediation effect of entrepreneurial innovativeness

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Chi Thi Phuong Nguyen ◽  
Duong Tuan Nguyen ◽  
Hang Thu Nguyen
Keyword(s):  
Personality Traits ◽  
Indirect Effects ◽  
Structural Equation ◽  
New Technology ◽  
Equation Model ◽  
Openness To Experience ◽  
Innovation Performance ◽  
Mediation Effect ◽  
Firm Innovation ◽  
Content Type

Purpose The purpose of this paper is to examine the effect of entrepreneurs’ personality traits on firm innovation performance through the mediation role of entrepreneurs’ innovativeness. Design/methodology/approach The data consist of 2,574 firms from a survey of small and medium-scale manufacturing enterprises (SMEs) in Vietnam, a developing and transitioning economy where SMEs constitute an integral part of the economy. The estimation results based on the structural equation model was applied to analyze the data. Findings The results indicate that an entrepreneur’s innovativeness is positively associated with his extraversion, conscientiousness, and openness to experience but negatively accompanied with his neuroticism. Besides, the three traits – openness to experience, conscientiousness and extraversion have positive indirect effects, while neuroticism has a negative indirect effect on technological improvement and new technology adoption. However, the effects of agreeableness on entrepreneurial innovativeness and firm innovation performance are insignificant. In addition, the diverse backgrounds of the entrepreneur such as education and ethnics are also found to influence his innovativeness and to have indirect effects on firm innovation performance. Originality/value This study may contribute to the immature literature on the entrepreneurial process within SMEs by presenting empirical evidence on the relationship between entrepreneurial personality traits and firm innovation with a large sample of SMEs in Vietnam, an emerging economy where SMEs constitute an integral part of the economy.

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