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The Role of Product and Brand Perceptions In Stock Investing: Effects On Investment Considerations, Optimism and Confidence

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Abstract

Behavioral finance researchers are increasingly interested in the relationship between people’s perceptions of companies’ products, on one hand, and their decisions to invest in companies’ stocks, on the other. The purpose of this article is to examine the influence that individuals’ evaluations of companies’ products/brands, in particular, have on their propensities to consider alternative stocks for investment. The authors explicate the main ways of such influence by applying psychological consumer-behavior theories, and test their hypotheses with data gathered from 292 individual investors. The results show that the personal relevance that an investor attaches to a particular company’s product domain has negative influence on the consideration that the individual gives to alternative investment targets, whilst investing in that company’s stock. The individual’s affective evaluation of the company’s brand has a similar effect. Moreover, the results show that an individual’s affective evaluation of a company’s brand has a positive effect on his optimism about the financial returns of the company’s stock. Finally, the results suggest that an individual’s familiarity with the company’s brand does not decrease the consideration that he gives to alternative investment targets, nor is it linked to overconfidence in one’s expectations about the financial returns of the company’s stock.

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... In addition, although the global Islamic finance industry is growing, several challenges have been identified, including limited awareness and lack of confidence (FitchRatings, 2021). Thus, behavioural finance researchers have become increasingly interested in investigating the factors influencing stock investment decisions (Aspara, 2013). The literature shows that investors tend to choose a particular stock because of various factors, such as a company's stock price, credit rating, market sentiment, dividend policy and corporate earnings (Ding et al., 2019;Tomola, 2013;Xie et al., 2019). ...
... For an investor to make an investment decision, they must be familiar with and feel confident towards the company's brand. Various studies have found that familiarity with a brand influences consumers' and investors' confidence in it, which in turn affects their decision to buy, use and invest in that brand (Aspara, 2013;Frieder and Subrahmanyam, 2005;Hati et al., 2021;Laroche et al., 1996;Sallam and Wahid, 2012). For example, Frieder and Subrahmanyam (2005) investigated the effect of company brand perceptions on investors' inclination to hold stocks and found that individual investors prefer to invest in stocks of easily recognized products. ...
... For example, Frieder and Subrahmanyam (2005) investigated the effect of company brand perceptions on investors' inclination to hold stocks and found that individual investors prefer to invest in stocks of easily recognized products. Aspara (2013) presented similar findings, that when an investor has an attachment to a particular company's product, they will give less consideration to alternative investment targets. At the same time, investors' willingness to invest in the familiar company's stock is enhanced. ...
Article
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Purpose This paper aims to investigate the influence of investors’ attitudes on their decision-making. Two subjective perception factors, brand familiarity and perceived trust, were proposed to influence investors’ attitudes and decision-making. This paper also suggests the potential mediating effect of attitude on decisions on Islamic stock investment. Design/methodology/approach Data were collected using a primary data collection method. Questionnaires were used and distributed to a sample size of 250 Malaysian investors in the Klang Valley aged between 25 and 50 years old. Data were analysed using SPSS and Structural Equation Modelling–Partial Least Squares. Findings Seven hypotheses were proposed, and six were supported. The findings show that brand familiarity and perceived trust have a significant relationship with attitude. Brand familiarity and attitude have a significant relationship with investment decision behaviour. The relationship between perceived trust and attitude also reveals significant findings. However, perceived trust was found to have an insignificant relationship with investment decision behaviour. Mediation analysis shows that attitude mediates the relationship between brand familiarity and investment decision behaviour. Attitudes are also found to mediate the relationship between perceived trust and investment decision behaviour. Practical implications It is recommended that publicly listed companies emphasize and devote extra efforts to enhancing investors' familiarity with and favour their brand. In addition, to build an investor’s trust, a company must be consistent in dividend payments. Such action may improve the probability of the company’s stock being chosen for investment. Originality/value Subjective perceptions of investors' decision-making in Islamic stock investment have yet to be thoroughly explored in the literature, especially in the Malaysian context. In this paper, the indirect relationship between brand familiarity and perceived trust in attitude is tested. This paper contributes to consumer behaviour and marketing of Islamic stock investment research area.
... Relatedly, the allocation of an export-processing zone allows investors to exploit certain advantages and incentives provided by the host government as part of the export development and promotion and thus may be influential to investment decisions (Moreira, 2009). Aspara (2013) advances the notion that how the products or brands within the export context are perceived by consumers, may influence investor perceptions and ultimately their decision-making process when considering investing internationally. Furthermore, the emotional significance of the particular product domain of a business to an investor, increases the confidence in return on investment and profitability of investing in the business, while significantly decreasing the propensity of investors to consider alternative investment options (Aspara, 2013). ...
... Aspara (2013) advances the notion that how the products or brands within the export context are perceived by consumers, may influence investor perceptions and ultimately their decision-making process when considering investing internationally. Furthermore, the emotional significance of the particular product domain of a business to an investor, increases the confidence in return on investment and profitability of investing in the business, while significantly decreasing the propensity of investors to consider alternative investment options (Aspara, 2013). Loots and Kabundi (2012) advance that there is a significant relationship between the availability of export commodities (such as oil) and FDI inflows in the case of Africa. ...
... As it emerged, Zimbabwe's business-friendly trade policy; the availability of distribution channels for export markets; existing global demand for Zimbabwe's export products, as well as; the export processing zone status allocation to foreign manufacturers in Zimbabwe were found to be quite influential factors to FDI market entry motives. The extant to the literature (Abor et al., 2008;Anafro et al., 2017;Aspara, 2013Behar & Manners, 2010Khan & Nawaz, 2011;Mafelane & Odhiambo, 2016;Moreira, 2009;Vinesh et al., 2014) supports this finding alluding to the various factors that constitute a country's exports profile. ...
Article
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The Foreign Direct Investment-Exports nexus has been widely researched, however despite evidence of the bi-directional relationship, little is known about the reverse Exports-Foreign Direct Investment relationship. Thus, the study intended to examine the influence of Zimbabwe’s Exports profile on the FDI decisions of foreign investors. The study set out to identify the export factors constituting Zimbabwe’s Exports profile and then test the relationship between Zimbabwe’s Exports profile and the four foreign direct investment market opportunity types. STATISTICA 2016 was utilised to apply Exploratory Factor Analysis, Principal Component Analysis and Multiple Regression to analyse the quantitative data generated from a purposive sample of n=305 foreign investors. Factors such as the existing global demand for Zimbabwe’s export products, and the export processing zone status allocation to foreign manufacturers in Zimbabwe were found to be some of the more influential factors to foreign direct investment market entry motives. Importantly, the results indicate discernible statistically significant relationships between Zimbabwe’s Exports profile and market-, resource-, efficiency-, and strategic asset-seeking market opportunities. Thus, this study is novel, providing valuable insights into the Exports profile-Foreign Direct Investment nexus – significantly contributing to the extent of the literature within the foreign direct investment and behavioural economic discourses.
... In current literature, the majority of studies measure familiarity by asking respondents to describe their knowledge and evaluations of a particular company. Alternatively, respondents are asked to indicate on a rating scale their familiarity or identification with a specific brand (Aspara 2013;Aspara & Tikkanen 2011). In these questions, the name of the company is usually provided instead of an image or picture relating to the brand of the company. ...
... The notion that investment decision making could be influenced by corporate brand familiarity is thus supported. The findings from this study correspond with the findings from various other authors such as Frieder and Subrahmanyam (2005), Aspara and Tikkanen (2011) and Aspara (2013). These studies conclude that investors are more likely to invest in the stocks of companies they are familiar with. ...
... These studies conclude that investors are more likely to invest in the stocks of companies they are familiar with. Aspara andTikkanen (2011:1446) found that 'an individual's identification with a company has a positive effect on their determination to invest in the company's shares rather than in other companies' shares that have approximately similar expected financial return/risks'. ...
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Purpose: The purpose of this study was to investigate the existence of familiarity bias amongst individual investors in the South African stock market. Problem investigated: According to Warren Buffet, one needs to maintain emotional detachment if one wants to be a successful investor. However, recent research indicates that the perceptions of companies’ products and brands may influence individuals’ investment decisions in the stock market. This phenomenon implies that the investment decisions of individual investors are not purely based on firm fundamentals as suggested by traditional finance theories, but might be driven partly by the positive or negative attitude they have towards certain companies’ products and brands. The existence of familiarity bias amongst individual investors was investigated to determine if individuals prefer to invest in companies they are familiar with as opposed to unfamiliar companies. Methodology: A quantitative approach was followed. An online survey was used to show images of familiar and unfamiliar company brands to respondents, whereafter respondents were asked to indicate whether they will invest in the shares of the identified companies. The statistical analysis entailed descriptive statistics as well as one-way analyses of variance to test the stated hypotheses. Main findings: The results of this exploratory study indicate that investors do exhibit familiarity bias when choosing between different companies to invest in. Value of the research: The inclination of individual investors to invest in familiar corporate brands can have implications for the marketing industry, financial markets, the performance of companies as well as the investment performance of individual investors in the sense that it would seem that company brands could have an influence on investment decisions.
... At a macrolevel, on the other hand, corporate brands and such brand-related variables as brand equity, reputation, performance and trust govern financial decisions as brands gain increasingly more importance not only for customers but also for stakeholders including investors (Aspara 2013;Fischer and Himme 2016). Besides these corporate brands, stock markets, or stock exchanges as a manifestation of the financial market, are considered to have significant impacts on investor decisions by means of the overall brand equity that they resonate for their actual and potential investors. ...
... The interaction between brands and consumers has been a subject for many disciplines as the implications of this relationship transcends the traditionally ascribed role of marketing on the issue. It has gained special importance for the finance discipline, for instance, as there has been a common understanding that brands' relational as well as numerical success with their customers reflect onto their financial performance (Aspara 2013;Frieder and Subrahmanyam 2005;Seddon 2015). Beyond the firm level, even the countries with highest brand index ratings attract higher share of investments, tourists, and students according to the reports by Anholt-GfK (2012) and FutureBrand Country Brand Index (2012) (Bose et al. 2016). ...
Article
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The aim of this study is to investigate investors’ brand equity perception for a stock exchange as a mediator in financial investment decisions. An online survey is conducted in two samples in the developed market context of Ireland and developing one of Turkey. Results indicate that although investors’ risk perception has a negative impact on investment decisions, this impact is partially mediated by brand equity of stock exchanges in question. This mediating effect further differs by the market context, with a larger effect size in the developing Turkish market. It can be concluded that although developing markets face higher volatility in macroeconomic conditions, it could be possible to spread the risk resulting from this volatility with an effective brand equity management, which is found to be especially important in developing markets. The study offers some practical implications to policy makers and managerial sides regarding the need for a careful perception management aimed at individual investors.
... Given the increased responsibility borne by the individual, there have been frequent calls for more research that aims to understand and aid consumers in their investment decision-making (Kozup and Hogarth, 2008;Nenkov et al., 2009). As a response to these calls, consumer behavior research has recently started to turn attention toward understanding the nature and biases involved with making investment decisions (Aspara, 2013; The current issue and full text archive of this journal is available on Emerald Insight at: www.emeraldinsight.com/0309-0566.htm ...
... It could, however, be argued that because of an increased digitalization of financial consumption, the importance of a strong brand is exacerbated: the on-line consumer connects with a multitude of brands through channels not controlled by producers/retailers (or in a financial context, banks and fund companies) and subsequently iterates between them toward a purchase decision (Edelman, 2010). Recent research has accordingly highlighted the importance of brands to consumer investment behavior and has shown, for example, that consumers who have a more positive view of the company brand also give more attention to, and are more willing to invest in, the stock for reasons unrelated to financial return (Aspara, 2013;Aspara and Tikkanen, 2010). One of the primary reasons the brand is important in the investment and financial services context is its connection to trust (Dawes Farquhar and Robson, 2015). ...
Article
Purpose Choosing how to invest one’s assets is one of the more important decisions consumers are faced with. However, determining the objective financial quality of complex investment products such as mutual funds is not an easy task for consumers. Against this background, this study aims to clarify the potential impact of one, not necessarily rational, cue on consumer perceptions of financial quality in the investment context: the country-of-origin (COO) of the mutual fund or stock. Design/methodology/approach Two Web-based experiments are used to test the study’s hypotheses. Findings COO is found to impact investors’ evaluation of the financial metrics of mutual funds, both in terms of perceived risk and potential return. Moreover, the results of Experiment 2 show that although a strong financial brand can partially overcome the COO effect, the extent of this effect is moderated by whether the fund utilizes an active or passive management style. Research limitations/implications Although mutual fund providers with a strong financial country image (CI) may leverage that image and build on their home country’s brand, providers from countries with a poor financial CI may do well focusing on passive management to minimize negative COO influence. Originality/value The results highlight that COO can be an important source of sub-optimal investment decisions. These insights are of high importance for efforts to improve consumer decision-making and for individual service providers.
... Empirical studies into how the subjective perceptions of investors affect their investment decisions are gaining traction as a discourse in economic psychology and behavioural finance (Aspara, 2013). Behavioural finance theory advances the notion that financial markets are inefficient in providing information symmetry for investors, and that investors are not rational, and are in fact susceptible to behavioural heuristics and biases in their investment decision making (Dottorato, 2012;Luong and Ha, 2011). ...
... Exports influence the image of the country within its external publics based on the reverse effect of the country-of-origin effectwhere the quality of key products/brands originating from a particular country either positively or negatively influences the image of the source country (Aspara, 2013;Schlicher, 2012). While, as a determinant of FDI, exports relate to how the country of origin effect influences investors in their FDI decisions -based on how by producing their products and exporting their output from the FDI host country would present as a market opportunity for the foreign investor (Belloso, 2010; Kalamova and Konrad, 2009). ...
Conference Paper
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After a decade-long(1998-2008) protracted socioeconomic crisis, Zimbabwe suffered severe reputational damage as an investment location. Post-crisis Zimbabwe is presently an uncompetitive investment destination within the Southern African region, and this paper argues that the post-crisis image of the country is influential to investor behaviour and determines the current FDI inflows to the country. To date, no previous studies have been conducted to ascertain the influence of Zimbabwe's image on its ability to attract foreign direct investment. Thus, a desk research was conducted to synthesise nation branding, behavioural finance and investment promotion theory and constructs within the FDI context, in order to construct a proposed explanatory framework for the non-financial nation brand image determinants influencing FDI inflow opportunities in Zimbabwe.This paper makes a novel contribution to the body of knowledge in FDI, nation branding and investment promotion, as it posits the first explanatory framework for qualitative, image-related factors influencing FDI decision-making within the African context. Content analysis of the extant of contemporary literature affirms the role of nation images in the formation of subjective perceptions held of a country as a potential investment location, thus filling a discernible gap in knowledge. To this end, this paper identifies nine latent variables as non-financial nation brand image determinants that potentially influence foreign investors when considering FDI to Zimbabwe. It is recommended that the Government of Zimbabwe conduct research and quantitatively test the hypotheses formulated for the proposed model as part of its concerted investment promotion activities.
... Numerous researchers have studied on investors' behavior from various perspectives of research including finance, behavioral finance, behavioral economics and even neurofinance (Aspara 2013(Aspara , 2015Bi 2017;Guillamo ń-Saor ín & Mart ínez-Lo ṕez 2013;Hoffman & Ketteler 2015;Hogarth et al. 2016;Sahi 2012). Nevertheless, one of the poignant problems that still occurs is that an investor will face a range of information especially those communicated online which makes investors contemplate whether to continue investing and to be loyal to the brand that they are currently investing in. ...
... Researchers have been pointing out that investors buy stocks of firms that they know and like. Their decisions are influenced by the personal relevance and the effective evaluation which are attached to the companies' brands (Aspara 2013;Hoffman & Ketteler 2015;Keloharju et al. 2012). Investors are now prone to purchasing stocks that are attention-grabbing especially those that appear in the news as compared to the normative goal of return maximization (Aspara et al. 2015;Barber & Odean 2001). ...
Conference Paper
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In this fast-moving digital landscape, individual investors contemplate whether to be loyal to a specific company brand or not because of the proliferation of online financial communications. Hence, companies have to be attentive of the implications of the current marketing trend and the influence of the new media towards investors' behavior. With the increasing prominence of philanthropic marketing and online generated content, this study intends to understand which factors will influence individual investors' behavior in terms of their brand attitude and brand loyalty. Findings from this study will facilitate companies to improve their communication online and subsequently boost brand loyalty. Finally, this study will contribute to the theory of reasoned action (TRA) by integrating the signaling theory and consumer-company identification (C-C identification) concept within the financial communications perspective as limited studies have been steered using these theories and concept in trying to explain investors' brand loyalty.
... Prior research in finance literature suggests that investors are more likely to invest in stocks that they are familiar with (Frieder & Subrahmanyam, 2009;Grullon et al., 2004). Thus, from the mere awareness perspective, familiarity with a stock leads an investor to perceive that she has an information advantage over other stocks (Aspara, 2013), which increases the likelihood of investing in that stock. From the information effect perspective, paying attention to a firm's stock and learning about it because of the changes in the marketing levers increases the investor's confidence in her knowledge of the firm. ...
... From the information effect perspective, paying attention to a firm's stock and learning about it because of the changes in the marketing levers increases the investor's confidence in her knowledge of the firm. An investor is more likely to invest in a stock when the investor's confidence in her knowledge of the firm is higher (Allgood & Walstad, 2016;Aspara, 2013). Both mechanisms explain how the changes in marketing levers lead to investing in stocks through investor attention. ...
Article
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Investors' attention to a firm's stock has been demonstrated to influence stock returns (Da et al., 2011). But does a firm's marketing information draw attention to a firm's stock? Research in finance, accounting, and marketing has investigated advertising as one potential driver of investors' attention to a firm's stock. How about other potential marketing drivers? The authors develop hypotheses related to the impact of the changes in four marketing levers: advertising, product development announcements, WOM, and customer satisfaction on the change in investor attention to a firm's stock. Furthermore, they investigate the moderating role of competitors' marketing levers in these relationships. To test the hypotheses, they compile a panel dataset with 349 firms covering the 2007-2017 period. The results suggest that the changes in the focal firm's advertising and WOM have a positive and significant impact on the changes in investor attention to the focal firm’s stock. Furthermore, these effects are amplified when there is an increase in competitors' advertising spending and WOM, respectively. For the customer satisfaction lever, the results suggest that the change in competitors' customer satisfaction enhances the impact of the change in focal firm's customer satisfaction on investor attention. Collectively, the results suggest that investors attend to the firm's and its competitors' marketing information in a much more nuanced manner than previously thought.
... Further researchers include behavioural biases, emotions and personality traits of investors and evaluate their influence on investment decision. The advancement brings different aspects such as considering investors as a consumer (Aspara & Tikkanen, 2008;Aspara, 2013;Lim, Soutar & Lee, 2013;Ibrahim & Arshad, 2018). The economic psychology and behavioural finance includes investors' subjective perception and assess their influence on individual investors' decision to invest for example Aspara and Tikkanen (2008), Aspara (2013), Ibrahim and Arshad (2018). ...
... The advancement brings different aspects such as considering investors as a consumer (Aspara & Tikkanen, 2008;Aspara, 2013;Lim, Soutar & Lee, 2013;Ibrahim & Arshad, 2018). The economic psychology and behavioural finance includes investors' subjective perception and assess their influence on individual investors' decision to invest for example Aspara and Tikkanen (2008), Aspara (2013), Ibrahim and Arshad (2018). The inclusion of consumer related construct intend to provide more insight of decision to invest in a particular stock. ...
Article
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The review of related literature indicates that consumer behavior constructs such as product knowledge and product involvement can be a potential factor that can help to determine the investment intentions of individual investors. Thus, current research employed a consumer behavior perspective to determine the investment intentions of individual investors by collecting data from a sample of 548 individuals employed in various companies in Pakistan. The collected data was analyzed using descriptive statistics with the help of SPSS. The reliability and validity of the focal constructs was assessed using measurement model and hypothesis testing was done through structural model. SmartPLS 3.3.2 was used as a tool to run measurement and structural model. The measurement model shows that focal constructs hold acceptable level of reliability and validity. The hypothesis testing results showed that there is a significant effect of product knowledge and product involvement on the investment intention of individual investors. The results contribute toward better understanding of investment intention of investors from a consumer behavior perspective (product knowledge, product involvement). The results can be helpful for the practitioners to develop some policies to increase the intentions of individual investors by creating awareness of financial products. Moreover, to design programs that can increase the level of involvement of individual investors in financial products. These efforts can enhance the investment intentions of individual investors.
... When it comes to the relationship between the preferences of firm characteristics and investing decisions, investors' preferences for firm's product-related attributes and 1116 IJBM 34,7 attention grabbing stocks come into play. Aspara and Tikkanen (2010) and Aspara (2013) argue that a firm's particular attributes, which is intrinsically relevant to investors, influence their investment decisions beyond expected financial returns and risks. These authors document that investors' involvement with a firm's products and brands influence them to buy stocks of that firm. ...
... Referring to the study of Aspara (2013), it is argued that investors' preferences for firm's quality of management, quality of product or services and long term value of products or services are likely to influence trading decisions. Preferences for firm's management and product-related attributes indicate that investors fundamentally evaluate a firm's internal management as well as external product-related attributes. ...
Article
Purpose The purpose of this paper is to test the competing explanations of stated preferences for firm characteristics, optimism and overconfidence for trading activities in a single framework. Design/methodology/approach A survey methodology is followed to collect the data among retail investors in Malaysia using simple random sampling. Findings The findings show simultaneous identification of stated preferences for firm characteristics, optimism and overconfidence as determinants of trading activities. Preferences for firm’s profitability characteristics, management and product-related attributes and risky characteristics are likely to decrease investors’ trading activities. On the other hand, preferences for firm’s liquidity and trading volume characteristics with relative financial-domain optimism, personal investment optimism and better-than-average aspect of overconfidence are likely to increase investors’ trading activities. Practical implications This finding implies that investors should be careful not only in assessing firm’s characteristics but also need to understand the effects of optimism and overconfidence in trading decisions. Originality/value The study considers various aspects of optimism and overconfidence, and the stated preferences for firm characteristics, unlike one aspect of these behavioral biases and indirect observation of preferences for firm characteristics. Furthermore, the study considers trading frequency, annual portfolio turnover and trading intention, whereas earlier studies considered only one or two of these trading decisions.
... First, the industry's reputation as a provider of long-term security may lead investors to assume that insurance company stocks are safer, and perhaps countercyclical, investments. The behavioral explanation for this is that investors are subject to a representativeness bias which causes them to mistake company, product, or brand characteristics for stock investment characteristics (Solt and Statman, 1989;Aspara, 2013). If insurance stocks are bought for their perceived long term safety, performance to the contrary of these expectations may cause quicker sell decisions, resulting in steeper declines than in the broader market. ...
Article
This study presents an improved model for estimating life insurer cost of capital with the inclusion of upside and downside risk factors and controlling for life insurer characteristics. Although various asymmetric measures of market risk have been shown to be priced factors for the broader equity market, life insurer realized equity returns include a much larger premium for bearing downside risk, even after controlling for firm characteristics and other measures of risk. Crosssectional regression analysis finds a positive (negative) premium for downside (upside) betas, conditional on down and up markets respectively. Coskewness and cokurtosis are also priced factors.
... In contrast, negatively evaluated stocks are perceived to include higher risks and lesser chances of profit than estimated objectively . Furthermore, investors report a biased tendency of investing in familiar instruments (Sahi, Arora, & Dhameja, 2013) and are more optimistic about the financial returns of companies with familiar product brands (Aspara, 2013). Accordingly, questions measuring financial risk tolerance should be formulated neutrally and should omit information that may trigger positive or negative feelings (e.g., trade names, company names). ...
Article
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To advise investors on the financial market according to their financial risk tolerance it is necessary to apply a valid and reliable instrument measuring financial risk tolerance. We develop a screening instrument which assesses different facets of financial risk tolerance, namely, risk propensity, risk attitude, risk capacity, and risk knowledge. First, an item pool was generated and discussed with lay people as well as financial advisors to assure the questions’ understandability and answerability. Second, the most coherent and practice-oriented questions were tested empirically to determine four scales representing the four facets of risk tolerance. Third, resulting items were assessed using a representative sample of Austrian citizens interested in saving, stock trading, and investing, and psychometric quality of the instrument was determined.
... Goh et al. (2009) contended that this is mainly attributable to a resulting reduction of agency problems. Aspara (2013) analysed the trading choices of a sample of individual investors and found that the quality of management is likely to impact on such decisions. Other studies suggested that securities tend to be more liquid when the underlying assets of the firm are more liquid as well (Gopalan et al., 2012;Correia and Amaral, 2014). ...
... Goh et al. (2009) contended that this is mainly attributable to a resulting reduction of agency problems. Aspara (2013) analysed the trading choices of a sample of individual investors and found that the quality of management is likely to impact on such decisions. Other studies suggested that securities tend to be more liquid when the underlying assets of the firm are more liquid as well (Gopalan et al., 2012;Correia and Amaral, 2014). ...
Article
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Purpose The purpose of this paper is to obtain new empirical evidence about the connections between equity trading activity and five possible liquidity determinants: market capitalisation, dividend yield, earnings yield, company growth and the distinction between recently listed firms as opposed to more established ones. Design/methodology/approach The authors use a sample of 172 stocks from four European markets and estimate models using the entire sample data and different sub-samples to check the relative importance of the above determinants. The authors also conduct a factor analysis to re-classify the variables into a more succinct framework. Findings The evidence suggests that market capitalisation is the most important trading activity determinant, and the number of years listed ranks thereafter. Research limitations/implications The positive relation between trading activity and market capitalisation is in line with prior literature, while the findings relating to the other determinants offer further empirical evidence which is a worthy addition in view of the contradictory results in prior research. Practical implications This study is of relevance to practitioners who would like to understand the cross-sectional variation in stock liquidity at a more detailed level. Originality/value The originality of the paper rests on two important grounds: the authors focus on trading turnover rather than on other liquidity proxies, since the former is accepted as an important determinant of the liquidity-generation process, and the authors adopt a rigorous approach towards checking the robustness of the results by considering various sub-sample configurations.
... First, the industry's reputation as a provider of long-term security may lead investors to assume that insurance company stocks are safer, and perhaps countercyclical, investments. The behavioral explanation for this is that investors are subject to a representativeness bias which causes them to mistake company, product, or brand characteristics for stock investment characteristics (Solt and Statman, 1989;Aspara, 2013). If insurance stocks are bought for their perceived long-term safety, performance to the contrary of these expectations may cause quicker sell decisions, resulting in steeper declines than in the broader market. ...
Article
This study presents an improved model for estimating life insurer cost of capital with the inclusion of upside and downside risk factors and controlling for life insurer characteristics. Although various asymmetric measures of market risk have been shown to be priced factors for the broader equity market, life insurer realized equity returns include a much larger premium for bearing downside risk, even after controlling for firm characteristics and other measures of risk. Cross-sectional regression analysis finds a positive (negative) premium for downside (upside) betas, conditional on down and up markets, respectively. Coskewness and cokurtosis are also priced factors.
... As shown in Table 1 Ali, Lynch, Melewar, & Jin, 2015, Tracey, 2014, and number of employees (Cravens & Oliver, 2006). We also used the respondent rating of their brand familiarity (Akhter & Ahmed, 2013;Aspara, 2009, 2013, Ali, et al., 2015De Vris, Erasmus, & Gerber, 2017, Frieder & Subrahmanyam, 2003, 2012, McCorkindale, 2008, Schoenbachler, Gordon, & Aurand, 2004, Tat Keh & Xie, 2009). ...
... Blue-chip stock plays a vital role as a risk eliminator for some products of a firm or a firm considering it as perceived advantage over the risk factors (Bailey & Ball, 2006). The organizations that have blue-chip stocks, brand equity, and strong goodwill in the market make a positive impact on the company's financial performance (Aspara, 2013;Seddon & Currie, 2017). Investors investing in blue-chip company's stocks have low risk perception and they are optimistic about investment in those stocks. ...
Article
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This study aims to examine the direct and indirect links between behavioral biases and investor’s investment decisions via the mediating role of risk perception through structural equation modeling. The study is conducted among individual investors who are engaged in investment for several years in Pakistan Stock Exchange. Purposive sampling technique was used for data collection and the sample size was consisted of 450 questionnaires. The findings contribute that risk perception mediates between blue-chip stocks and investment decisions. Furthermore, risk perception does not play the mediating role between herding bias, disposition effect, and investment decisions. However, the disposition effect has a strong direct relationship with risk perception. The study is beneficial to individual investors who can make investment decisions by self-estimation rather than to follow the others’ opinion. The proper training and education to the investors is also an appropriate path to overcome these biases. Risk is the major factor that discourages investment decisions but blue-chip stocks are a major risk eliminating factor while building investment decisions. Most of the prior studies focused on behavioral biases and investment decisions of individual investors but this study contributed to the mediating effect of risk perception. Human capital, anomalies, computer literacy, and artificial technology could also be used as a mediator and moderator for future orientation.
... Lopes (2011) posits that the image of a nation may be considered as a behavioural construct that influences the 'actions' of the consumer. Within the FDI context, the behavioural finance theory supports the influence of subjective factors on investment decisions (Aspara, 2013). The behavioural finance theory assumes that subjective intrinsic human behavioural factors influence investment decision making (Kishore, 2006;Palmgren & Ylander, 2015;Phan & Zhou, 2014). ...
Article
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This paper examines the influence that the reputation of Zimbabwe’s human capital has as an antecedent of FDI market entry opportunities in the country. By synthesizing nation branding, behavioural finance and foreign direct investment theory, this paper contributes to the growing body of knowledge in human capital as a determinant influencing foreign investor behaviour within an African economic context. Empirical data was generated from a self-administered online survey of a purposively sampled population of 305 foreign investors within the Zimbabwean context. Exploratory factor analysis extracted the items that constituted the Zimbabwean human capital construct, with Cronbach’s alpha coefficients being utilized to measure the reliability of the measuring instrument. Descriptive statistics, Pearson product-moment coefficients and multiple regression analysis were employed to further analyze the data. The results revealed that foreign investors considered the availability of a sustainable, highly productive, skilled, retainable and inexpensive workforce, as the influential human capital attributes they considered for FDI to Zimbabwe. The empirical evidence further affirmed that the reputation of Zimbabwe’s human capital is an antecedent for resource- and efficiency-seeking FDI typologies to Zimbabwe. As a result, practical guidelines are provided for the Government of Zimbabwe and the Zimbabwe Investment Authority on the potential development and promotion of Zimbabwe’s human capital for the purpose of positively influencing investor behaviour, thereby attracting FDI to the country.
... al., 2015); citra perusahaan (Ackert, et. al., 2010;Aspara, 2013); budaya (Daneshvar, et al., 2017); dan Corporate Social Responsibility (Cohen, et al., 2017). Berbeda dengan penelitian sebelumnya, penelitian ini termotivasi untuk menyoroti faktor internal yang dapat mempengaruhi minat individu untuk melakukan investasi di pasar modal. ...
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The investment intention is important to be explored because intention to invest in Indonesian capital market is still low. This study analyze the factors that influence investment intention by using Theory of Planned Behaviour (TPB). Through TPB, investment intention can be measured from explanatory variables which in turn will encourage actual behaviour. The variables used to predict investment intention are attitudes, subjective norms, perceived behavioural control, financial literacy, and risk perception. This study uses 161 respondents that were collected through a questionnaire. Data were analyzed with validity, reliability, and hypothesis testing using Structural Equation Modeling (SEM) through path analysis method. The results show that attitudes and subjective norms have no significant effect on investment intention. Meanwhile, perceived of behavioural control, financial literacy, and risk perception have a positive effect on investment intention in the Indonesian capital market. This results are expected to contribute for future research and provide advice to the government to design programs that can increase investment intention in the capital market.
... Findings from previous studies highlight that investors show preferences for dividend yield stock, stocks with lottery features and preferences for a range of stock-specific characteristics in a self-reported survey (Graham & Kumar, 2006;Kumar, 2009; M A N U S C R I P T A C C E P T E D ACCEPTED MANUSCRIPT 4 Khan et al., 2016). Aspara (2013) reports that investors' affective evaluation of a firm's product and brands influences their tendencies to invest in those firms as it increases investors' optimism about the financial returns of the firm. Since investors tend to exhibit preferences for stock's certain characteristics, these preferences may induce their decisions on which stock to be included in the portfolio that has certain characteristics. ...
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... Investors' perception and its influences on financial decisions are gaining more attention in behavioral finance literature. In particular, investors' perceptions regarding products and brands of the company, opinion of market efficiency, risk and return expectations are found to influence various financial decisions such as trading, stock investing, risk taking and the use of technical analysis Aspara, 2013;Doran et al., 2010;Menkhoff, 2010). Besides, it has been demonstrate that perception of past investment outcome influences investors' behavioral characteristics (e.g. ...
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Purpose The purpose of this paper is to examine the relationships among perception of past portfolio returns, optimism and financial decisions. Design/methodology/approach The relationships are examined using a data set of both retail and institutional investors in Malaysia and estimated using ordinary least square regression. Findings The results demonstrate that perception of past portfolio returns influences both retail and institutional investors’ trading and risk taking. Optimism measured as relative investment optimism and personal investment optimism similarly influences both groups of investors’ financial decisions. However, perception of past portfolio returns causes only retail investors to exhibit optimism. The results furthermore show that only for retail investors perception of past portfolio returns indirectly influences financial decisions, through the mediating channel of optimism. Practical implications The findings on the influences of perception of past portfolio returns and the mediating channel in decision process help to understand the differences between retail and institutional investors. Retail investors are found to be more susceptible to optimism. Therefore, regulators in Malaysia may enhance their initiatives by incorporating the peril of forming optimistic expectations in financial decisions, by giving special focus on retail investors. Originality/value This paper focuses on investors’ perception of past portfolio returns and its influence on various financial decisions, unlike past portfolio returns or market returns. Also, this paper is among the first to demonstrate the mediating channel of optimism in investors’ decision process.
... Rakesh, (2014), find out that speculator fallacy and its various types in Bombay Stock Exchange market that trouble of expectations of shareholders investing in shares of company are adversely trouble the out-come of invested capital in stock. Aspara, 2013, found that periodically study showed evidence that shareholder-investors buy stock of company they have knowledge and like it According to Lin, (2011), that when investors begin behaving like others however taking independent decision by the available information of share and company and follow investment decision of majority shareholders and investors rather than depending on stock price list and movements that increase investors risk and return factors. Strahilevitz, et al. (2011), define that repurchasing of stock not favor in decision making when investors was sold a stock in low price and after that going to repurchasing on high price of share on this situation investors avoid and disappointed such kind of decision. ...
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Pakistan is under developing country and it has an unpredictable market nature of shareholder-investors observe the company’s performance. This research could help to companies in understanding financial behavior, attitude and investors’ satisfaction in stock trade. Financial behavior is comparatively new subject in Pakistan therefore; this study has examined the financial behavior and attitude of investors. The behavioral finance that has been attempted to understand the positive experiences influences investors’ financial behavior. This study has find out that investor satisfaction is strongest in influence of positive financial behavior of investor and trader in stock trading; positive experience and brokers suggestions are strengthens the investment decision of investors and increases behavior loyalty to prefer over competitor. The main purpose of research to determine the effect of financial behavior on investors’ attitude and behavioral loyalty and investors’ satisfaction to preference over competitor. The research framework links with experiences in stock trade for positive (negative) experiences, attitude and financial behavior is developed. The research framework is measured data from sample of Karachi and Karachi Stock Exchange; the data is analyzed in smart PLS based on PLS-SEM. This study focused on trading experience with company’s active investors and traders in banking industry in Pakistan. The future research could be research in other sectors with inter-related issue of investors and traders (brokers) in stock trade. This is the first study in this research area; this study will be determine the experiences with positive (negative) financial behavior, attitude, satisfaction and behavioral loyalty of investors and traders in stock trade. Therefore, adding in this area of study which will help understanding the investors and traders attitude, preference and financial behavior in financial market.
... Further researchers include behavioural biases, emotions and personality traits of investors and evaluate their influence on investment decision. The advancement brings different aspects such as considering investors as a consumer (Aspara & Tikkanen, 2008 Aspara, 2013). Considering the apparent evidence that investment decision-making is affected by investor's behaviour, Lim et al. (2016) addressed that there is a need to investigate the relationship between investor's behaviour and their financial decision-making in a perspective by treating investors as a consumer. ...
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Publisher Summary Individuals come to “know” their own attitudes, emotions, and other internal states partially by inferring them from observations of their own overt behavior and/ or the circumstances in which this behavior occurs. Thus, to the extent that internal cues are weak, ambiguous, or uninterpretable, the individual is functionally in the same position as an outside observer, an observer who must necessarily rely upon those same external cues to infer the individual's inner states. This chapter traces the conceptual antecedents and empirical consequences of these propositions, attempts to place the theory in a slightly enlarged frame of reference, and clarifies just what phenomena the theory can and cannot account for in the rapidly growing experimental literature of self-attribution phenomena. Several experiments and paradigms from the cognitive dissonance literature are amenable to self-perception interpretations. But precisely because such experiments are subject to alternative interpretations, they cannot be used as unequivocal evidence for self-perception theory. The reinterpretation of cognitive dissonance phenomena and other self-perception phenomena have been discussed. The chapter highlights some differences between self-perception and interpersonal perception and shift of paradigm in social psychology. It discusses some unsolved problems, such as the conceptual status of noncognitive response classes and the strategy of functional analysis.
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This book was originally published by Macmillan in 1936. It was voted the top Academic Book that Shaped Modern Britain by Academic Book Week (UK) in 2017, and in 2011 was placed on Time Magazine's top 100 non-fiction books written in English since 1923. Reissued with a fresh Introduction by the Nobel-prize winner Paul Krugman and a new Afterword by Keynes’ biographer Robert Skidelsky, this important work is made available to a new generation. The General Theory of Employment, Interest and Money transformed economics and changed the face of modern macroeconomics. Keynes’ argument is based on the idea that the level of employment is not determined by the price of labour, but by the spending of money. It gave way to an entirely new approach where employment, inflation and the market economy are concerned. Highly provocative at its time of publication, this book and Keynes’ theories continue to remain the subject of much support and praise, criticism and debate. Economists at any stage in their career will enjoy revisiting this treatise and observing the relevance of Keynes’ work in today’s contemporary climate.
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The study of consideration has been attracting increasing attention over the last five years (see Shocker et al., 1991 for a review). Academic interest has been piqued by realization of the fact that we are achieving a good understanding of the brand evaluation and brand choice processes, given consideration, but less of an understanding of what drives brand consideration. From an academic perspective this lack of knowledge is troubling. From a practical perspective, managers have become increasingly concerned that in crowded markets their brands may not even gain entry into the consideration set. This is a practical problem if the factors that determine consideration are different from those that affect choice. Gensch (1987) suggests that different attributes may be used at multiple stages of choice. Nedungadi (1990) provides strong evidence that brand evaluation, a major determinant of choice, may not play the primary role during memory-based brand recall and consideration. Roberts and Lattin (1991) suggest that the functional form relating preferences to choice will be different once we take account of consideration sets.
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This paper re-examines the commonly observed inverse relationship between per- ceived risk and perceived benefit. We propose that this relationship occurs because people rely on aÄect when judging the risk and benefit of specific hazards. Evidence supporting this proposal is obtained in two experimental studies. Study 1 investigated the inverse relationship between risk and benefit judgments under a time-pressure condition designed to limit the use of analytic thought and enhance the reliance on aÄect. As expected, the inverse relationship was strengthened when time pressure was introduced. Study 2 tested and confirmed the hypothesis that providing information designed to alter the favorability of one's overall aÄective evaluation of an item (say nuclear power) would systematically change the risk and benefit judgments for that item. Both studies suggest that people seem prone to using an 'aÄect heuristic' which improves judgmental eÅciency by deriving both risk and benefit evaluations from a common source — aÄective reactions to the stimulus item. Copyright # 2000 John Wiley & Sons, Ltd.
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In this article, the authors try to determine why and under what conditions consumers enter into strong, committed, and meaningful relationships with certain companies, becoming champions of these companies and their products. Drawing on theories of social identity and organizational identification, the authors propose that strong consumer-company relationships often result from consumers' identification with those companies, which helps them satisfy one or more important self-definitional needs. The authors elaborate on the nature of consumer-company identification, including the company identity, and articulate a consumer-level conceptual framework that offers propositions regarding the key determinants and consequences of such identification in the marketplace.
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Building brand loyalty has become more important, yet more difficult to achieve in today's marketplace. This research investigates a possible avenue for building brand loyalty that is not directly related to the marketing of the product – attracting individual investors in the brand's corporate parent. A survey of over 500 individual investors revealed that individual investors do tend to buy brands from companies in which they hold stock, and investors may buy stock in a company because they have experience with the brand. In contrast with brand loyalty, where consumers will not buy competitive offerings, individual investors indicated they would buy competitive offerings, suggesting that stock ownership is more likely to lead to repeat purchase behavior, but not brand loyalty.
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A review and meta-analysis of methodological and subject variables influencing the exposure-affect relationship was performed on studies of the mere exposure effect published in the 20 years following Zajonc's (1968) seminal monograph. Stimulus type, stimulus complexity, presentation sequence, exposure duration, stimulus recognition, age of subject, delay between exposure and ratings, and maximum number of stimulus presentations all influence the magnitude of the exposure effect. Implications of these findings are discussed in the context of previous reviews of the literature on exposure effects and with respect to prevailing theoretical models of the exposure-affect relationship. Modifications of the 2-factor model of exposure effects that increase the heuristic value of the model are described. A possible evolutionary basis of the exposure effect is discussed.
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A review and meta-analysis of methodological and subject variables influencing the exposure–affect relationship was performed on studies of the mere exposure effect published in the 20 years following R. B. Zajonc's (see record 1968-12019-001) seminal monograph. Stimulus type, stimulus complexity, presentation sequence, exposure duration, stimulus recognition, age of subject, delay between exposure and ratings, and maximum number of stimulus presentations all influence the magnitude of the exposure effect. Implications of these findings are discussed in the context of previous reviews of the literature on exposure effects and with respect to prevailing theoretical models of the exposure–affect relationship. Modifications of the 2-factor model of exposure effects that increase the heuristic value of the model are described. A possible evolutionary basis of the exposure effect is discussed. (PsycINFO Database Record (c) 2012 APA, all rights reserved)
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Intuitions relating to outcomes extended over time are examined. Utility integration is proposed as a normative rule for the evaluation of extended episodes. In Experiment 1, subjects explicitly compared aversive experiences of varying durations. By several measures, disutility was a marginally decreasing function of episode duration, even for experiences that were thought to become increasingly aversive. This pattern is a qualitative violation of the integration rule. In Experiment 2, subjects made global evaluations of a hypothetical person's aversive experiences, on the basis of a series of subjective ratings of discomfort made at periodic intervals. The results showed an extreme sensitivity to improving or deteriorating trend and a striking neglect of duration. The final moments of an extended episode appear to exert a strong influence on the overall judgment. This leads to violations of monotonicity when adding some moments of moderate pain reduces judgments of global aversiveness.
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In Exp I, 183 undergraduates read a persuasive message from a likable or unlikable communicator who presented 6 or 2 arguments on 1 of 2 topics. High involvement (HI) Ss anticipated discussing the message topic at a future experimental session, whereas low-involvement (LI) Ss anticipated discussing a different topic. For HI Ss, opinion change was significantly greater given 6 arguments but was unaffected by communicator likability. For LI Ss, opinion change was significantly greater given a likable communicator but was unaffected by the argument's manipulation. In Exp II with 80 similar Ss, HI Ss showed slightly greater opinion change when exposed to 5 arguments from an unlikable (vs 1 argument from a likable) communicator, whereas LI Ss exhibited significantly greater persuasion in response to 1 argument from a likable (vs 5 arguments from an unlikable) communicator. Findings support the idea that HI leads message recipients to employ a systematic information processing strategy in which message-based cognitions mediate persuasion, whereas LI leads recipients to use a heuristic processing strategy in which simple decision rules mediate persuasion. Support was also obtained for the hypothesis that content- vs source-mediated opinion change would result in greater persistence. (37 ref) (PsycINFO Database Record (c) 2004 APA, all rights reserved)
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What do investors want? Abstract Diners want more than the utilitarian benefits of low cost and high nutrition when they choose restaurants, they want the utilitarian benefits of palatability, ambiance and conformity to culture. And they also want the expressive benefits of status, patriotism and social responsibility. Similarly, investors want more than the utilitarian benefits of low risk and high expected returns when they choose investments, they want additional utilitarian benefits and they want expressive benefits as well. Restaurant journals discuss both the utilitarian benefits of restaurants and their expressive ones, but finance journals are confined to the utilitarian benefits of low risk and high expected returns. I hope that the expressive benefits of investments would be discussed in future issues of finance journals and offer in this article some thoughts about the future of the investment profession and its business.
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The relationship between risk and return lies at the heart of modern finance. This relationship is embodied within such core concepts as the capital market line and the security market line. Both of these graphs feature a positive slope, meaning that the higher the risk the higher the expected return. I propose that even though investors may state that in principle, risk and expected return are positively related, in practice they form judgments in which the two are negatively related. I have organized my remarks around the following six questions: (1) What evidence is there that investors judge risk and return to be negatively related? (2) What psychological forces would lead investors to form such judgments about risk and return? (3) What implications do such judgments hold for the broad debate between proponents of market efficiency and proponents of behavioral finance? (4) How robust are judgments about risk and return to judgments about the expected equity premium? (5) To what extent are investors consciously aware of the manner in which they form judgments about risk and return? (6) How reliable is the evidence on risk and return presented here?
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Four recent scales of consumer involvement are compared. These scales are first scrutinized, and, where necessary, modified, on a priori grounds. The modified scales are then empirically compared in terms of unidimensionality, convergent and discriminant validity, and nomological validity. On these criteria, the pruned and modified version of each of the four scales is found satisfactory. However, some unique features of each, which are discussed as trade-offs that marketing researchers would have to consider in their choice of a scale to measure this important consumer behavior construct. © 1995 John Wiley & Sons, Inc.