We describe a psychophysiological study of the emotion regulation of investment bank traders. Building on work on the role of emotions in financial decision making, we examined the relationship between market conditions, trader experience, and emotion regulation while trading, as indexed by high-frequency heart rate variability (HF HRV). We found a significant inverse relationship between HF HRV and market volatility and a positive relationship between HF HRV and trader experience. We argue that this suggests that emotion regulation may be an important facet of trader expertise, and that learning effects demonstrated in financial markets may include improved emotion regulation as an important component of that learning. Our results also suggest the value of investigating the role of effective emotion regulation in a broader range of financial decision-making contexts.

Drawing on regret and reputation literatures, the authors demonstrate how positive corporate associations can mitigate the effects of share performance on investor regret. Three studies are presented, the first involved the observation of six investment club meetings. The second is a survey of investors exploring some of the findings of the first study, specifically the relationship between investor regret and corporate associations. The final study uses an experimental design to test whether corporate social responsibility (CSR) messaging can influence regret in the context of disappointing share performance by influencing corporate agreeableness. The main findings are that a range of corporate associations are important to investors, more so than actual share performance, in their decision-making. Specifically, the more agreeable (e.g. trustworthy, supportive) the company is perceived to be, the lower will be any regret felt over share performance. Finally, CSR information was found to affect regret via an influence on agreeableness.

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