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PurposeInvestment decisions hold immense significance for investors and eventually affect their portfolio performance. Investors are advised to weigh the costs and benefits associated with every decision in order to make rational investment decisions. However, behavioral finance research reveals that investors' choices often stem from a blend of economic, psychological and sociological factors, leading to irrationality. Moreover, environmental, social and corporate governance (ESG) factors, aligned with behavioral finance hypotheses, also sway opinions and stock prices. Hence, this study aims to identify how individual equity investors prioritize key determinants of investment decisions in the Indian stock market.Design/methodology/approachThe current research gathered data from 391 individual equity investors through a structured questionnaire. Thereafter, a fuzzy analytic hierarchy process (F-AHP) was used to meet the purpose of the research.FindingsInformation availability, representative heuristics belonging to psychological factors and macroeconomic indicators falling under economic factors were discovered to be the three most prioritized criteria, whereas environmental issues within the realm of ESG factors, recommendations of brokers or investment consultants of sociological factors, and social issues belonging to ESG factors were found to be the least prioritized criteria, respectively.Research limitations/implicationsOnly active and experienced individual equity investors were surveyed in this study. Furthermore, with a sample size of 391 participants, the study was confined to individual equity investors in one nation, India.Practical implicationsThis research has implications for individual investors, institutional investors, market regulators, corporations, financial advisors, portfolio managers, policymakers and society as a whole.Originality/valueTo the best of the authors' knowledge, no real attempt has been made to comprehend how active and experienced individual investors prioritize critical determinants of investment decisions by taking economic, psychological, sociological and ESG factors collectively under consideration.
PurposeInvestment decisions hold immense significance for investors and eventually affect their portfolio performance. Investors are advised to weigh the costs and benefits associated with every decision in order to make rational investment decisions. However, behavioral finance research reveals that investors' choices often stem from a blend of economic, psychological and sociological factors, leading to irrationality. Moreover, environmental, social and corporate governance (ESG) factors, aligned with behavioral finance hypotheses, also sway opinions and stock prices. Hence, this study aims to identify how individual equity investors prioritize key determinants of investment decisions in the Indian stock market.Design/methodology/approachThe current research gathered data from 391 individual equity investors through a structured questionnaire. Thereafter, a fuzzy analytic hierarchy process (F-AHP) was used to meet the purpose of the research.FindingsInformation availability, representative heuristics belonging to psychological factors and macroeconomic indicators falling under economic factors were discovered to be the three most prioritized criteria, whereas environmental issues within the realm of ESG factors, recommendations of brokers or investment consultants of sociological factors, and social issues belonging to ESG factors were found to be the least prioritized criteria, respectively.Research limitations/implicationsOnly active and experienced individual equity investors were surveyed in this study. Furthermore, with a sample size of 391 participants, the study was confined to individual equity investors in one nation, India.Practical implicationsThis research has implications for individual investors, institutional investors, market regulators, corporations, financial advisors, portfolio managers, policymakers and society as a whole.Originality/valueTo the best of the authors' knowledge, no real attempt has been made to comprehend how active and experienced individual investors prioritize critical determinants of investment decisions by taking economic, psychological, sociological and ESG factors collectively under consideration.
The paper analyzes the cryptocurrency ecosystem at both the aggregate and individual levels to understand the factors that impact future volatility. The study uses high-frequency panel data from 2020 to 2022 to examine the relationship between several market volatility drivers, such as daily leverage, signed volatility and jumps. Several known autoregressive model specifications are estimated over different market regimes, and results are compared to equity data as a reference benchmark of a more mature asset class. The panel estimations show that the positive market returns at the high-frequency level increase price volatility, contrary to what is expected from the classical financial literature. We attributed this effect to the price dynamics over the last year of the dataset (2022) by repeating the estimation on different time spans. Moreover, the positive signed volatility and negative daily leverage positively impact the cryptocurrencies’ future volatility, unlike what emerges from the same study on a cross-section of stocks. This result signals a structural difference in a nascent cryptocurrency market that has to mature yet. Further individual-level analysis confirms the findings of the panel analysis and highlights that these effects are statistically significant and commonly shared among many components in the selected universe.
Investors’ personality traits and psychological biases play a crucial role in the decision-making process and risk-taking behavior of investors. The emotional and psychological factors impact the decision-making, giving rise to biases. These biases make investors make irrational decisions, which signifies the need for this study. This study aims to assess investors’ personalities using HEXACO model and its interaction with biases and financial risk tolerance. The data of 530 retail investors in India, who had more than 2 years of investing experience in the stock market, were collected. The study considered the HEXACO model since it captures all dimensions of personality that are not considered in the commonly used Big Five Model (BFM). The result of structural equation modeling and mediation analysis shows that the ‘honesty-humility’ trait significantly affects overconfidence bias. The mediation analysis of biases between traits and financial risk tolerance showed complete, partial, and no mediation effect depending on the nature of prejudice. Clear distinction of personality traits into ‘virtue traits’ and ‘character traits’ can be observed. This clear distinction paves the way for employing the HEXACO model in future studies.
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