Myopic loss aversion and stock investments: An empirical study of private investors

Lee, Boram; Veld‐Merkoulova, Yulia V.

doi:10.1016/j.jbankfin.2016.04.008

Cited by 41 publications

(20 citation statements)

References 60 publications

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“…This is a common procedure in order to ensure a basic understanding of the decision problem and is applied in several fields of economic research, such as financial economics (e.g. Bassen et al 2019;Gamel et al 2017;Lee and Veld-Merkoulova 2016), transportation economics (e.g. Ziegler 2012), or energy economics (e.g.…”

Section: Data Experimental Design and Variablesmentioning

confidence: 99%

“…In the context of investments in renewable energies, Gamel et al (2017) required experience in financial investments, such as stocks, open equity funds, or bonds. Lee and Veld-Merkoulova (2016) only consider members of the CentERdata panel that invested in stocks or mutual funds in order to analyze portfolio evaluations of individual investors. 13 Beyond that, the respondents do not receive any further incentives (i.e.…”

Section: Data Experimental Design and Variablesmentioning

confidence: 99%

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Investment Barriers and Labeling Schemes for Socially Responsible Investments

Gutsche

Zwergel

2020

Schmalenbach Bus Rev

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Given the increasing role of socially responsible investing (SRI), but still limited participation of individual (i.e. small, retail) investors, the objective of this study is twofold: (i) We aim to identify investment barriers regarding SRI for individual investors and analyze to what extent these barriers vary across different investor groups. (ii) We analyze to what extent sustainability or transparency labels can help to overcome these barriers. To this end, we empirically analyze data from a survey and a stated choice experiment for a broad sample of financial decision makers in German households. The results suggest that a considerable amount of respondents can imagine to invest in a socially responsible manner, which is promising for policymakers and practitioners who aim to foster sustainable development and SRI. However, too high information costs are a severe barrier for potential future investors and a considerable share of respondents distrusts providers of socially responsible investment products. Banks, who could help to solve this problem, appear not to fulfill their role as intermediaries. But we find that labels might serve as a complement to banks. Especially sustainability certificates that confirm the consideration of sustainability criteria could decrease information costs and overcome at least some barriers for some investor groups, particularly for new investors. However, the results also suggest that a certain degree of basic knowledge and trust in providers of socially responsible investment products is required before labels work efficiently.

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Section: Data Experimental Design and Variablesmentioning

confidence: 99%

Section: Data Experimental Design and Variablesmentioning

confidence: 99%

Investment Barriers and Labeling Schemes for Socially Responsible Investments

Gutsche

Zwergel

2020

Schmalenbach Bus Rev

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“…Empirically, the tenets of modern portfolio theory have often been challenged, although the evidence relating risk-taking attitudes and portfolio allocation is inconclusive (Ameer, 2015;Jaiyeoba and Haron, 2016;Lee and Veld-Merkoulova, 2016). Prior research shows that there are various other factors affecting risk tolerance and the portfolio allocation decision.…”

Section: Literature Review 21 Portfolio Allocationmentioning

confidence: 99%

Islamic religiosity and portfolio allocation: the Malaysian context

Mahdzan

Zainudin

Hashim

et al. 2017

IMEFM

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Purpose -This study aims to investigate the association between Muslim individuals' portfolio allocation choice and Islamic religiosity (levels and dimensions), controlling for risk tolerance and sociodemographic factors.Design/methodology/approach -The study uses primary data collected via survey questionnaires from a sample of 751 Muslim working individuals in Kuala Lumpur, Malaysia. Owing to the ordinal nature of the dependent variable, which reflects the levels of proportions of risky assets in portfolios, the data were analyzed using an ordered probit regression model.Findings -The findings reveal that Islamic religiosity levels in general were insignificantly related to portfolio allocation, but that two dimensions of religiosity (virtue and obligation) significantly impact the allocations of risky assets in the portfolio. The higher the level of virtue, the lower the propensity to allocate risky assets into the portfolio. On the contrary, the higher the level of obligation, the higher the propensity to allocate risky assets in the portfolio. Meanwhile, individuals with higher risk tolerance, income and education levels show greater propensity to allocate risky assets in the portfolio.Research limitations/implications -The sample is restricted to Muslims in Kuala Lumpur; hence, the findings are not easily generalized to Muslim investors in general. Findings may differ between Muslims across the world, so future research needs to expand from a country specific to an international analysis. In addition, future studies could include other determinants of portfolio allocation, such as financial literacy.Practical implications -The findings of this study may assist financial planners and policymakers to better understand the drivers of portfolio allocation among their Muslim clients.Originality/value -While other studies have tended to focus on the impact of religiosity on the holdings of specific financial assets, such as Islamic bank accounts or Takaful, the present study explores the effect of Islamic religiosity dimensions on the allocations of risky assets in the portfolio. The study also develops an ordinal measure of portfolio allocation and makes a methodological contribution by using an ordered probit regression analysis.

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“…The Swedish common pension plan system facilitates pension savings for all workers in Sweden, allowing participants to allocate part of their pension savings individually, but limiting these investments to certain mutual funds. Therefore, Swedish investors may have less need for self-control, as certain essential pension benefits do not depend on individual pension planning, and the trading activity of older investors may not be as pension-motivated as in Kaplanski et al (2015), or in Lee and Veld-Merkoulova (2016). In turn, we use data on individual accounts without any restrictions, thus enabling us to address the importance of gender and age in investing when the investors' own self-control becomes a notably vital aspect of trading ETPs.…”

Section: Introductionmentioning

confidence: 99%