Affect-based stock investment decision: The role of affective self-affinity

Download

index.pdf

Date

2017-6

Author

Usul, Naime
Özdemir, Özlem
Kiessling, Timothy

Metadata

Show full item record

Item Usage Stats

140
views

111
downloads

This paper studies the role of affective self-affinity for a company in the stock investment decision by investigating the factors triggering it. Based on the social identity theory and the affect literature we hypothesize that three types of identifications, namely group related, company-people related and idea ideal related, trigger affective self-affinity for a company which results in extra affect-based motivation to invest in the company's stock. The two ideas included in the idea/ideal related affective self-affinity are socially responsible investing and nationality related ideas. Based on the survey data of 133 active individual investors, we find that the more the investors perceive the company supports/represents a specific group or idea or employ a specific person, with which the investors identify themselves, the higher is the investors' affective self-affinity for the company. This results in higher extra affective motivation to invest in the company's stock over and beyond financial indicators. Thus, investors' identification with groups, people, or ideas such as socially responsible investing and nationality results in higher affect-based investment motivation through affective self-affinity aroused in the investors. Moreover, positive attitude towards the company is another factor that explains the affect-based extra investment motivation.

Subject Keywords

Investor behavior, Investor psychology, Affect heuristic, Affective self-affinity, Social identity theory, Antecedents of affective self-affinity

URI

https://hdl.handle.net/11511/28448

Journal

Journal of Behavioral and Experimental Economics

DOI

https://doi.org/10.1016/j.socec.2017.04.004

Collections

Department of Business Administration, Article

Suggestions

OpenMETU
Core

Uncertainty, macroprudential policies and corporate leverage: Firm-level evidence Yarba, Ibrahim; Güner, Zehra Nuray (2020-06-01) This paper investigates the impact of macroprudential policies and uncertainty of economic environment on corporate leverage dynamics over the last decade. This is the first study to investigate the impact of macroprudential policies and uncertainty on leverage dynamics of Turkish non-financial firms using firm-level data. We argue in this paper that persistence of uncertainty should be a more appropriate factor affecting credit dynamics rather than uncertainty. In that sense, we construct a measure of unce...
Quantiative Methodology for Determination of Cost Contingency in International Projects Sönmez, Rifat; Birgönül, Mustafa Talat (American Society of Civil Engineers (ASCE), 2007-01-01) This paper presents a quantitative methodology to determine financial impacts of the risk factors during the bidding stages of international construction projects. Project and country data of 26 construction projects from 21 countries were collected for evaluation of the international risk factors. The factors impacting cost contingency were identified using correlation and regression analysis techniques. The results indicated that four factors had major contributions for explaining the variations in the co...
Do US Corporate Governance Standards Effectively Discourage Risk in the Emerging Markets? Sayari, Naz; Marcum, Bill (2018-06-01) This study provides an examination of the effect of various corporate governance factors on the management of the risks inherent in business and the potential divergent impact of these factors on US firms and firms in emerging countries. In particular, the study scrutinises corporate governance and corporate risk-taking behaviour across different political and socioeconomic environments. In a cross-sectional time-series setting, two-step generalised least squares regression outcomes reveal that the impact o...
Information in the financial news: effect of market commentary on stock market performance Giray, Aynur; Danışoğlu, Seza; Department of Business Administration (2012) This paper studies the effect of investment sentiment on asset prices. A sentiment proxy is calculated by performing content analysis on the Wall Street Journal‘s "Heard on the Street‘ columns. This proxy is extracted by the principal component analysis of the word tags from the Harvard psychological dictionary that is used by the content analysis software General Inquirer. The relationship between stock prices, trading volume and the media sentiment proxy is estimated within the VAR context. Results sugges...
Reactions of dissatisfied investors: exit, voice or loyalty Tasci, Muge; Özdemir, Özlem (2017-09-01) This study examines the reactions of individual investors that have invested in the stocks of companies that have been eventually delisted from the stock market due to bankruptcy and/or bad governance. Data to determine reaction styles of investors are collected through a wellestablished questionnaire to a sample of 67 investors of Borsa Istanbul. Multinomial logistic regression analysis concludes that investors' perceived knowledge about the stock market is the most important factor affecting how investors...

Citation Formats

N. Usul, Ö. Özdemir, and T. Kiessling, “Affect-based stock investment decision: The role of affective self-affinity,” Journal of Behavioral and Experimental Economics, pp. 97–109, 2017, Accessed: 00, 2020. [Online]. Available: https://hdl.handle.net/11511/28448.