Predicting Individual Investors- Intention to Invest: An Experimental Analysis of Attitude as a Mediator
The survival of publicly listed companies largely
depends on their stocks being liquidly traded. This goal can be
achieved when new investors are attracted to invest on companies-
stocks. Among different groups of investors, individual investors are
generally less able to objectively evaluate companies- risks and
returns, and tend to be emotionally biased in their investing
decisions. Therefore their decisions may be formed as a result of
perceived risks and returns, and influenced by companies- images.
This study finds that perceived risk, perceived returns and trust
directly affect individual investors- trading decisions while attitude
towards brand partially mediates the relationships. This finding
suggests that, in courting individual investors, companies still need to
perform financially while building a good image can result in their
stocks being accepted quicker than the stocks of good performing
companies with hidden images.
[1] P. Vogelheim, D. D. Schoebachler, G. L. Gordon, and C. C. Gordon,
"The importance of courting the individual investor," Business Horizons,
vol. 44, no. 1, pp. 69-76, 2001.
[2] Australian Securities Exchange, 2008 Australian share ownership study.
Sydney: Australian Securities Exchange, 2009.
[3] J. Aspara, and H. Tikkanen, "Interactions of individuals' companyrelated
attitudes and their buying of the companies' stocks and products,"
Journal of Behavioral Finance, Vol. 9, no. 2, pp. 85-94, 2008.
[4] M. Massa, and A. Simonov, "Hedging, familiarity and portfolio choice,"
The Review of Financial Studies, vol. 19, no. 2, pp. 633-685, 2006.
[5] C. A. Looney, J. S. Valacich, P. A. Todd, and M. G. Morris, "Paradoxes
of online investing: testing the influence of technology on user
expectancies," Decision Sciences, vol. 37, no. 2, pp. 205-246, 2006.
[6] E. Rubaltelli, S. Rubichi, L. Savadori, M. Tedeschi, and M. Ferretti,
"Numerical information format and investment decisions: implications
for the disposition effect and the status quo bias," Journal of Behavioral
Finance, vol. 6, no. 1, pp. 19-26, 2005.
[7] B. M. Barber, and T. Odean, "Online investors: do the slow die first?"
The Review of Financial Studies, vol. 15, no. 2, pp. 455-487, 2002.
[8] J. J. Choi, D. Laibson, and A. Metrick, "How does the Internet affect
trading? evidence from investor behavior in 401(k) plans," Journal of
Financial Economics, vol. 64, no. 3, pp. 397-421, 2002.
[9] P. Konana, and S. Balasubramanian, "The social-economic-
psychological(SEP) model in technology and usage: an application to
online investing," Decision Support Systems, vol. 39, no. 3, pp. 505-524,
2005.
[10] J. F. Cocco, F. J. Gomes, and P. J. Maenhout, "Consumption and
portfolio choice over the life cycle," The Review of Financial Studies,
vol. 18, no. 2, pp. 491-533, 2005.
[11] W. J. Jansen, and N. J. Nahuis, "The stock market and consumer
confidence: European evidence," Economics Letters, vol. 79, no. 1, pp.
89-98, 2003.
[12] J. R. Ritter, "Behavioral finance," Pacific-Basin Finance Journal, vol.
11, no. 4, pp. 429-437, 2003.
[13] B. M. Barber, and T. Odean, "Boys will be boys: gender,
overconfidence, and common stock investment," The Quarterly Journal
of Economics, vol. 116, no. 1, pp. 261-292, 2001.
[14] R. Deaves, C. Dine, and W. Horton, How are investment decisions
made? Toronto, ON: The Task Force to Modernize Securities
Regulation in Canada, 2006.
[15] C. R. Fox, and A. Tversky, "Ambiguity aversion and comparative
ignorance," The Quarterly Journal of Economics, vol. 110, no. 3, pp.
585-603, 1995.
[16] J. R. Graham, C. R. Harvey, and H. Huang, "Investor competence,
trading frequency, and home bias," Management Science, vol. 55, no. 7,
pp. 1094-1106, 2009.
[17] J. R. Brown, Z. Ivkovic, P. A. Smith, and S. Weisbenner, "Neighbors
matter: causal community effects and stock market participation,"
Journal of Finance, vol. 63, no. 3, pp. 1509-1531, 2008.
[18] I. Ajzen, "From intentions to actions: a theory of planned behavior," in
Action Control: From Cognition to Behavior, J. Kuhl, and J. Beckmann,
Eds. New York: Springer, 1985, pp. 11-39.
[19] I. Ajzen, "The theory of planned behavior," Organizational Behavior and
Human Decision Processes, vol. 50, no. 2, pp. 179-211, 1991.
[20] V. Ricciardi, "A risk perception primer: a narrative research review of
the risk perception literature in behavioral accounting and behavioral
finance," SSRN Working Paper, 2004.
[21] V. Ricciardi, "A literature review of risk perception studies in behavioral
finance: the emerging issues," Proc. 25th Annual Meeting of the Society
for the Advancement of Behavioral Economics Conference, New York,
2007.
[22] H. Loranger, and J. Nielsen, Designing Websites to Maximise Investor
Relations: Usability Guidelines for Investor Relations on Corporate
Websites. Fremont, CA: Nielsen Norman Group, 2003, pp. 1-124.
[23] R. C. Mayer, J. H. Davis, and D. F. Schoorman, "An integrative model
of organizational trust," Academy of Management Review, vol. 20, no. 3,
pp. 709-734, 1995.
[24] M. Siegrist, and G. Cvetkovich, "Perception of hazards: the role of social
trust and knowledge," Risk Analysis, vol. 20, no. 5, pp. 713-719, 2000.
[25] M. C. Clark, and R. L. Payne, "Character-based determinants of trust in
leaders," Risk Analysis, vol. 26, no. 5, pp. 1161-1173, 2006.
[26] R. A. Olsen, "Trust as risk and the foundation of investment value," The
Journal of Socio-Economics, vol. 37, no. 6, pp. 2189-2200, 2008.
[27] D. Aaker, Managing Brand Equity. New York: The Free Press, 1991.
[28] L. L. Berry, "Cultivating service brand equity," Journal of the Academy
of Marketing Science, vol. 28, no. 1, pp. 128-137, 2000.
[29] D. F. Davis, S. L. Golicic, and A. J. Marquardt, "Branding a B2B
service: does a brand differentiate a logistics service provider?"
Industrial Marketing Management, vol. 37, no. 2, pp. 218-227, 2008.
[30] L. Frieder, and A. Subrahmanyam, "Brand perceptions and the market
for common stock," Journal of financial and Quantitative Analysis, vol.
40, no. 1, pp. 57-85, 2005.
[31] G. Huberman, "Familiarity breeds investment," The Review of Financial
Studies, vol. 14, no. 3, pp. 659-680, 2001.
[32] W-Y. Huang, H. Schrank, and A. J. Dubinsky, "Effect of brand name on
consumers- risk perceptions of online shopping," Journal of Consumer
Behavior, vol. 4, no. 1, pp. 40-50, 2004.
[33] E. U. Weber, N. Siebenmorgen, and M. Weber, "Communicating asset
risk: how name recognition and the format of historic volatility
information affect risk perception and investment decisions," Risk
Analysis, vol. 25, no. 3, pp. 597-609, 2005.
[34] M. Kilka, and M. Weber, "Home bias in international stock return
expectations," Journal of Behavioral Finance, vol. 1, no. 3&4, pp. 176-
192, 2000.
[35] A. M. Jenkins, "Research methodologies and MIS research," in Research
Methods in Information Systems, E. Mumford, R. A. Hirschheim, G.
Fitzgerald and A. T. W. Harper, Eds. Amsterdam, Holland: North-
Holland Publishing Co, 1985, pp. 103-117.
[36] Y. D. Wang, and H. H. Emurian, "Trust in e-commerce: consideration of
interface design factors," Journal of Electronic Commerce in
Organizations, vol. 3, no. 4, pp. 42-60, 2005.
[37] K. Bryne, "How do consumers evaluate risk in financial products?"
Journal of Financial Services Marketing, vol. 10, no. 1, pp. 21-36, 2005.
[38] E. Delgado-Ballester, and J. L. Munuera-Aleman, "Brand trust in the
context of consumer loyalty," European Journal of Marketing, vol. 35,
no. 11/12, pp. 1238-1258, 2008.
[39] Y. Ganzach, S. Ellis, A. Pazy, and T. Ricci-Siag, "On the perception and
operationalization of risk perception," Judgment and Decision Making,
vol. 3, no. 4, pp. 317-324, 2008.
[40] J. Nilsson, "Investment with a conscience: examining the impact of prosocial
attitudes and perceived financial performance on socially
responsible investment behavior," Journal of Business Ethics, vol. 83,
no. 2, pp. 307-325, 2008.
[41] E. J. Karson, and R. J. Fisher, "Predicting intentions to return to web
site: extending the dual mediation hypothesis," Journal of Interactive
Marketing, vol. 19, no. 3, pp. 2-14, 2005.
[42] S. B. MacKenzie, R. J. Lutz, and G. E. Belch, "The role of attitude
toward the ad as a mediator of advertising effectiveness: a test of
competing explanations," Journal of Marketing Research, vol. 23, no. 2,
pp. 130-143, 1986.
[43] C. M. Ringle, S. Wende, and S. Will, SmartPLS 2.0 Beta. Hamburg:
University of Hamburg, 2005.
[44] J. S. Anderson, and D. W. Gerbing, "Structural equation modeling in
practice: a review and recommended two-step approach," Psychological
Bulletin, vol. 103, no. 3, pp. 411-423, 1988.
[45] C. M. Ringle, S. Wende, and S. Will, "The finite mixture partial least
squares approach: methodology and application," in Handbook of
Partial Least Squares: Concepts, Methods and Applications in
Marketing and Related Fields, V. E. Vinzi, W. W. Chin, J. Henseler and
H. Wang, Eds. New York: Springer-Verlag, 2009.
[46] P. Guenzi, L. Georges, and C. Pardo, C. "The impact of strategic account
managers' behaviors on relational outcomes: an empirical study,"
Industrial Marketing Management, vol. 38, no. 3, pp. 300-311, 2009.
[47] M. Tenenhaus, V. E. Vinzi, Y-M Chatelin, and C. Lauro, "PLS path
modeling," Computational Statistics & Data Analysis, vol. 48, no. 1, pp.
159-205, 2005.
[48] W. W. Chin, "The partial least squares approach to structural equation
modeling," in Modern Methods for Business Research, G. A.
Marcoulides, Ed. Mahwah, NJ: Lawrence Eribaum Associates, 1998, pp.
295-336.
[49] R. M. Baron, and D. A. Kenny, "The moderator-mediator variable
distinction in social psychological research: conceptual, strategic and
statistical considerations," Journal of Personality and Social
Psychology, vol. 51, no. 6, pp. 1173-1182, 1986.
[50] U. Konradt, T. Christophersen, and U. Schaeffer-Kuelz, "Predicting user
satisfaction, strain and system usage of employee self-services,"
International Journal of Human-Computer Studies, vol. 64, no. 11, pp.
1141-1153, 2006.
[51] D. Gefen, D. W. Straub, and M-C. Boudreau, "Structural equation
modelling and regression: guideline for research practice,"
Communications of AIS, vol. 4, no. 7, pp. 1-77, 2000.
[52] K. Mathieson, E. Peacock, and W. W. Chin, "Extending the technology
acceptance model: the influence of perceived user resources," The DATA
BASE for Advances in Information Systems, vol. 32, no. 3, pp. 86-112,
2001.
[1] P. Vogelheim, D. D. Schoebachler, G. L. Gordon, and C. C. Gordon,
"The importance of courting the individual investor," Business Horizons,
vol. 44, no. 1, pp. 69-76, 2001.
[2] Australian Securities Exchange, 2008 Australian share ownership study.
Sydney: Australian Securities Exchange, 2009.
[3] J. Aspara, and H. Tikkanen, "Interactions of individuals' companyrelated
attitudes and their buying of the companies' stocks and products,"
Journal of Behavioral Finance, Vol. 9, no. 2, pp. 85-94, 2008.
[4] M. Massa, and A. Simonov, "Hedging, familiarity and portfolio choice,"
The Review of Financial Studies, vol. 19, no. 2, pp. 633-685, 2006.
[5] C. A. Looney, J. S. Valacich, P. A. Todd, and M. G. Morris, "Paradoxes
of online investing: testing the influence of technology on user
expectancies," Decision Sciences, vol. 37, no. 2, pp. 205-246, 2006.
[6] E. Rubaltelli, S. Rubichi, L. Savadori, M. Tedeschi, and M. Ferretti,
"Numerical information format and investment decisions: implications
for the disposition effect and the status quo bias," Journal of Behavioral
Finance, vol. 6, no. 1, pp. 19-26, 2005.
[7] B. M. Barber, and T. Odean, "Online investors: do the slow die first?"
The Review of Financial Studies, vol. 15, no. 2, pp. 455-487, 2002.
[8] J. J. Choi, D. Laibson, and A. Metrick, "How does the Internet affect
trading? evidence from investor behavior in 401(k) plans," Journal of
Financial Economics, vol. 64, no. 3, pp. 397-421, 2002.
[9] P. Konana, and S. Balasubramanian, "The social-economic-
psychological(SEP) model in technology and usage: an application to
online investing," Decision Support Systems, vol. 39, no. 3, pp. 505-524,
2005.
[10] J. F. Cocco, F. J. Gomes, and P. J. Maenhout, "Consumption and
portfolio choice over the life cycle," The Review of Financial Studies,
vol. 18, no. 2, pp. 491-533, 2005.
[11] W. J. Jansen, and N. J. Nahuis, "The stock market and consumer
confidence: European evidence," Economics Letters, vol. 79, no. 1, pp.
89-98, 2003.
[12] J. R. Ritter, "Behavioral finance," Pacific-Basin Finance Journal, vol.
11, no. 4, pp. 429-437, 2003.
[13] B. M. Barber, and T. Odean, "Boys will be boys: gender,
overconfidence, and common stock investment," The Quarterly Journal
of Economics, vol. 116, no. 1, pp. 261-292, 2001.
[14] R. Deaves, C. Dine, and W. Horton, How are investment decisions
made? Toronto, ON: The Task Force to Modernize Securities
Regulation in Canada, 2006.
[15] C. R. Fox, and A. Tversky, "Ambiguity aversion and comparative
ignorance," The Quarterly Journal of Economics, vol. 110, no. 3, pp.
585-603, 1995.
[16] J. R. Graham, C. R. Harvey, and H. Huang, "Investor competence,
trading frequency, and home bias," Management Science, vol. 55, no. 7,
pp. 1094-1106, 2009.
[17] J. R. Brown, Z. Ivkovic, P. A. Smith, and S. Weisbenner, "Neighbors
matter: causal community effects and stock market participation,"
Journal of Finance, vol. 63, no. 3, pp. 1509-1531, 2008.
[18] I. Ajzen, "From intentions to actions: a theory of planned behavior," in
Action Control: From Cognition to Behavior, J. Kuhl, and J. Beckmann,
Eds. New York: Springer, 1985, pp. 11-39.
[19] I. Ajzen, "The theory of planned behavior," Organizational Behavior and
Human Decision Processes, vol. 50, no. 2, pp. 179-211, 1991.
[20] V. Ricciardi, "A risk perception primer: a narrative research review of
the risk perception literature in behavioral accounting and behavioral
finance," SSRN Working Paper, 2004.
[21] V. Ricciardi, "A literature review of risk perception studies in behavioral
finance: the emerging issues," Proc. 25th Annual Meeting of the Society
for the Advancement of Behavioral Economics Conference, New York,
2007.
[22] H. Loranger, and J. Nielsen, Designing Websites to Maximise Investor
Relations: Usability Guidelines for Investor Relations on Corporate
Websites. Fremont, CA: Nielsen Norman Group, 2003, pp. 1-124.
[23] R. C. Mayer, J. H. Davis, and D. F. Schoorman, "An integrative model
of organizational trust," Academy of Management Review, vol. 20, no. 3,
pp. 709-734, 1995.
[24] M. Siegrist, and G. Cvetkovich, "Perception of hazards: the role of social
trust and knowledge," Risk Analysis, vol. 20, no. 5, pp. 713-719, 2000.
[25] M. C. Clark, and R. L. Payne, "Character-based determinants of trust in
leaders," Risk Analysis, vol. 26, no. 5, pp. 1161-1173, 2006.
[26] R. A. Olsen, "Trust as risk and the foundation of investment value," The
Journal of Socio-Economics, vol. 37, no. 6, pp. 2189-2200, 2008.
[27] D. Aaker, Managing Brand Equity. New York: The Free Press, 1991.
[28] L. L. Berry, "Cultivating service brand equity," Journal of the Academy
of Marketing Science, vol. 28, no. 1, pp. 128-137, 2000.
[29] D. F. Davis, S. L. Golicic, and A. J. Marquardt, "Branding a B2B
service: does a brand differentiate a logistics service provider?"
Industrial Marketing Management, vol. 37, no. 2, pp. 218-227, 2008.
[30] L. Frieder, and A. Subrahmanyam, "Brand perceptions and the market
for common stock," Journal of financial and Quantitative Analysis, vol.
40, no. 1, pp. 57-85, 2005.
[31] G. Huberman, "Familiarity breeds investment," The Review of Financial
Studies, vol. 14, no. 3, pp. 659-680, 2001.
[32] W-Y. Huang, H. Schrank, and A. J. Dubinsky, "Effect of brand name on
consumers- risk perceptions of online shopping," Journal of Consumer
Behavior, vol. 4, no. 1, pp. 40-50, 2004.
[33] E. U. Weber, N. Siebenmorgen, and M. Weber, "Communicating asset
risk: how name recognition and the format of historic volatility
information affect risk perception and investment decisions," Risk
Analysis, vol. 25, no. 3, pp. 597-609, 2005.
[34] M. Kilka, and M. Weber, "Home bias in international stock return
expectations," Journal of Behavioral Finance, vol. 1, no. 3&4, pp. 176-
192, 2000.
[35] A. M. Jenkins, "Research methodologies and MIS research," in Research
Methods in Information Systems, E. Mumford, R. A. Hirschheim, G.
Fitzgerald and A. T. W. Harper, Eds. Amsterdam, Holland: North-
Holland Publishing Co, 1985, pp. 103-117.
[36] Y. D. Wang, and H. H. Emurian, "Trust in e-commerce: consideration of
interface design factors," Journal of Electronic Commerce in
Organizations, vol. 3, no. 4, pp. 42-60, 2005.
[37] K. Bryne, "How do consumers evaluate risk in financial products?"
Journal of Financial Services Marketing, vol. 10, no. 1, pp. 21-36, 2005.
[38] E. Delgado-Ballester, and J. L. Munuera-Aleman, "Brand trust in the
context of consumer loyalty," European Journal of Marketing, vol. 35,
no. 11/12, pp. 1238-1258, 2008.
[39] Y. Ganzach, S. Ellis, A. Pazy, and T. Ricci-Siag, "On the perception and
operationalization of risk perception," Judgment and Decision Making,
vol. 3, no. 4, pp. 317-324, 2008.
[40] J. Nilsson, "Investment with a conscience: examining the impact of prosocial
attitudes and perceived financial performance on socially
responsible investment behavior," Journal of Business Ethics, vol. 83,
no. 2, pp. 307-325, 2008.
[41] E. J. Karson, and R. J. Fisher, "Predicting intentions to return to web
site: extending the dual mediation hypothesis," Journal of Interactive
Marketing, vol. 19, no. 3, pp. 2-14, 2005.
[42] S. B. MacKenzie, R. J. Lutz, and G. E. Belch, "The role of attitude
toward the ad as a mediator of advertising effectiveness: a test of
competing explanations," Journal of Marketing Research, vol. 23, no. 2,
pp. 130-143, 1986.
[43] C. M. Ringle, S. Wende, and S. Will, SmartPLS 2.0 Beta. Hamburg:
University of Hamburg, 2005.
[44] J. S. Anderson, and D. W. Gerbing, "Structural equation modeling in
practice: a review and recommended two-step approach," Psychological
Bulletin, vol. 103, no. 3, pp. 411-423, 1988.
[45] C. M. Ringle, S. Wende, and S. Will, "The finite mixture partial least
squares approach: methodology and application," in Handbook of
Partial Least Squares: Concepts, Methods and Applications in
Marketing and Related Fields, V. E. Vinzi, W. W. Chin, J. Henseler and
H. Wang, Eds. New York: Springer-Verlag, 2009.
[46] P. Guenzi, L. Georges, and C. Pardo, C. "The impact of strategic account
managers' behaviors on relational outcomes: an empirical study,"
Industrial Marketing Management, vol. 38, no. 3, pp. 300-311, 2009.
[47] M. Tenenhaus, V. E. Vinzi, Y-M Chatelin, and C. Lauro, "PLS path
modeling," Computational Statistics & Data Analysis, vol. 48, no. 1, pp.
159-205, 2005.
[48] W. W. Chin, "The partial least squares approach to structural equation
modeling," in Modern Methods for Business Research, G. A.
Marcoulides, Ed. Mahwah, NJ: Lawrence Eribaum Associates, 1998, pp.
295-336.
[49] R. M. Baron, and D. A. Kenny, "The moderator-mediator variable
distinction in social psychological research: conceptual, strategic and
statistical considerations," Journal of Personality and Social
Psychology, vol. 51, no. 6, pp. 1173-1182, 1986.
[50] U. Konradt, T. Christophersen, and U. Schaeffer-Kuelz, "Predicting user
satisfaction, strain and system usage of employee self-services,"
International Journal of Human-Computer Studies, vol. 64, no. 11, pp.
1141-1153, 2006.
[51] D. Gefen, D. W. Straub, and M-C. Boudreau, "Structural equation
modelling and regression: guideline for research practice,"
Communications of AIS, vol. 4, no. 7, pp. 1-77, 2000.
[52] K. Mathieson, E. Peacock, and W. W. Chin, "Extending the technology
acceptance model: the influence of perceived user resources," The DATA
BASE for Advances in Information Systems, vol. 32, no. 3, pp. 86-112,
2001.
@article{"International Journal of Business, Human and Social Sciences:61284", author = "Azwadi Ali", title = "Predicting Individual Investors- Intention to Invest: An Experimental Analysis of Attitude as a Mediator", abstract = "The survival of publicly listed companies largely
depends on their stocks being liquidly traded. This goal can be
achieved when new investors are attracted to invest on companies-
stocks. Among different groups of investors, individual investors are
generally less able to objectively evaluate companies- risks and
returns, and tend to be emotionally biased in their investing
decisions. Therefore their decisions may be formed as a result of
perceived risks and returns, and influenced by companies- images.
This study finds that perceived risk, perceived returns and trust
directly affect individual investors- trading decisions while attitude
towards brand partially mediates the relationships. This finding
suggests that, in courting individual investors, companies still need to
perform financially while building a good image can result in their
stocks being accepted quicker than the stocks of good performing
companies with hidden images.", keywords = "Behavioral Finance, Investment, Attitude towardsBrand, Partial Least Squares", volume = "5", number = "2", pages = "220-8", }
