Please use this identifier to cite or link to this item:
https://hdl.handle.net/2440/107721
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Type: | Journal article |
Title: | How investor perceptions drive actual trading and risk-taking behavior |
Author: | Hoffmann, A. Post, T. Pennings, J. |
Citation: | Journal of Behavioral Finance, 2015; 16(1):94-103 |
Publisher: | Taylor and Francis |
Issue Date: | 2015 |
ISSN: | 1542-7560 1542-7579 |
Statement of Responsibility: | Arvid O. I. Hoffmann, Thomas Post and Joost M. E. Pennings |
Abstract: | Recent work in behavioral finance showed how investors' perceptions (i.e., return expectations, risk tolerance, and risk perception) affect hypothetical trading and risk-taking behavior. However, are such perceptions also capable of explaining actual trading and risk-taking behavior? To answer this question, we combine monthly survey data with matching brokerage records to construct a panel dataset allowing us to simultaneously examine investor perceptions and behavior. We find that investor perceptions and changes therein are important drivers of actual trading and risk-taking behavior: Investors with higher levels of and upward revisions of return expectations are more likely to trade, have higher turnover, trade larger amounts per transaction, and use derivatives. Investors with higher levels of and upward revisions in risk tolerance are more likely to trade, have higher buy-sell ratios, use limit orders more frequently, and hold riskier portfolios. Investors with higher levels of risk perception are more likely to trade, have higher turnover, have lower buy-sell ratios, and hold riskier portfolios. |
Keywords: | individual investors; investment decisions; investor perceptions; trading behavior; risk-taking behavior |
Rights: | © The Institute of Behavioral Finance |
DOI: | 10.1080/15427560.2015.1000332 |
Published version: | http://dx.doi.org/10.1080/15427560.2015.1000332 |
Appears in Collections: | Aurora harvest 8 Business School publications |
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RA_hdl_107721.pdf Restricted Access | Restricted Access | 389.69 kB | Adobe PDF | View/Open |
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