The Moderating Effects of Investors' Personality on the Relationship between the Use of Financial Advice Service and Trading

Document Type : Research Paper

Authors

1 Assistant Prof., Department of Accounting, Hazrat_e Masoumeh University (HMU), Qom, Iran.

2 MSc., Department of Business Management, Abadan Branch, Islamic Azad University, Abadan, Iran.

Abstract

Objective: Investors' personality traits play an important role in their success in the capital market. In this regard, this study attempts to investigate the moderating effects of personality traits on the relationship between the use of financial advisory services and investor trading behaviors.
Methods: The present research is practical in nature and can be considered a descriptive-exploratory and correlational study. The required data were collected through the distribution of questionnaires among 267 investors. The study was conducted in the second and third seasons of the year 2021. The gathered data was initially analyzed through Exploratory Factor Analysis (EFA), the investors' personality traits were identified using the five-factor model of personality, and then, using Confirmatory Factor Analysis (CFA), their correct measurement was ensured. The regression model was tested afterward.
Results: According to the regression analysis results, in addition to the independent variable (financial advice service), the variables of gender, marital status, monthly income, stock market experience, risk aversion, and financial literacy affected the dependent variable (investors’ trading behavior). In contrast, age and education level did not influence the dependent variable. After this stage, the moderating effects of investors' personality traits on the relationship between the independent variable and the dependent variable were studied. The three traits of openness to experience, conscientiousness, and agreeableness strengthened the relationship, while neuroticism debilitated it. The extraversion personality trait did not affect this relationship. Finally, the instrumental variable was used to solve the problem of the endogenous explanatory variable. This was done using two-stage least squares (2SLS) regression analysis.
Conclusion: Personality traits are among the factors influencing the trading behaviors of investors. Therefore their role in using financial advisors is undeniable.

Keywords

References

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Financial Research Journal
Volume 24, Issue 4
2023
Pages 655-678

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