Dissertation
To receive a Master's degree
Financial Orientation Business Management]
Abstract
According to Eigen's theory of planned behavior, it is assumed that human behavioral tendencies under the influence of some cognitive factors lead to a change in the individual's behavior. In this research, the effect of several factors on long-term and short-term investment tendencies is investigated according to the five dimensions of personality. The research community includes all the investors of Tehran Stock Exchange, 384 people randomly form the research sample. The data was collected using a questionnaire and analyzed using structural equation modeling with the help of Amos software. The results show that people who have more overconfidence are less inclined to long-term investment, and people who are more open to experience are more inclined to long-term investment. Risk-averse and conscientious people do not want to make long-term or short-term investments. These results of ours in the dimensions of openness and overconfidence are consistent with the research results of Mayfield and others.
Key words: five-factor model, personality, behavioral bias, investment tendencies, structural equation modeling
Introduction
In this chapter, we try to find a brief view about the importance of the topic, the research objective of the research, and the research hypotheses. In the definition of the topic, we describe the problem, the purpose of the implementation and the application of the research results. Then we state the research hypotheses and the research method, and at the end we introduce the key words used in the thesis. 1-2-Definition of the subject (statement of the problem, the purpose of the implementation and application of the research results) For those who take the role of psychology in financial knowledge as a factor influencing the securities markets and investors' decisions, it is difficult to accept the existence of doubts about the validity of financial behavior. Proponents of behavioral financial knowledge firmly believe that knowing the psychological tendencies and behaviors of investors in the field of investment is absolutely necessary and requires serious development of the field of study. It is possible to reduce the amount of deviation from long-term decisions and help investors to achieve their long-term financial goals by identifying the personality characteristics of investors and the deviations of investors' behavior and providing programs that reduce the impact of these deviations in behavioral finance (Ahmad Badri, 2018). And his degree of risk-taking and experience are effective in decision-making.
In the field of behavioral finance, in addition to personality, some behavioral biases also have a great impact on investor behavior. These biases cause the investor's behavior to deviate from his rational state and cause some problems such as improper portfolio formation, excessive transactions and so on. . . will be Overconfidence[1], over-reliance[2], reliance and adjustment[3], hindsight error[4], access error[5], commitment escalation error, and randomness error are among the biases and behavioral tendencies that have been investigated in studies (Rasoul Saadi et al., 2009). Many studies and researches in recent years have confirmed the validity of this model and consider it the basis of other models (Nichelson and others, 2005). In this research, the five-factor model was used to examine personality dimensions. The purpose of this study is to investigate the effect of personality traits and some behavioral biases on long-term and short-term investment decisions. Considering that many investors do not act rationally in the market and have many biases, it causes the market to deviate from its efficiency. For example, one of the results of these anomalies is the formation of a bubble in the stock market, as a result of which a large number of investors suffer losses. Therefore, the results of this research It can be used to more accurately identify behavioral biases and match the individual's personality with his investment style and finally adjust these anomalies.
Also, the results of this research will be useful for stock brokers, because with a program, people's investment preferences can be adjusted according to their personality.
1-3-Research hypotheses
This thesis includes the following hypotheses:
1- Risk aversion[8] makes most people less inclined to short-term investments.
2- More people are less inclined to risk.
3- The more open people are to experience[9], the more willing they are for short-term investment.
4- The more open people are to experience, the more willing they are for long-term investment.
5- People who are more vigilant and aware[10] are more willing to short-term investment.
6- People who are more vigilant and aware are more willing to long-term investment.
7- Overconfidence[11] of most investors makes them more inclined to short-term investment.
8- More overconfidence of investors makes them more inclined to long-term investment.
9- Extroverted people[12] are more inclined to short-term investment.
10- Extroverted people are more inclined to long-term investment.
1-4-Method Research
The current research is applied in terms of purpose and descriptive and correlational in terms of data collection method. In this research, a questionnaire survey was used to investigate personality dimensions and biases. Amos software is used for data analysis. The research community includes all the investors of the Tehran Stock Exchange and the sample was selected using the unlimited population sampling method. 1-5-Steps of the research 1-Preparation of the conceptual description of the research using library studies, English articles and internet sites 2-Determining the research hypotheses using the history and literature review of the subject 3-Designing the questionnaire and determining its questions with the opinion of experts.
4-Data collection and their analysis with the help of statistical software
5-Comparison of the obtained results with other research results
6-Providing suggestions for future research
1-6-Explanation of the words and terms used in the research
1-6-1-Personality[13]
It means the same individual differences that cause stability in a person's behavior and is a relatively stable set of Characteristics that affect a person's behavior (Rezaian, 1380)
1-6-2-Five-Factor Model
The Five-Factor Model (FFM) of personality is an experimental conclusion about the variables of personality traits. According to this model, personality is composed of five main dimensions, which are narcissism [14] (N), extraversion [15] (E), openness [16] (O), assimilation [17] (A), and alertness and awareness [18] (C). Briefly, behavioral biases are defined as systematic errors in judgment. The same mistakes that cause us not to follow the logic and rationality required by standard financial knowledge in our decisions (Badri, 2018). Researchers have so far identified a large number of behavioral biases, including overconfidence, flowery behavior, and contingency.
1-6-4-Investment
Investing means using money in a way that turns it into more money. This can happen because someone wants to pay interest using money. Or because the value of the money used to buy bonds increases during the ownership period. We have divided investment into two types, short-term and long-term. Short-term investment means investment with a one-year vision or less. And long-term investment means investment with a vision of more than one year.