Kauppakorkeakoulun julkaisuportaali
Aalto-yliopiston kauppakorkeakoulun gradujen tiedot nyt Aaltodocissa: Aaltodoc-julkaisuarkisto
Kauppakorkeakoulu | Laskentatoimen ja rahoituksen laitos | Rahoitus | 2010
Tutkielman numero: 12300
Examining the association between personality traits and stock market participation - Evidence from Finnish university students
Tekijä: Jouhikainen, Hannes
Otsikko: Examining the association between personality traits and stock market participation - Evidence from Finnish university students
Vuosi: 2010  Kieli: eng
Laitos: Laskentatoimen ja rahoituksen laitos
Aine: Rahoitus
Asiasanat: rahoitus; financing; psykologia; psychology; behavioral finance; behavioral finance; sijoittajat; investors
Sivumäärä: 101
Avainsanat: investor psychology; equity premium puzzle; limited stock market participation; personality trait; Big Five taxonomy

This study is the first to assess whether personality traits act as a way to explain limited stock market participation of private investors. In the study, personality is measured in terms of the Big Five personality trait indicator, which is the most commonly utilized method to conceptualize personality trait differences in academic studies. On a broader level, the evidence gained on the relation between personality and stock market participation helps shed light on the reasons behind the equity premium puzzle.


The data for the study consists of 771 responses gathered from Finnish university students during spring 2010 via a questionnaire. This questionnaire combines the Big Five Inventory (BFI) questionnaire of John and Srivastava (1999) with a modified version of the background variable part that Luotonen (2010) used in studying the relation between personal values and stock market participation.


The results contribute to research on two fronts. On the one hand, they provide moderate support for the hypothesized relevance of personality traits as explanatory factors behind stock market participation. If examining only the Big Five traits, extraversion is positively associated with stock market participation, and agreeableness, neuroticism, and openness are negatively associated. However, when a full set of control variables is included, only extraversion retains statistical significance, if ignoring first-year students from the sample. It is also found that those scoring lower on agreeableness are more likely to report non-interest in stocks as a reason for non-participation. In addition to these findings, the results also provide indicative support for the hypothesis that the impact of personality traits on investing increases with higher levels of investment vehicle sophistication. Besides being academically significant, the results motivate the consideration of prospective investors’ personality traits by practitioners such as mutual fund managers especially when segmenting their customer base and designing marketing campaigns promoting financial products.
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