Investment Beliefs and Portfolio Risk-Taking — A Comparison between Industry Professionals and Non-Professionals

Magnus Jansson, Sven Hemlin, Doron Sonsino and Carl-Christian Trönnberg

Chapter 10 in Behavioral Finance:A Novel Approach, 2020, pp 239-266 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Investment beliefs, serving as a bridge between high-level objectives and practical decision-making, are increasingly implemented in the investment industry. The present web-based study compares the beliefs of Swedish professional (N = 64) and non-professional (N = 278) investors, testing the links between investment beliefs and portfolio risk-taking in both samples. The results expose significant differences between the beliefs of professionals and others, also showing that the portfolio risk-taking of non-professionals is susceptible to self-confidence and emotional effects while the professionals respond to investment beliefs and risk attitude. The results confirm that disclosure of investment beliefs may reduce tensions between stakeholders and investment managers for the industry’s benefit.

Keywords: Analysts Recommendations; Behavioral Biases; Behavioral Economics; Behavioral Finance; Board of Directors; Compensation; Compensation Committee; Control; Coronavirus; Corporate Governance; COVID-19; Decision Making; Disposition Effect; Earnings Management; Elections; Emotions; Financial Crises; Financial Market Anomalies; Financial Markets; Forecast-Accuracy; Gender Differences; Heuristics; Interval Forecasting; Investment; Investor Horizon; Investors' Beliefs; IPO Under-Pricing; Life Expectancy; Myopia; Overconfidence; Pensions Industry; Policy Reforms; Polls; Portfolio Risk; Prediction Markets; Regulation; Stock Price Drifts; Time Preferences (search for similar items in EconPapers)
JEL-codes: G3 G30 G4 G41 (search for similar items in EconPapers)
Date: 2020
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