The Impact of Perceived Portfolio Returns on Investor Decisions - The underlying psychological mechanism

Subject Areas : Journal of Investment Knowledge

Mohammadreza zolghadrnasab ¹ ( Department of Accounting, Qazvin Branch, Islamic Azad University, Qazvin, Iran. )
sina kherdyar ² ( Department of Accounting, Rasht Branch, Islamic Azad University, Rasht, Iran )
Fazel Mohammadi Noodeh ³ ( Department of Management, Lahijan Branch, Islamic Azad University, Lahijan, Iran )
aiyuob ahmadi ⁴ ( Department of Management, Lahijan Branch, Islamic Azad University, Lahijan, Iran )

Received: 2020-07-15 Accepted : 2020-10-07 Published : 2023-03-21

Keywords: Key words: Perceived portfolio returns, psychological mechanism, investor decision,

Abstract :

The purpose of this study is to test psychological mechanisms on how perceived portfolio returns affect investors and risk-taking, and whether these psychological mechanisms play a moderating role. Past portfolio behavior is important for investors in investment decisions. The statistical population of this research is active investors in Tehran Stock Exchange, the sample was selected by available sampling method. Using a closed questionnaire, collected information to analysis the research hypotheses using structural equations and path analysis with Phoenix software. The results show that expected returns of a portfolio formed in the past make investors more risk-averse and thus show a higher attitude towards risk. From the other side the interaction of psychological characteristics (overconfidence, optimism and willingness of risk taking) has a moderating effect on the relationship between the expected return of the past portfolio and the portfolio turnover, portfolio trading volume and portfolio risk sharing of investors. The results lead to the conclusion that the presence of underlying biases deteriorates financial behaviors.

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