Affect-based stock investment decision: The role of affective self-affinity

Dr. Naime Geredeli Usul

Abstract

This paper studies the role of affective self-affinity for a company in the stock investment decision by investigating the factors triggering it. Based on the social identity theory and the affect literature we hypothesize that three types of identifications, namely group related, company-people related and idea/ideal related, trigger affective self-affinity for a company which results in extra affect-based motivation to in- vest in the company’s stock. The two ideas included in the idea/ideal related affective self-affinity are socially responsible investing and nationality related ideas. Based on the survey data of 133 active individual investors, we find that the more the investors perceive the company supports/represents a specific group or idea or employ a specific person, with which the investors identify themselves, the higher is the investors’ affective self-affinity for the company. This results in higher extra affective motivation to invest in the company’s stock over and beyond financial indicators. Thus, investors’ identification with groups, people, or ideas such as socially responsible investing and nationality results in higher affect-based investment motivation through affective self-affinity aroused in the investors. Moreover, positive attitude towards the company is another factor that explains the affect-based extra investment motivation.

Short Bio

Dr. Naime Usul was graduated from Bilkent University, Department of Business Administration in 2007 at the third rank. She took her PhD degree in Finance from Bilkent University in 2017. She is interested in the areas of Corporate Finance and Behavioral Finance; in particular, in the stock market anomalies, investor behavior and investor psychology. Her paper named “Affect-based stock investment decision: The role of affective self-affinity” was awarded with the first prize in Hakan Orbay Research Awards in 2017. Among the courses she taught, there are Corporate Finance (Lab instructor) and Elements of Finance in Bilkent University, and Principles of Accounting I & II in Baskent University.

Venue

Wednesday, April 18, 2018 at 2pm