Title : PERSONALITY TRAITS, CULTURE AND OVERCONFIDENCE OF INDIVIDUAL INVESTORS
Author : TRI KARTIKA PERTIWI
Universitas Airlangga
Item Type : Thesis (Dissertation)
Abstract
This research aims to examine the factors that influence the overconfidence of individual investors on the Indonesian Stock Exchange. Psychological factors are internal and external environmental factors that shape human behavior. Internal factors can be assessed from personality traits. Personality measurements carried out by researchers used five personality traits or Big Five Personality Traits, with personality dimensions namely Agreeableness, Extraversion, Conscientiousness, Neuroticism and Openness to experience. External factors are assessed from the culture adopted by investors which consists of masculinity/femininity, individualism/collectivism and uncertainty avoidance. This research is research with a quantitative approach. Data were collected using surveys to explore individual investor information, from the 238 returned questionnaires, 200 questionnaires could be used. The method used for estimation is Partial Least Square (PLS). The estimation results show that conscientiousness has a positive effect on investor overconfidence. Investing in the capital market contains high uncertainty, with the personality traits of conscientiousness, an investor feels that his thoroughness, making plans, and being persistent in his work will produce the right decisions, therefore investors trust their own information more than other people's information. With their persistence and tenacity, they assume that investment profits are due to the success of their investment strategy, this will increase overconfidence. The results of the analysis prove that the personality trait of openness has a positive effect on overconfidence, meaning that investors who are open to new things, are intelligent thinkers, they assume that their level of ability is above other investors, so they become overconfident. The results of culture research show that individualism has no effect on investor overconfidence, but collectivism adopted by individual investors increases investor overconfidence. This is reflected in the negative influence of collectivism culture on overconfidence. The respondents of this research are investors on the Indonesian Stock Exchange, where Indonesian people, who are usually called eastern cultural communities, prioritize family. So they tend to obey the opinions of their group, in a collectivism culture group or family members are willing to help every member who experiences a loss, so that in making decisions they become overconfident, because there are family members who are ready to help. Therefore, investors in stock buying and selling transactions always relate to their group or broker in making investment decisions. The research results also show that masculinity influences investor overconfidence, the culture of masculinity is oriented towards success, competition, performance with the mindset that "live to work". Investing in stocks that are full of uncertainty is favored by investors with masculine roles, and is popular with men. The conclusion of this research is that individual investors on the Indonesian Stock Exchange, especially in Surabaya, experience an overconfidence bias which is influenced by the personality traits of conscientiousness, openness to experience, and also collectivism culture and masculinity culture. The implication of this research is that investors in making decisions in conditions of uncertainty need to consider psychological aspects, by trying to control themselves and always introspect themselves. Investors also need to enrich their investment knowledge from various sources, so that investors do not only consider the information they have.
Keywords: Overconfidence, Big Five Personality, Culture
