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Locus of control and investment decision: an investor's perspective

Locus of control and investment decision: an investor's perspective The ultimate objective of any investor is to maximise his return from the stock who is assumed to be perfectly rational. However, in real life, many investors are seen behaving irrationally as apart from the expected return there are various behavioural perspectives such as emotions, perceptions, psyche, and intuition that influence his decisions. The paper has attempted to explore the relation between the internal economic locus of control (ELC) and the intention of investment. Further, it has addressed the mechanism of the relation with the help of mediating variable risk perception. It is also an attempt to understand the influence of financial literacy on the relationship between locus of control and risk perception. The study found that risk perception has a positive mediating role in the relationship between economic locus of control and intention to invest and further financial literacy has a significant role as a moderator variable interacting with the internal ELC and risk perception. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Services, Economics and Management Inderscience Publishers

Locus of control and investment decision: an investor's perspective

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Publisher
Inderscience Publishers
Copyright
Copyright © Inderscience Enterprises Ltd
ISSN
1753-0822
eISSN
1753-0830
DOI
10.1504/ijsem.2022.122736
Publisher site
See Article on Publisher Site

Abstract

The ultimate objective of any investor is to maximise his return from the stock who is assumed to be perfectly rational. However, in real life, many investors are seen behaving irrationally as apart from the expected return there are various behavioural perspectives such as emotions, perceptions, psyche, and intuition that influence his decisions. The paper has attempted to explore the relation between the internal economic locus of control (ELC) and the intention of investment. Further, it has addressed the mechanism of the relation with the help of mediating variable risk perception. It is also an attempt to understand the influence of financial literacy on the relationship between locus of control and risk perception. The study found that risk perception has a positive mediating role in the relationship between economic locus of control and intention to invest and further financial literacy has a significant role as a moderator variable interacting with the internal ELC and risk perception.

Journal

International Journal of Services, Economics and ManagementInderscience Publishers

Published: Jan 1, 2022

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