EFFECT OF NEUROTICISM, CONSCIENTIOUSNESS ON INVESTMENT DECISIONS. MEDIATION ANALYSIS OF FINANCIAL SELF-EFFICACY

Abstract

This research adds value in comprehension of investor's personality and its effects on investment
decisions. Data was collected through questionnaires from 506 individual investors of Pakistan Stock
Exchange. Mediation analysis was performed using Hayes (2013) PROCESS macro in SPSS. This
study examined the relationship between Neuroticism, Conscientiousness and Investment decisions.
The results of the study supported a positive relationship between neuroticism, conscientiousness and
long-term investment decisions. The results from bootstrapping also supported the mediating effect of
financial self-efficacy between neuroticism, conscientiousness and long-term investment decision.
The study in the environment of Pakistan has used personality psychology theory and the theory of
planned behavior to discover investor psychology based upon the concept that personality is
positively correlated with financial behaviors. It carries an ample value for all parties in the financial
and investment sector. Practitioners should know that highly conscientious people are normally
confident about their analytical skills and possess a high level of financial self-efficacy and financial
self-efficacy of neurotic investor acts as facilitators for making long term investment decisions.