BEYOND NUMBERS: THE INFLUENCE OF PERSUASION ON INVESTMENT DECISIONS OF COLLEGE STUDENTS
DOI:
https://doi.org/10.4270/ruc.2023111Keywords:
Behavioral Finance, Decision Making, Non-professional Investors, PersuasionAbstract
This research aims to verify the influence of persuasive arguments on the investment decisions of undergraduate students. The research used the Theory of Persuasion as its base theory, focusing on the element of authority. Methodologically, the study is classified as correlational, and we used the experimental method, which involved the participation of 576 students in the role of non-professional investors. We manipulated the variables of persuasive argument and company performance in six different scenarios. Therefore, we used a 2x2 factorial; the technique for analyzing the data for the hypotheses was the Binomial Test, and as a complementary analysis of the demographic characteristics, the use of logistic regression. The results found were: (i) participants' choices were greater for companies that present persuasive arguments of authority in financial analysts' reports; (ii) investors prefer companies with better performance than companies with worse performance; (iii) investors' choices were greater for companies that performed worse but presented persuasive arguments in their reports, compared to companies with better performance, but without the presence of persuasive arguments. In conclusion, we noted that the persuasive argument influenced the investment decision, and the persuasive argument influenced more people with lower incomes than those with higher incomes. The research contributes to the behavioral finance literature by identifying that the persuasive element of authority creates a shortcut in the investor's decision. We suggested that investors seek to improve critical thinking regarding available narratives.
Downloads
References
Abbott, W. F., & Monsen, R. J. (1979). On the measurement of corporate social responsibility: Self-Reported disclosures as a method of measuring corporate social involvement. Academy of Management Journal, 22(3), 501–515. http://www.jstor.org/stable/255740.
Agliardi, E., Agliardi, R., & Spanjers, W. (2016). Corporate financing decisions under ambiguity: Pecking order and liquidity policy implications. Journal of Business Research, 69, 6012–6020. http://dx.doi.org/10.1016/j.jbusres.2016.05.016
Aguiar, A. B. (2017). Pesquisa experimental em contabilidade: Propósito, desenho e execução. Advances in Scientific and Applied Accounting, 10(2), 224-244. http://dx.doi.org/10.14392/asaa.2017100206
Alam, N., & So, J. (2020). Contributions of emotional flow in narrative persuasion: An empirical test of the emotional flow framework. Communication Quarterly, 68(2),161-182. http://doi/10.1080/01463373.2020.1725079.
Azmat, S., Ali, H., Brown, K., & Skully, M. (2021). Persuasion in Islamic finance. Australian Journal of Management, 46(2), 1-15. http://doi.org/10.1177/0312896220926556.
Augustin, P., & Izhakian, Y. (2017). Ambiguity, volatility, and credit risk. SSRN- Eletronic Journal, 15, 1-58.
B3. (2021). Históricos pessoas físicas. São Paulo. http://www.b3.com.br/pt_br/market-data-e-indices/servicos-de-dados/market-data/consultas/mercado-a-vista/historico-pessoas-fisicas/.
Barberis, N., & Thaler, R. (2005). A survey of behavioral finance. In: G. Constantinides, M. Harris & R. Stulz. (Ed.). Handbook of the Economics of Finance, (1.vol., pp. 1053-1128). Amesterdã: Elsevier.
Bhattacherjee, A., & Sanford, C. (2006). Influence processes for information technology acceptance: An elaboration likelihood model. MIS Quarterly, 30(4), 805-825.
Bi, S., Liu, Z., & Usman, K. (2017). The influence of online information on investing decisions of reward-based crowdfunding. Journal of Business Research, 71, 10-18.
Bickart, B., Morrin, M., & Ratneshwar, S. (2015). Does it pay to beat around the bush? The case of the obfuscating salesperson. Journal of Consumer Psychology, 25(4), 596–608. http://dx.doi.org/10.1016/j.jcps.2015.01.010
Brauer, M., & Wiersema, M. (2018). Analyzing analyst research: A review of past coverage and recommendations for future research. Journal of Management, 44(1), 218-248.
Camargo, R. D. C. C. P., & Alberton, L. (2023). A relevância da divulgação dos critérios de materialidade nas decisões de investidores. Enfoque: Reflexão Contábil, 42(3), 52-68.
Cambra, U. C., & Herrero, S. G. (2013). La I Guerra Mundial y los orígenes de la Teoria de los Efectos. El caso de aliadófilos y germanófilos. História y Comunicatión Social, 18, 125-138. http://dx.doi.org/10.5209/rev_HICS.2013.v18.43418
Cascino, S., Clatworthy, M., Osma, B. G., Gassen, J., Isman, S., & Jeanjean, T. (2014). Who uses financial reports and for what purpose? Evidence from capital providers. Accounting Europe, 11(2), 1-25.
Castro Jr, F. H. F., & Famá, R. (2002). As novas finanças e a teoria comportamental no contexto da tomada de decisão sobre investimentos. Caderno de Pesquisas em Administração, 9(2), 26-35.
Chaicken, S. (1980). Heuristic versus systematic information processing and the use of source versus message cues in persuasion. Journal of Personality and Social Psychology, 39(5), 752-766.
Chaicken, S., & Maheswaran, D. (1994). Heuristic processing can bias systematic processing: Effects os source credibility, argument ambiguity, and task importance on attitude judgment. Journal of Personality and Social Psychology, 66(3), 460-473.
Chia, R. C. J., Lim, S. Y., Ong, P. K., & Teh, S. F. (2015). Pre and post Chinese new year holiday effects: evidence from Hong Kong stock market. The Singapore Economic Review, 60(4), 1-14. http://doi:/10.1142/S021759081550023X
Cialdini, R. B. (1984). Influence: The psychology of persuasion. New York: Haper Collins.
Coutinho, C. P. (2011). Metodologia de investigação em ciências sociais e humanas: Teoria e prática. (2ªed.). Coimbra: Almedina.
Damasceno, R., & Iglesias, F. (2014). Táticas de persuasão de vendedores de shopping-centers: Um estudo de campo. Psicologia Argumento, 32(79), 187-195. http://doi:/10.7213/psicol..argum.32.s02.AO17
Daniel, K., Hirshleifer, D., & Subrahmanyan, A. (1998). Investor psychology and security market under and overreactions. Journal of Finance, 53, 1839-1885. http://www.jstor.org/stable/117455
Defleur, M. L., & Ball-Rokeach, S. (1982). Theories of mass communication. (4 ed.). New York: Longman.
DellaVigna, S. & Gentzkow, M. (2010). Persuasion: Empirical evidence. Annual Review of Economics, Annual Reviews, 2(1), 643-669.
Dorow, A., Macedo Jr., J. S., Nunes, P., Reina, D., & Maximiniano, D. R. (2010). A heurística da ancoragem e a tomada de decisão sob risco em investimento imobiliário. Contabilidade, Gestão e Governança, 13(3), 86-101.
Du, N. (2009). Do investors react differently to range and point management earnings forecasts? The Journal of Behavioral Financial, 10, 195-203. http://doi:/10.1080/15427560903369276
Du, N., Stevens, K., & McEnroe, J. (2015). The effects of comprehensive income on investors’ judgments: An investigation of one-statement vs. two-statement presentation formats. Accounting Research Journal, 28(3), 284-299. http://doi/10.1108/ARJ-11-2013-0083
Duclos, R. (2015). The psychology of investment behavior: (De) biasing financial decision-making one graph at a time. Journal of Consumer Psychology, 25(2), 317-325. http://dx.doi.org/10.1016/j.jcps.2014.11.005
Fama, E. F. (1970). Efficient capital markets: A review of theory and empirical works. The Journal of Finance, 25(2), 383-417.
Fávero L. P., & Belfiore P. (2017). Análise de dados: Técnicas multivariadas exploratórias com SPSS® e Stata®. Rio de Janeiro: Campus Elsevier.
Figueiredo, M. F. (2015). A intertextualidade como argumento da autoridade: O caso da carta-testemunho de Getúlio Vargas. Estudos Linguísticos, 44(3), 1386-1394.
Fotheringham, W. C. (1966). Perspective on persuasion. Boston: Allyn and Bacon.
Gomez-Carrasco, P., & Michelon, G. (2018). The power of stakeholders' voice: The effects of social media activism on stock markets. Business Strategy and the Environment, 26, 855-872. http://doi:10.1002/bse.1973
Han, J. T., Chen, Q., Liu, J. G., Luo, X. L., & Fan, W. (2017). The persuasion of borrowers’ voluntary information in peer to peer lending: An empirical study based on elaboration likelihood model. Computers in Human Behavior, 78, 200-214. https://doi.org/10.1016/j.chb.2017.09.004
Henry, E., & Peytcheva, M. (2018). Earnings-announcement narrative and investor judgment. The Accounting Review, 32(3), 1-44.
Kahneman, D. (2012). Rápido e devagar: Duas formas de pensar. Tradução: Cássio de Arantes Leite. Rio de Janeiro: Objetiva.
Kahneman, D., & Tversky, A. (1979). Prospect Theory: An analysis of decision under risk. Econometrica, 47(2), 263-291. http://links.jstor.org/sici?sici=0012-9682%28197903%2947%3A2%3C263%3APTAAOD%3E2.0.CO%3B2-3
Kartasova, J., Gaspareniene, L., & Remeikiene, R. (2014). Influence of snake bite effect on investment return rate: Lithuanian example. Mykolas Romeris University, 5(27), 1769-1773.
Khan, M. T. I., Tan, S. H., & Chong, L. L. (2016). Perception of past portfolio returns, optimism and financial decisions. Review of Behavioral Finance, 9(1), 79-98. https://doi.org/10.1108/RBF-02-2016-0005
Kimura, H., (2003). Aspectos comportamentais associados às reações do mercado de capitais. Revista de Administração Eletrônica, 2(1), 1-14.
Lee, H., Tsohou, A., & Choi, Y. (2017). Embedding persuasive features into policy issues: Implications to designing public participation processes. Government Information Quarterly, 34, 591–600. https://doi.org/10.1016/j.giq.2017.11.006
Lima, D. H. S., Rodrigues, J. M., Silva, C. A. T. & Silva, J. D. G. (2012). Impacto do nível de evidenciação de informações contábeis sobre a precificação de ações no contexto de seleção adversa: Uma pesquisa experimental. Revista Brasileira de Gestão e Negócios, 14(43), 159-175.
Lima, M. V. (2003). Um estudo sobre finanças comportamentais. RAE-Revista de Administração de Empresa Eletrônica, 2(1), 1-19.
Nwagbara, U., & Belal, A. (2019). Persuasive language of responsible organization? A critical discourse analysis of corporate social responsibility (CSR) reports of Nigerian oil companies. Accounting, Audinting & Accountability Journal, 32(8), 2395-2420. http://doi/10.1108/AAAJ-03-2016-2485
Radoc, B. (2018). Case-Based investing: Stock selection under uncertainty. Journal of Behavioral and Experimental Finance, 17, 53-59. https://doi.org/10.1016/j.jbef.2017.12.007
Ramos, S. T. C., & Naranjo, E. S. (2014). Metodologia da investigação científica. Luanda: Escolar.
Rasheed, M. H., Rafique, A., Zahid, T. & Akhtar, M. W. (2018). Factors influencing investor’s decision making in Pakistan: Moderating the role of locus of control. Review of Behavioral Finance, 10(1), 70-87. https://doi.org/10.1108/RBF-05-2016-0028
Riaz, L., & Hunjra, A. I. (2015). Relationship between psychological factors and investment decision making: The mediating role of risk perception. Pakistan Journal of Commerce and Social Sciences, 9, 968–981.
Riley, T. J., Semin, G. R., & Yen, A. C. (2014). Patterns of language use in accounting narratives and their Impact on investment-related judgments and decisions. Behavioral Research in Accounting, 26(1), 59-84.
Ruiz, P. S., Wood, M. S., & Ruboyianes, A. L. (2021). Persuasive or polarizing? The influence of entrepreneurs’ use of ingratiation rhetoric on investor funding decisions. Journal of Business Venturing, 36, 1-26. http://doi.org/10.1016/j.jbusvent.2021.106120.
Sagarin, B. J., Cialdini, R. B., Rice, W. E., & Serna, S. B. (2002). Dispelling the illusion of invulnerability: The motivations and mechanisms of resistance to persuasion. Journal of Personality and Social Psychology, 83(3), 526–541. http://doi:10.1037//0022-3514.83.3.526
Sampieri, R. H., Collado, C. F., & Lucio, M. D. P. B. (2013). Metodologia de pesquisa. (5. ed.). Porto Alegre: Penso.
Santos, J. O., & Barros, C. A. S. (2011). O que determina a tomada de decisão financeira: Razão ou emoção? Revista Brasileira de Gestão de Negócios, 13(38), 7-20.
Sarwar A., & Afaf, G. (2016). A comparison between psychological and economic factors affeting individual investor's decision-making behavior. Cogent Business & Management, 3, 1-18. http://dx.doi.org/10.1080/23311975.2016.1232907
Schwartzstein, J., & Sunderam, A. (2021). Using models to persuade. American Economic Review, 111(1), 276-323. https://doi:10.1257/aer.20191074.
Sharma, A. & Kumar, A. (2020). A review paper on behavioral finance: Study of emerging trends. Qualitative Research in Financial Markets, 12(2), 137-157. https://doi.org/10.1108/QRFM-06-2017-0050
Shen, L. (2013). Communication as persuasion. In P.Cobley & P. J. Schulz. (Ed.). Theories and models of communication (pp. 257-272). Berlim: De Guyter Mouton.
Shu, W., & Cheng, C. Y. (2012). How to improve consumer attitudes toward using credit cards online: An experimental study. Electronic Commerce Research and Applications, 11, 335–345. https://doi:10.1016/j.elerap.2012.01.003
Smith, M. (2003). Research methods in accounting. London: Sage.
Souza, A. (2002). A persuasão: Estratégias da comunicação influente. Rio de Janeiro: Nordica.
Tauni, M. Z., Rao, Z. R., Fang, H., Mirza, S. S., Memon, Z. L., & Jebran, K. (2017). Do investor’s big five personality traits influence the association between information acquisition and stock trading behavior? China Finance Review International, 7(4), 450-477. https://doi.org/10.1108/CFRI-06-2016-0059
Westphal, J. D., & Bednar, M. K. (2008). The pacification of institutional investors. Administrative Science Quarterly, 53, 29-72.
Winchel, J. (2015). Investor reaction to the ambiguity and mix of positive and negative argumentation in favorable analyst reports. Contemporary Accounting Research, 32(3), 973–999. http://doi:10.1111/1911-3846.12108
Yang, W., & Ju, X. (2012). The research of investment decision-making behavior model under imperfect rationality. J. Convergence Information Technology, 7(14), 521–527.
Zhang, K. Z. K., Barnes, S. J., Zhao, S. J., & Zhang, H. (2018). Can consumers be persuaded on brand microblogs? An empirical study. Information & Management, 55, 1–15. http://dx.doi.org/10.1016/j.im.2017.03.005
Downloads
Published
How to Cite
Issue
Section
License
The copyright for papers published in this journal belong to the author, with rights of first publication for the journal. As the papers appears in this publicly accessed journal, the papers are for free use, receiving their credit, in educational and non-commercial uses. The journal will allow the use of the papers published for non-commercial purposes, including the right to send the paper to publicly accessed databases.
