The Influence of Team Composition and Decision Processes on Investment Portfolios: The Case of Investment Clubs

51 Pages Posted: 15 Apr 2014 Last revised: 30 May 2014

See all articles by Markus Glaser

Markus Glaser

Ludwig Maximilian University of Munich (LMU) - Faculty of Business Administration (Munich School of Management)

Florian Haagen

TeamInvest GmbH

Torsten Walther

Ludwig Maximilian University of Munich (LMU) - Faculty of Business Administration (Munich School of Management)

Date Written: May 30, 2014

Abstract

Investment clubs offer the opportunity to form a well-diversified portfolio with private investors being invested in that portfolio. Nevertheless, many investment clubs hold undiversified portfolios. We hypothesize that the clubs’ composition and the characteristics of the decision making process have an impact on the number of stocks held by the club. We analyze this research question by combining the transaction records and basic characteristics of German investment clubs with a survey that measures the design of the clubs’ decision making process and the composition of their members. We find that clubs that desire to find a decision that is supported by a large fraction of club members have substantially fewer stocks in their portfolio. The analyses also reveal that the number of stocks decreases if preference aggregation becomes more difficult.

Keywords: Investor Behavior, Diversification, Group Decision Making, Investment Clubs

JEL Classification: G11, D70

Suggested Citation

Glaser, Markus and Haagen, Florian and Walther, Torsten, The Influence of Team Composition and Decision Processes on Investment Portfolios: The Case of Investment Clubs (May 30, 2014). Available at SSRN: https://ssrn.com/abstract=2424661 or http://dx.doi.org/10.2139/ssrn.2424661

Markus Glaser

Ludwig Maximilian University of Munich (LMU) - Faculty of Business Administration (Munich School of Management) ( email )

Schackstraße 4
Munich, 80539
Germany

Florian Haagen

TeamInvest GmbH ( email )

Ainmillerstraße 11
München, 80801
Germany

Torsten Walther (Contact Author)

Ludwig Maximilian University of Munich (LMU) - Faculty of Business Administration (Munich School of Management) ( email )

Schackstraße 4
Munich, 80539
Germany

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