The Role of Product and Brand Perceptions in Stock Investing: Effects on Investment Considerations, Optimism and Confidence

47 Pages Posted: 7 Sep 2010

See all articles by Jaakko Aspara

Jaakko Aspara

Hanken School of Economics; Aalto University School of Business (formerly known as Helsinki School of Economics)

Date Written: July 13, 2010

Abstract

Behavioral finance researchers are increasingly interested in the relationship between people’s perceptions of companies’ products, on one hand, and their decisions to invest in companies’ stocks, on the other. The purpose of this article is to examine the influence that individuals’ evaluations of companies’ products/brands, in particular, have on their propensities to consider alternative stocks for investment. The authors explicate the main ways of such influence by applying psychological consumer-behavior theories, and test their hypotheses with data gathered from 292 individual investors. The results show that the personal relevance that an investor attaches to a particular company’s product domain has negative influence on the consideration that the individual gives to alternative investment targets, whilst investing in that company’s stock. The individual’s affective evaluation of the company’s brand has a similar effect. Moreover, the results show that an individual’s affective evaluation of a company’s brand has a positive effect on his optimism about the financial returns of the company’s stock. Finally, the results suggest that an individual’s familiarity with the company’s brand does not decrease the consideration that he gives to alternative investment targets, nor is it linked to overconfidence in one’s expectations about the financial returns of the company’s stock.

Keywords: Investing in stocks, consumer behavior, consideration, attitude, confidence, optimism, personal relevance, affective evaluation

Suggested Citation

Aspara, Jaakko, The Role of Product and Brand Perceptions in Stock Investing: Effects on Investment Considerations, Optimism and Confidence (July 13, 2010). Available at SSRN: https://ssrn.com/abstract=1673346 or http://dx.doi.org/10.2139/ssrn.1673346

Jaakko Aspara (Contact Author)

Hanken School of Economics ( email )

P.O. Box 479
Helsinki, Helsinki 00101
Finland

Aalto University School of Business (formerly known as Helsinki School of Economics) ( email )

P.O. Box 21230
Helsinki, 00076
Finland

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