Behavioral biases of finance professionals: Turkish evidence

Abstract

This study extends the existing literature on the determinants of behavioral biases of Turkish finance sector professionals. It examines the impact of various personal and objective attributes of finance sector professionals on their risk choices derived from their portfolio allocation, and personal wealth data. Utilizing survey data from 206 professionals, we find that these professionals take higher risk in the form of investment in equities when investing in home country firms (geographic bias) and investing in firms headquartered in their home towns (home bias). Those relying on their own predictions when making investment decisions and those with emotional biases invest less in equities. Findings further show that younger professionals, professional with less education, with lower risk aversion, and with single broker accounts are more likely to invest in equities. We also find that those with higher expected returns invest more in equities, showing overconfidence. Subsample analysis results for finance professionals suggest that portfolio managers and brokerage company professionals display differing risk taking behavior.