Risk capacity and investment priority as moderators in the relationship between big-five personality factors and investment behavior: a conditional moderated moderated-mediation model

Abstract

This paper aims to explore the relationship between big-five personality traits and investment behavior, particularly in the Indian context. Riding on the theory of planned behavior (TPB), we built a multi-layered moderated moderated-mediation model exploring the complex relationships between personality traits, investment attitude, and investment strategy. We collected data from 934 respondents from the southern part of India and analyzed using the Hayes (2018) PROCESS macros to test the hypotheses. The results indicate that (i) Personality traits (extraversion, emotional stability, conscientiousness, agreeableness, and openness to experience) are positively related to investment attitude and investment strategy, (ii) Investment attitude is positively related to investment strategy, (iii) Risk capacity moderates the relationship between personality traits and investment attitude, and (iv) Investment priority (second moderator) moderates the moderated relationship between personality traits, risk capacity (first moderator), and investment strategy mediated through investment attitude. Finally, the implications for behavioral finance and practicing managers are discussed.