The familiar versus the unfamiliar : familiarity bias amongst individual investors

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dc.contributor.authorDe Vries, Annalienen_ZA
dc.contributor.authorErasmus, Pierre D.en_ZA
dc.contributor.authorGerber, Charleneen_ZA
dc.date.accessioned2017-03-16T12:33:54Z
dc.date.available2017-03-16T12:33:54Z
dc.date.issued2017-02-02
dc.descriptionCITATION: De Vries, A., Erasmus, P. D. & Gerber, C. 2017. The familiar versus the unfamiliar : familiarity bias amongst individual investors. Acta Commercii, 17(1), a366, doi:10.4102/ac.v17i1.366.
dc.descriptionThe original publication is available at http://www.actacommercii.co.za
dc.description.abstractPurpose: The purpose of this study was to investigate the existence of familiarity bias amongst individual investors in the South African stock market. Problem investigated: According to Warren Buffet, one needs to maintain emotional detachment if one wants to be a successful investor. However, recent research indicates that the perceptions of companies’ products and brands may influence individuals’ investment decisions in the stock market. This phenomenon implies that the investment decisions of individual investors are not purely based on firm fundamentals as suggested by traditional finance theories, but might be driven partly by the positive or negative attitude they have towards certain companies’ products and brands. The existence of familiarity bias amongst individual investors was investigated to determine if individuals prefer to invest in companies they are familiar with as opposed to unfamiliar companies. Methodology: A quantitative approach was followed. An online survey was used to show images of familiar and unfamiliar company brands to respondents, whereafter respondents were asked to indicate whether they will invest in the shares of the identified companies. The statistical analysis entailed descriptive statistics as well as one-way analyses of variance to test the stated hypotheses. Main findings: The results of this exploratory study indicate that investors do exhibit familiarity bias when choosing between different companies to invest in. Value of the research: The inclination of individual investors to invest in familiar corporate brands can have implications for the marketing industry, financial markets, the performance of companies as well as the investment performance of individual investors in the sense that it would seem that company brands could have an influence on investment decisions.en_ZA
dc.description.urihttp://www.actacommercii.co.za/index.php/acta/article/view/366
dc.description.versionPublisher's version
dc.format.extent10 pages
dc.identifier.citationDe Vries, A., Erasmus, P. D. & Gerber, C. 2017. The familiar versus the unfamiliar : familiarity bias amongst individual investors. Acta Commercii, 17(1), a366, doi:10.4102/ac.v17i1.366.
dc.identifier.issn1684-1999 (online)
dc.identifier.issn2413-1903 (print)
dc.identifier.otherdoi:10.4102/ac.v17i1.366
dc.identifier.urihttp://hdl.handle.net/10019.1/100688
dc.language.isoen_ZAen_ZA
dc.publisherAOSIS Publishing
dc.rights.holderAuthors retain copyright
dc.subjectFinance -- Psychological aspectsen_ZA
dc.subjectEconomics -- Psychological aspectsen_ZA
dc.subjectInvestments -- Decision makingen_ZA
dc.subjectFinance, Personal -- Psychological aspectsen_ZA
dc.subjectFinance, Personal -- Decision makinge
dc.subjectInvestments -- South Africa -- Decision makingen_ZA
dc.subjectBusiness namesen_ZA
dc.titleThe familiar versus the unfamiliar : familiarity bias amongst individual investorsen_ZA
dc.typeArticleen_ZA
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