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Using two experiments, I examine how apologizing for fraud influences investor's avoidance (selling shares) and revenge (litigation) behavior. Investors in experiment one report how many shares they would sell and how likely they would be to pursue legal punishment after discovering fraud has occurred in an organization they are currently invested in and subsequently reading about management's response to the fraud. I manipulate the nature of fraud as fraudulent financial reporting (misreporting) or asset misappropriation (embezzlement). I also manipulate whether management apologizes, scapegoats responsibility, or remains silent after the fraud. Results show avoidance and revenge behavior is more negative after misreporting fraud. Data suggest that this difference may be partially attributable to the underlying moral norm that is violated. Specifically, misreporting is primarily a moral violation of deception, whereas embezzlement is primarily a moral violation of stealing. Results also show differential investor reactions depending on the type of fraud and management's response. For misreporting, revenge behavior is higher when management apologizes, but there is no effect on avoidance behavior. For embezzlement, avoidance behavior is reduced when the organization apologizes, but revenge behavior is unaffected. In experiment two, I replicate the misreporting condition from experiment one and manipulate apology sincerity. Results show that apology sincerity is positively associated with revenge behavior. Results of these two experiments extend both accounting and trust repair research by emphasizing the importance of disentangling moral integrity-based trust violations and that the adage of \"just say you're sorry\" is helpful in some situations and harmful in others.

PurposeThis study aims to investigate which messaging strategies employed in personalised newsletters could be used for improving the propensity of individuals to save or invest and secure their financial well-being.Design/methodology/approachThe authors conducted a field experiment with 4,782 clients at an Estonian retail bank. For three months (after measuring baseline levels for a month), the participants received personalised monthly newsletters with either a praising or a scolding message based on comparing their recent investment decisions to their past decisions.FindingsTheir results suggest that newsletters could serve as an encouragement for those who already invest significant amounts each month and a reminder for those who have stopped regular investing for a month. The newsletters robustly increased investments in securities accounts for these groups.Research limitations/implicationsThe authors contribute to the marketing literature by examining praise and scolding messaging strategies within the same channel and company, focussing on the individual's past behaviour. They raise several hypotheses to be tested in future randomised controlled trials (RCTs).Practical implicationsThe authors’ results show the importance of investor behaviour analysis as the effectiveness of the newsletter intervention largely depended on the type of customer it was served to. This highlights the importance of personalisation.Originality/valueThe results show that a given message tends to influence only specific groups of investors. Identifying these groups is valuable information for messaging strategies.

Purpose The behavioural decision-making process of individuals highlights the importance of investors’ sentiment and their correlation with the real economy. This paper aims to contribute to the literature of behavioural finance by examining the influence of contextual factors on investment decision-making. Design/methodology/approach Using a questionnaire, a total of 445 valid responses were collected from March to May 2021 through online sources. The current study uses a technique of Fuzzy-analytical hierarchical process (AHP) to assign relative weights to various contextual factors influencing investment decision-making. Harman’s single factor test was used to check common method bias. Findings Results of the study reveal that accounting information, self-image/firm-image coincidence, and neutral information as the top-ranked factors in influencing investment decisions, whereas advocate recommendation and personal financial needs emerged as less important factors in influencing investment decisions. Research limitations/implications The current study collects data from Indian stock market investors, which may limit the generalization of the study to India only. Moreover, this study is cross-sectional in nature, and there are numerous factors that are not part of the study but might significantly influence the investors’ decision-making process. Practical implications The research has implications for both academicians working in the area of behavioural finance and practitioners’ who are active in stock markets, more specifically dealing with retail investors and in the domain of personal finance. Also, the current study will accommodate different groups, i.e. policy makers, financial advisors, investors, investment professionals, etc. in carrying out their professional work. Originality/value The current study will provide a comprehensive overview of individual investor behaviour. To the best of the authors’ knowledge, the present study is one of its kind to use the Fuzzy-AHP technique for evaluating the relative ranks of contextual factors influencing investment decision-making.

This conceptual article introduces Perceived Cognitive Assistance (PCA)—a novel psychological construct capturing how interactive support from Large Language Models (LLMs) alters investors’ perception of their cognitive capacity to execute complex trading strategies. PCA formalizes a behavioral shift: LLM-empowered retail investors may transition from intuitive heuristics to institutional-grade strategies—sometimes without adequate comprehension. This empowerment–distortion duality forms the theoretical contribution’s core. To empirically validate this model, this article outlines a five-step research agenda including psychological diagnostics, trading behavior analysis, market efficiency tests, and a Behavioral Shift Index (BSI). One agenda component—a dual-agent simulation framework—enables causal benchmarking in post-LLM environments. This simulation includes two contributions: (1) the Virtual Trader, a cognitively degraded benchmark approximating bounded human reasoning, and (2) the Digital Persona, a psychologically emulated agent grounded in behaviorally plausible logic. These components offer methods for isolating LLM assistance’s cognitive uplift and evaluating behavioral implications under controlled conditions. This article contributes by specifying a testable link from established decision frameworks (Theory of Planned Behavior, Technology Acceptance Model, and Risk-as-Feelings) to two estimators: a moderated regression for individual decisions (Equation (1)) and a composite Behavioral Shift Index derived from trading logs (Equation (2)). We state directional, falsifiable predictions for the regression coefficients and for index dynamics, and we outline an identification and robustness plan—versioned, time-locked, and auditable—to be executed in the subsequent empirical phase. The result is a clear operational pathway from theory to measurement and testing, prior to empirical implementation. No empirical results are reported here; the contribution is the operational, falsifiable architecture and its implementation plan, to be executed in a separate preregistered study.

This study investigates the effects of investor trading behavior and investor sentiment on futures market return. We find that the spot investor trading behavior, futures investor trading behavior, spot market sentiment, and futures market sentiment all have positive effects on daily futures returns in Chinese financial market. More importantly, we show that the effect of (spot) futures investor trading behavior has better explanatory power than (spot) futures market sentiment on futures returns. Further supporting our results, high investor trading behavior and high investor sentiment strengthen the positive relation between sentiment-returns and behavior-returns.

PurposeThe study explored various dimensions of overconfidence bias (OB) among retail investors in Indian financial markets. Further, these dimensions were validated through formative assessments for OB.Design/methodology/approachThe study applied exploratory factor analysis (EFA) to 764 respondents to explore dimensions of OB. These were validated with formative assessments on 489 respondents by the partial least square path modeling (PLS-PM) approach in SmartPLS 4.0 software.FindingsThe major findings of EFA explored four dimensions for OB, i.e. accuracy, perceived control, positive illusions and past investment success. The formative assessments revealed that positive illusions followed by past investment success among retail investors played an instrumental role in orchestrating the OBs that affect investment decisions in financial markets.Practical implicationsThe formative index of OB has several practical implications for registered financial and investment advisors, bank advisors, business media companies and portfolio managers, besides individual investors in the domain of behavioral finance.Originality/valueThis research provides a novel approach to provide a formative index of OB with four dimensions. This formative index can acts as an overview for upcoming researchers to investigate the OB of retail individual investors.Highlights Overconfidence bias is an important predictor of retail investors' behaviorFormative dimensions of the overconfidence bias index.Accuracy, perceived control, positive illusions and past investment success are important dimensions of overconfidence bias.Modern portfolio theory and illusion of control theory support this study.

The expansion of financial markets has enabled individuals to invest in a variety of securities and financial instruments. Consequently, behavioral finance has shed light on the characteristics and psychological processes that influence the investment intentions and decisions of investors. We performed a systematic review of the recent literature on the key elements that influence the behavioral intentions and investment decisions of individual investors. In combination with bibliometric and weight analysis, this review aims to propose a comprehensive approach to present quantitative and qualitative analyses of the rising elements influencing investors’ intentions and behaviors in financial investment products. Using the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) statement, this work comprises a review of 28 articles published in Web of Science and Scopus databases between 2016 and 2021. The findings identify six underlying themes of investor behavior determined using content: (1) personal factors, (2) social factors, (3) market information, (4) firm-specific factors, (5) product-related factors, and (6) demography. The future research agenda is highlighted based on the Theories, Constructs, Contexts, and Methods framework. The findings provide insights for both theoretical and practical application for corporations, financial institutions, and policy makers in understanding investors’ behavior so as to strengthen the financial industry and economy.

This article studies how financial investors respond to firms' corporate social responsibility (CSR) performance in terms of their investing behaviors, and how such behaviors change contingent on an event that provokes their attention and concerns to CSR. Using the melamine contamination incident in China as a natural experiment, it is found that neither the individual investors' nor the institutional investors' behaviors are influenced by firms' CSR performance before the incident. Nevertheless, in the post-event period, institutional investors' behaviors are significantly influenced by firms' CSR performance that exceeds a certain threshold. Furthermore, such an effect diminishes for a better CSR performance. In comparison, the authors do not find any effects of CSR performance on individual investors, either before the event or after the event. Finally, firms' performance and investors' behaviors jointly affect firms' stock returns after the event but not before the event. This article reconciles the mixed findings in the literature on the effect of firms' CSR performance on their financial performance by showing that such an effect exists in a contingent manner. Furthermore, the authors show that a too low or a too high CSR performance could lead to undesirable responses from investors. Therefore, managers should pay attention to optimizing firms' CSR activities.

In recent years, as a result of developments in global markets, the financial decision-making mechanism of individuals has become one of the most debated topics. In the literature, despite the fact that linear relationship between energy market and investor sentiment is investigated, usually traditional tests are applied. Further, uncertainty conditions at the global level are not taken into account within the frame of markets and sentiment relations. The relationship between oil prices and investor sentiment is outstanding for asset allocation and portfolio risk management under conditions of uncertainty. This research paper examines the connection between energy market, global uncertainty and investor sentiment using monthly data between 2004 and 2024. In the analysis, firstly, it is examined that whether the series are linear or not employing linearity test. Then, quantile causality test is applied to the series that are determined to be non-linear. Empirical findings provide that investor sentiment cause oil prices while oil prices cause global uncertainty. In addition, global uncertainty and investor sentiment have a mutual causal relationship. Analysis results revealed that investor sentiment significantly affects the energy markets, and there is a strong association between global uncertainty and investment sentiment.

Many industries in Indonesia do not share profits in the form of dividends with investors, which affects the value of the company. This condition really determines the investor's decision to invest in the future as a reaction to the company's dividend policy. The study is aimed at analyzing the dividend policy in relation to investor behaviour and its impact on the value of a firm with financial stability as a moderate variable. This study uses 360 IDX-listed businesses from 2018 to 2022 for properties. Smart PLS was used to test the model. The study shows that the dividend policy affects the value of the company, but does not affect the behaviour of investors. However, financial stability has a negative impact on the dividend policy and the value of the company. In addition, financial stability cannot mitigate the relationship between the dividend policy and the value of the firm; Conversely, economic resilience can mitigate investor behavior and affect a firm's value. The article emphasizes that managers who develop dividend policy, that managers who develop dividend policy should pay attention to the behaviour of investors, as this can be a positive signal for the future value of the company.