The Role of Product and Brand Perceptions In Stock Investing: Effects On Investment Considerations, Optimism and Confidence.
Behavioral finance researchers have been increasingly interested in the links between individual investors’ subjective perceptions about companies and their stock investment decisions. This article aims to provide a systematic examination of how investors’ subjective and affective evaluations of companies’ products and brands, in particular, may influence investors’ propensities to consider those companies as investment targets. The author hypothesizes the effects by applying psychological consumer behavior theories and tests the 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 decreases the consideration that the investor gives to alternative investment targets, while investing in that company's stock. The investor's affective evaluation of the company's product brand has a similar effect. Moreover, the results show that an investor's affective evaluation of a company's brand increases his optimism about the financial returns of the company's stock. Finally, the results suggest that contrary to what might be expected, an investor's familiarity with the company's brand does not decrease the consideration that he gives to alternative investment targets, nor is brand familiarity linked to overconfidence about the financial returns of the company's stock.