Influence of Personality Traits on Delegated Investment Decisions: Mediating Role of Soft Factors

Delegated investments are a special instance of fiduciary relationship that may be influenced by various personal and behavioral aspects of investment professionals. For this reason, our study investigates the conditional impact of big five personality traits on the performance of investment professionals in Pakistan. This study has been performed on 248 investment professionals selected through judgmental sampling technique. 94% of these respondents are male lying between the age brackets of 20 to 40 years. Responses from investment professionals are collected through closed-ended questionnaires that cover the aspects of personality traits, soft factors, investment decisions and investment performance in delegated investments. All items for study variables are adopted from previous studies cited in the paper. Responses are analyzed through the application of partial least square structure equation modeling by using smartpls4. Our study discovered the significant mediating effects of Agreeableness on the long term investment decisions and the performance of investment professionals in Pakistan. Full mediation (Baron & Kenny , 1986) of soft factors between the relationship of personality traits and the performance of investment professionals observed. LVS Soft factors also have moderating effect on the relationship between another personality trait Extraversion and the Short Term investment Decisions and performance of investment professionals. Furthermore, the direct effects of Extraversion on the Short Term Investment Decisions as well as on the Performance of investment professionals have also been observed to be significant here. The results of the study contribute to the body of literature related to behavioral finance and provide valuable insights for investors while deciding to delegate their investments to professionals. The novelty in our work is the relationship between personality traits and investment decisions tested in the context of delegated investments with moderating/mediating effects of soft factors.
Keywords: Personality Traits, Investment Professionals, Delegated Investments, Performance, Soft Factors