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Title: The relationship between personality traits and investment risk preference

Authors: Chung-Chu Liu; Kai-Yin Woo; Tai-Yuen Hon

Addresses: Department of Business Administration, National Taipei University, 151, University Rd., San Shia, New Taipei, 237 Taiwan ' Department of Economics and Finance, Hong Kong Shue Yan University, 10 Wai Tsui Crescent, Braemar Hill Road, North Point, Hong Kong ' Department of Economics and Finance, Hong Kong Shue Yan University, 10 Wai Tsui Crescent, Braemar Hill Road, North Point, Hong Kong

Abstract: Personality traits and risk preference behaviours have been the main subjects of behavioural finance. Our present study is to explore the relationship between the personality traits and investment risk preference. Questionnaire survey method is adopted to collect data and 600 valid samples are selected for the study. Also, the respondents come from Taiwan and Hong Kong, which allows us to test whether the differences in location of residence between these two regions can moderate the relationship. Our results show that investors personality traits have a significant relationship with their risk preferences. The evidence may help academics to integrate the role of personality traits into behavioural finance models, assist investors to recognise their risk preferences for making investment decisions, and facilitate finance professionals to design and recommend investment products for customers that match their risk preference characteristics with corresponding personality traits.

Keywords: personality traits; risk preference; questionnaire study; item analysis; factor analysis; hierarchical regression; behavioural finance; investment risks; Taiwan; Hong Kong; investment decisions.

DOI: 10.1504/IJRM.2016.076185

International Journal of Revenue Management, 2016 Vol.9 No.1, pp.57 - 71

Available online: 26 Apr 2016 *

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