PURPOSE OF THE STUDY
The objective of this study is to find out whether personal values affect the decision of an
individual to invest in the stock market. The main motivation is to shed further light on the
phenomenon of limited stock market participation, which has been shown to have significant
economic impacts, both micro and macro. By investigating the influence of personal values on
the probability of participation and on the different reasons for non-participation, the study fills a
gap in the existing behavioral finance literature.
As the topic has not been researched before, generally accepted methodologies do not exist. Thus
my paper also contributes by introducing a method to connect personal values to investment
decisions. The approach I choose is to combine the theory of personal values of Schwartz (1992)
to stock market participation. This method provides measures of both personal values and
investment behavior that are easy to quantify.
DATA
My data consist of information gathered using a tailored questionnaire about the demographics,
characteristics, investment experience, and personal values of a respondent. The sample includes
320 university students from the Helsinki area in Finland. According to the university attended,
the respondents can be grouped into students of business, technology, and natural or social
science.
RESULTS
I find that personal values significantly affect the probability of stock market participation. The
respondents who emphasize the Self-Enhancement values of power and achievement are more
likely to have invested in the stock market than the others. The influence of value orientation is
stronger than that of several previously suggested determinants of participation, which shows
that differences in personal values are partly causing the limited participation phenomenon.
When studying the reasons for non-participation reported by the respondents, I also find
evidence of the effect of values. Emphasis of the Conservation values of tradition, conformity,
and security increases the probability of reporting non-interest in stocks and equity funds as the
reason for not investing.
KEYWORDS
Stock market participation, personal values