The Impact of Informational Source and Portfolio Management on Individual Investors’ Trade Frequency: A Moderating Effect of Behavioral Biases

Abstract

Individual investors become significant players in the stock market and a paradigm of
finance is shifting from traditional to behavioral finance. This study investigates the impact of information sources and portfolio management on individual investors’ trade frequency with moderating
effect of behavioral biases at the Pakistan stock exchange. The researcher used descriptive statistics,
confirmatory factor analysis, and linear regression to test the hypotheses of the study. Furthermore,
the process macro is used to test the moderating effect of behavioral biases on investors’ trade frequency. The findings of this study divulge that information source and portfolio management influence the trade frequency of individual investors, and representativeness and overconfidence biases
moderate the effect of portfolio management and trade frequency, information source, and trade
frequency respectively. This study contributes to the existing literature on behavioral finance in understanding the investigated concepts as well as exploring the trade frequency of individual investors
affected by behavioral biases. This study can be helpful for individual investors in how they can take
reliable, factual, and rational decisions to enhance their trade frequency