IDEAS home Printed from https://ideas.repec.org/a/eee/jbrese/v69y2016i11p4970-4974.html
   My bibliography  Save this article

More than just financial performance: Trusting investors in social trading

Author

Listed:
  • Wohlgemuth, Veit
  • Berger, Elisabeth S.C.
  • Wenzel, Matthias

Abstract

Social trading is a new form of online community in which investors can automatically, simultaneously, and unconditionally copy the investments of other traders whom they trust. Using data from the social trading network eToro, this study uses fuzzy-set qualitative comparative analysis to explore configurations of cognition-based and affect-based signals of trustworthiness that generate trust and prompt one investor to copy another. This study identifies two configurations that prompt trust and the decision to copy. Those configurations rely on both cognition-based and affect-based signals of trustworthiness. Furthermore, the study identifies six configurations in which weak cognition-based and affect-based signals of trustworthiness lead to parties failing to establish trust. These findings contribute to a better understanding of the establishment and non-establishment of trust in online communities and have implications for social trading platforms and their members.

Suggested Citation

  • Wohlgemuth, Veit & Berger, Elisabeth S.C. & Wenzel, Matthias, 2016. "More than just financial performance: Trusting investors in social trading," Journal of Business Research, Elsevier, vol. 69(11), pages 4970-4974.
    • Handle: RePEc:eee:jbrese:v:69:y:2016:i:11:p:4970-4974
    DOI: 10.1016/j.jbusres.2016.04.061
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0148296316302247
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jbusres.2016.04.061?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Gamboa, Ana Margarida & Gonçalves, Helena Martins, 2014. "Customer loyalty through social networks: Lessons from Zara on Facebook," Business Horizons, Elsevier, vol. 57(6), pages 709-717.
    2. Mollick, Ethan, 2014. "The dynamics of crowdfunding: An exploratory study," Journal of Business Venturing, Elsevier, vol. 29(1), pages 1-16.
    3. Fama, Eugene F & MacBeth, James D, 1973. "Risk, Return, and Equilibrium: Empirical Tests," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 607-636, May-June.
    4. MacKenzie, Scott B. & Podsakoff, Philip M. & Fetter, Richard, 1991. "Organizational citizenship behavior and objective productivity as determinants of managerial evaluations of salespersons' performance," Organizational Behavior and Human Decision Processes, Elsevier, vol. 50(1), pages 123-150, October.
    5. Zhou, Zhimin & Wu, Jane Peihsun & Zhang, Qiyuan & Xu, Shen, 2013. "Transforming visitors into members in online brand communities: Evidence from China," Journal of Business Research, Elsevier, vol. 66(12), pages 2438-2443.
    6. Anne Haugen Gausdal, 2012. "Trust-building processes in the context of networks," Journal of Trust Research, Taylor & Francis Journals, vol. 2(1), pages 7-30, April.
    7. Estelami, Hooman & Maxwell, Sarah, 2003. "Introduction to special issue: The behavioral aspects of pricing," Journal of Business Research, Elsevier, vol. 56(5), pages 353-354, May.
    8. Fiedler, Marina & Sarstedt, Marko, 2014. "Influence of community design on user behaviors in online communities," Journal of Business Research, Elsevier, vol. 67(11), pages 2258-2268.
    9. Rajagopal, 2015. "Social Psychology of Consumers," Palgrave Macmillan Books, in: The Butterfly Effect in Competitive Markets, chapter 9, pages 223-247, Palgrave Macmillan.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Scheckenbach, Isabel & Wimmer, Maximilian & Dorfleitner, Gregor, 2021. "The higher you fly, the harder you try not to fall: An analysis of the risk taking behavior in social trading," The Quarterly Review of Economics and Finance, Elsevier, vol. 82(C), pages 239-259.
    2. Wohlgemuth, Veit & Wenzel, Matthias & Berger, Elisabeth S.C. & Eisend, Martin, 2019. "Dynamic capabilities and employee participation: The role of trust and informal control," European Management Journal, Elsevier, vol. 37(6), pages 760-771.
    3. Barth, Andreas & Laturnus, Valerie & Mansouri, Sasan & Wagner, Alexander, 2021. "ICO analysts," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242429, Verein für Socialpolitik / German Economic Association.
    4. Nagel, Duane M. & Giunipero, Larry & Jung, Hyeyoon & Salas, Jim & Hochstein, Bryan, 2021. "Purchaser perceptions of early phase supplier relationships: The role of similarity and likeability," Journal of Business Research, Elsevier, vol. 128(C), pages 174-186.
    5. Pelster, Matthias, 2019. "Attracting attention from peers: Excitement in social trading," Journal of Economic Behavior & Organization, Elsevier, vol. 161(C), pages 158-179.
    6. Manuel Kaiser & Elisabeth S. C. Berger, 2021. "Trust in the investor relationship marketing of startups: a systematic literature review and research agenda," Management Review Quarterly, Springer, vol. 71(2), pages 491-517, April.
    7. Schneider, Julian & Oehler, Andreas, 2021. "Competition for visibility: When do (FX) signal providers employ lotteries?," International Review of Financial Analysis, Elsevier, vol. 78(C).
    8. Kromidha, Endrit & Li, Matthew C., 2019. "Determinants of leadership in online social trading: A signaling theory perspective," Journal of Business Research, Elsevier, vol. 97(C), pages 184-197.
    9. Jin, Xuejun & Zhu, Yu & Huang, Ying Sophie, 2019. "Losing by learning? A study of social trading platform," Finance Research Letters, Elsevier, vol. 28(C), pages 171-179.
    10. Calic, Goran & Shevchenko, Anton, 2020. "How signal intensity of behavioral orientations affects crowdfunding performance: The role of entrepreneurial orientation in crowdfunding business ventures," Journal of Business Research, Elsevier, vol. 115(C), pages 204-220.
    11. Svatopluk Kapounek & Zuzana Kucerová, 2019. "Overfunding and Signaling Effects of Herding Behavior in Crowdfunding," CESifo Working Paper Series 7973, CESifo.
    12. Erdős, Sándor & Papp, Tamás & Vörös, Zsófia, 2022. "The effects of community-based signals on investment decisions in copy trading," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 97(C).
    13. Aloosh, Arash & Choi, Hyung-Eun & Ouzan, Samuel, 2023. "The tail wagging the dog: How do meme stocks affect market efficiency?," International Review of Economics & Finance, Elsevier, vol. 87(C), pages 68-78.
    14. Berger, Elisabeth S.C. & Wenzel, Matthias & Wohlgemuth, Veit, 2018. "Imitation-related performance outcomes in social trading: A configurational approach," Journal of Business Research, Elsevier, vol. 89(C), pages 322-327.
    15. Fabiana Fragnito, 2023. "Copytrading, a New Phenomenon: Comparative Economic and Legal Overview," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 431-445.
    16. Stan Oana Mara & Fanea-Ivanovici Mina, 2019. "Time to act: discourse on time in crowdfunding for social entrepreneurship project," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 13(1), pages 1162-1172, May.
    17. Andreas Oehler & Julian Schneider, 2023. "Social trading: do signal providers trigger gambling?," Review of Managerial Science, Springer, vol. 17(4), pages 1269-1331, May.
    18. Riccardo Reith & Maximilian Fischer & Bettina Lis, 2020. "Explaining the intention to use social trading platforms: an empirical investigation," Journal of Business Economics, Springer, vol. 90(3), pages 427-460, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zhengwei Huang & Jing Ouyang & Xiaohong Huang & Yanni Yang & Ling Lin, 2021. "Explaining Donation Behavior in Medical Crowdfunding in Social Media," SAGE Open, , vol. 11(2), pages 21582440211, April.
    2. Fengjiao Zhang & Hong Zhang & Sumeet Gupta, 2023. "Investor participation in reward-based crowdfunding: impacts of entrepreneur efforts, platform characteristics, and perceived value," Information Technology and Management, Springer, vol. 24(1), pages 19-36, March.
    3. Yasar, Burze & Sevilay Yılmaz, Işıl & Hatipoğlu, Nurullah & Salih, Aslıhan, 2022. "Stretching the success in reward-based crowdfunding," Journal of Business Research, Elsevier, vol. 152(C), pages 205-220.
    4. Harrison Hong & Terence Lim & Jeremy C. Stein, 2000. "Bad News Travels Slowly: Size, Analyst Coverage, and the Profitability of Momentum Strategies," Journal of Finance, American Finance Association, vol. 55(1), pages 265-295, February.
    5. Kiran Paudel & Atsuyuki Naka, 2023. "Effects of size on the exchange-traded funds performance," Journal of Asset Management, Palgrave Macmillan, vol. 24(6), pages 474-484, October.
    6. Muhammad Kashif & Thomas Leirvik, 2022. "The MAX Effect in an Oil Exporting Country: The Case of Norway," JRFM, MDPI, vol. 15(4), pages 1-16, March.
    7. Ferdinand Thies & Sören Wallbach & Michael Wessel & Markus Besler & Alexander Benlian, 2022. "Initial coin offerings and the cryptocurrency hype - the moderating role of exogenous and endogenous signals," Electronic Markets, Springer;IIM University of St. Gallen, vol. 32(3), pages 1691-1705, September.
    8. Christoffersen, Peter & Ghysels, Eric & Swanson, Norman R., 2002. "Let's get "real" about using economic data," Journal of Empirical Finance, Elsevier, vol. 9(3), pages 343-360, August.
    9. Radosław Kurach, 2013. "Does Beta Explain Global Equity Market Volatility – Some Empirical Evidence," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 7(2), June.
    10. Chang, Sanders S. & Wang, F. Albert, 2015. "Adverse selection and the presence of informed trading," Journal of Empirical Finance, Elsevier, vol. 33(C), pages 19-33.
    11. Shi, Yun & Cui, Xiangyu & Zhou, Xunyu, 2020. "Beta and Coskewness Pricing: Perspective from Probability Weighting," SocArXiv 5rqhv, Center for Open Science.
    12. Abugri, Benjamin A. & Dutta, Sandip, 2014. "Are we overestimating REIT idiosyncratic risk? Analysis of pricing effects and persistence," International Review of Economics & Finance, Elsevier, vol. 29(C), pages 249-259.
    13. Douglas Cumming & Lars Hornuf & Moein Karami & Denis Schweizer, 2023. "Disentangling Crowdfunding from Fraudfunding," Journal of Business Ethics, Springer, vol. 182(4), pages 1103-1128, February.
    14. Li, Xiao-Ming, 2017. "New evidence on economic policy uncertainty and equity premium," Pacific-Basin Finance Journal, Elsevier, vol. 46(PA), pages 41-56.
    15. Josef Lakonishok & Andrei Shleifer & Robert W. Vishny, 1992. "The Structure and Performance of the Money Management Industry," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1992 Micr), pages 339-391.
    16. Dimitrios D. Thomakos & Michail S. Koubouros, 2011. "The Role of Realised Volatility in the Athens Stock Exchange," Multinational Finance Journal, Multinational Finance Journal, vol. 15(1-2), pages 87-124, March - J.
    17. Shaikh, Salman, 2013. "Investment Decisions by Analysts: A Case Study of KSE," MPRA Paper 53802, University Library of Munich, Germany.
    18. Turan G. Bali & Robert F. Engle & Yi Tang, 2017. "Dynamic Conditional Beta Is Alive and Well in the Cross Section of Daily Stock Returns," Management Science, INFORMS, vol. 63(11), pages 3760-3779, November.
    19. Baron, Opher & Callen, Jeffrey L. & Segal, Dan, 2023. "Does the bullwhip matter economically? A cross-sectional firm-level analysis," International Journal of Production Economics, Elsevier, vol. 259(C).
    20. Cakici, Nusret & Zaremba, Adam, 2022. "Salience theory and the cross-section of stock returns: International and further evidence," Journal of Financial Economics, Elsevier, vol. 146(2), pages 689-725.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jbrese:v:69:y:2016:i:11:p:4970-4974. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jbusres .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.