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Information Sources for Investment Decisions: Evidence from Japanese Investors

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  • Sumeet Lal

    (School of Economics, Hiroshima University, 1-2-1 Kagamiyama, Higashihiroshima 7398525, Japan)

  • Abdul-Salam Sulemana

    (School of Economics, Hiroshima University, 1-2-1 Kagamiyama, Higashihiroshima 7398525, Japan)

  • Trinh Xuan Thi Nguyen

    (School of Economics, Hiroshima University, 1-2-1 Kagamiyama, Higashihiroshima 7398525, Japan)

  • Mostafa Saidur Rahim Khan

    (School of Economics, Hiroshima University, 1-2-1 Kagamiyama, Higashihiroshima 7398525, Japan)

  • Yoshihiko Kadoya

    (School of Economics, Hiroshima University, 1-2-1 Kagamiyama, Higashihiroshima 7398525, Japan)

Abstract

Although the traditional sources of financial knowledge in Japan are financial advisors and investment groups, the digital era and artificial intelligence have made other sources of information, such as social media and mass media, more influential. As such, it has become important to examine the socioeconomic, demographic, and psychological factors influencing the use of these information sources in the context of investment decisions. However, little research has been carried out to examine such associations using a large-scale nationwide dataset. We fill this gap by utilizing a dataset comprising almost 65,000 active investors from one of the largest online security companies in Japan, ensuring the representativeness and generalizability of our results. We show that active investors are more inclined to use social media and mass media than financial advisors and investment groups. The probit regression model shows that the use of each of the four sources of information is strongly shaped by an individual’s characteristics, which, to some extent, are not mutually exclusive for each source type. The study results imply that the government should regulate and monitor the quality and accuracy of the information disseminated by mass media and social media and educate investors on how to critically evaluate and verify the information that they receive.

Suggested Citation

  • Sumeet Lal & Abdul-Salam Sulemana & Trinh Xuan Thi Nguyen & Mostafa Saidur Rahim Khan & Yoshihiko Kadoya, 2023. "Information Sources for Investment Decisions: Evidence from Japanese Investors," IJFS, MDPI, vol. 11(4), pages 1-18, October.
    • Handle: RePEc:gam:jijfss:v:11:y:2023:i:4:p:117-:d:1252778
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    References listed on IDEAS

    as
    1. Kramer, Marc M., 2016. "Financial literacy, confidence and financial advice seeking," Journal of Economic Behavior & Organization, Elsevier, vol. 131(PA), pages 198-217.
    2. Fujiki, Hiroshi, 2020. "Are the actual and intended sources of financial knowledge the same? Evidence from Japan," Japan and the World Economy, Elsevier, vol. 55(C).
    3. Gu, Chen & Kurov, Alexander, 2020. "Informational role of social media: Evidence from Twitter sentiment," Journal of Banking & Finance, Elsevier, vol. 121(C).
    4. Oscar A. Stolper & Andreas Walter, 2017. "Financial literacy, financial advice, and financial behavior," Journal of Business Economics, Springer, vol. 87(5), pages 581-643, July.
    5. Angela Lyons & Urvi Neelakantan & Erik Scherpf, 2008. "Gender and Marital Differences in Wealth and Investment Decisions: Implications for Researchers, Financial Professionals, and Educators," NFI Working Papers 2008-WP-02, Indiana State University, Scott College of Business, Networks Financial Institute.
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