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The influence of dispositional affect and cognition on venture investment portfolio concentration

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  • Chan, Chien Sheng Richard
  • Park, Haemin Dennis

Abstract

We explore how an investor's dispositional affect and cognitive style influence venture investment portfolio concentration. Based on a field study using a sample of 128 judges from a business plan competition, we find that high positive affectivity investors construct more concentrated investment portfolios than their low positive affectivity counterparts, whereas high negative affectivity investors construct more diversified investment portfolios than their low negative affectivity counterparts. Further, investors who rely on analytical decision making display a weaker relationship between negative affectivity and investment diversification whereas investors who rely on emotion-based decision making display a stronger relationship between positive affectivity and investment concentration.

Suggested Citation

  • Chan, Chien Sheng Richard & Park, Haemin Dennis, 2013. "The influence of dispositional affect and cognition on venture investment portfolio concentration," Journal of Business Venturing, Elsevier, vol. 28(3), pages 397-412.
    • Handle: RePEc:eee:jbvent:v:28:y:2013:i:3:p:397-412
    DOI: 10.1016/j.jbusvent.2012.02.006
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