The influence of dispositional affect and cognition on venture investment portfolio concentration |
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| Authors: | Chien Sheng Richard Chan Haemin Dennis Park |
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| Institution: | 1. Peking University HSBC Business School, University Town, Nanshan District, Shenzhen, 518055 China;2. Bennett S. LeBow College of Business, Drexel University, Philadelphia, PA 19104, United States;3. Institute for Entrepreneurship and Innovation, Henry W. Bloch School of Management, University of Missouri — Kansas City, Kansas City, MO 64110, United States |
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| 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. |
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| Keywords: | Venture investment decisions Dispositional affect Cognition |
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