Interactions of Individuals' Company-Related Attitudes and Their Buying of Companies' Stocks and Products

Abstract

Although increasingly interested in individual investors' behavior and psychology, finance research has paid little attention to the fact that the same individuals who engage in investment behavior and trading of stocks of certain companies may also engage in other economic behavior, notably in the consumption of products. Recognizing this, as well as the increasing evidence of the role of company-related attitudes in individuals' investment behavior, the article presents a theoretical model concerning how an individual's company-related attitudes, his/her tendency to buy/hold the company's stocks, and his/her tendency to buy/use the company's products are likely to interact. The proposed interaction is suggested to generate a potentially considerable leverage effect, ultimately on the stock price of a company.