Research Article
Is Loss Possibility Information on Financial Investment Products Always Disadvantageous for Attracting Investments?
1 Neuberger Berman, 2 Dongguk University
Published: January 2018 · Vol. 47 No. 6 · pp. 1367-1390
DOI: https://doi.org/10.17287/kmr.2018.47.6.1367
Full Text
Abstract
Most domestic financial institutions have actively provided information on profit potential to retain investors when offering information on financial investment products, while excluding or downplaying information on loss potential. In this context, this study analyzed how providing minimal loss potential information affects investment attraction. To achieve this research objective, the study designated message sidedness of financial investment product information as the independent variable and investor response as the dependent variable, and proposed investor disposition and investment product characteristics as moderating variables. Furthermore, the study analyzed differences in changes in investors' attitudes toward investment institutions according to message sidedness when losses occurred after investment. To test this research model, an experimental study was conducted. Message type and investment product type were manipulated into two conditions each (persuasion message: one-sided vs. two-sided; investment product: high-risk/high-return vs. low-risk/low-return), and investor disposition was classified into two types (profit-seeking vs. risk-averse) based on survey responses before analyzing the results. The findings revealed that, first, message sidedness did not affect investment intention for risk-averse investors. Second, for high-risk/high-return products, investors' investment intention showed no difference depending on whether information about loss potential was provided. Finally, in situations where investment outcomes were confirmed after investing, when the investment institution provided only information about profit potential, investors' evaluations of the investment institution changed negatively. These results confirmed that limiting the provision of loss potential information when investment institutions introduce investment products is not always advantageous for attracting investment. Considering the scenario where losses are encountered after investment, providing information about loss potential was more advantageous for investor management. Lastly, this study presented managerial implications and suggested future research directions along with the limitations of the study.
