Information behaviour of online investors

Online trading has now become the prevalent form of stock market investing. With a large<br>percentage of investors online, understanding how they gather, use and share information is of<br>major interest to service providers, regulators, researchers and to investors themselves. Previous<br>studies have examined the adoption of online investing, the impact of online stock forums on<br>markets and the information content of stock forums. A relatively limited number of studies<br>have investigated the information seeking practices of online investors. This study sought a<br>deeper understanding of what drives the information behaviour of online investors.<br><br>This research reports on a qualitative study that interviewed 26 online investors about their<br>information practices and social networks. The interview transcripts were analysed using a<br>Grounded Theory methodology and the research process was also influenced by aspects of<br>Multi-Grounded Theory. A new Theory of Online Investor Information Behaviour has been<br>developed as a result of the analysis.<br><br>The theory introduces the concept of an Investment Persona – a role that an investor takes on –<br>that has a large impact on their information seeking behaviour. Investors may take on multiple<br>Personas simultaneously. A number of distinct Persona types were identified in the study: Long<br>Term Investor, Income Generator, Trader, Speculator, Venture Capitalist, Novice and Gambler.<br><br>The theory also includes a model of the Stock Investing Information Process, which includes the<br>tasks: Idea Generation, Stock Selection, Company Research, Buy, Monitor and Sell. While<br>information practices are incredibly diverse in the early stages of the investment process, the<br>later stages tend to be more homogenous.<br><br>A core aspect of the theory is the concept of an Information Lens. Rather than using all<br>information sources and social networks at all times, investors look through an Information Lens,<br>seeing only a small subset of their information world at any particular time. The Information<br>Lens is highly dynamic and is shaped by the current Persona and the task at hand.<br><br>The bidirectional relationship between the investor and the information world is also considered.<br>The information environment itself can influence the investor and change their behaviour, by<br>enabling new strategies that were not previously possible, or potentially threatening the investor<br>with information overload. Online technologies can also enhance the investing experience and<br>make it more interesting and exciting.