The Role of Company Affect in Stock Investments: Towards Blind, Undemanding, Noncomparative and Committed Love

This conceptual article aims to contribute to the discussion of the role of individuals’ perceptions and affective evaluations of companies in their decisions to buy/hold the companies’ stocks. Based on psychological finance and marketing literatures, the authors explicate five different ways in which an individual’s positive affect towards a company may influence his/her decisions to buy/hold the stocks of the company. The authors argue that an individual’s positive affect towards a company has positive influence on overoptimism and on overconfidence in expectations of financial returns from the company’s stock. Furthermore, the authors argue that the positive affect towards for a company has negative influence on the expected financial returns from ownership of its stock which the individual requires or is satisfied with; negative influence on the consideration he/she gives to other investment opportunities; and positive influence on his/her unwillingness to sell its stock. The authors illustrate the influences with “love” metaphors and discuss their implications to the marketing/finance interface.