Brazilian investors' susceptibility to interpersonal influence: Impacts on risk tolerance and the disposition effect

Social interactions play an important role in the mindset of investors. Based on social finance, this study analyzes the effect of investors' susceptibility to interpersonal influence on financial risk tolerance and the disposition effect. A survey was conducted with Brazilian investors employing structural equation modeling. Investors' susceptibility to interpersonal influence had a direct and negative impact on the level of financial risk tolerance, whereas its influence on the disposition effect was indirect and negative, with financial risk tolerance as a mediator. Furthermore, financial risk tolerance had a direct and positive impact on the investors' disposition effect. This study advances in the field by discussing the effect of interpersonal influence on investments in a developing country. In a country with low savings rates, understanding how social interactions and norms affect investment decisions is vital when it comes to adopting strategies that prevent inexperienced investors from entering potentially harmful investments. •Social interactions play an important role in investors' mindset.•Interpersonal influence reduces risk tolerance.•Risk tolerance increases disposition effect.•Risk tolerance is a mediator between interpersonal influence and disposition effect.•Social interactions and norms affect investment decisions.