Description
The Role of Behavioral Finance in Corporate Investment Decisions: A Mixed-Methods Study of Decision-Making Biases
Abstract
Business investment decisions depend on psychological factors which can be studied through behavioral finance principles. However, investors make irrational decisions as emotions and cognitive biases guide their processes. Such things affect their decision-making abilities. Accordingly, the study investigates reciprocal roles of cognitive biases together. Research does this by analyzing emotional factors in managerial investment choices and corporate financial decision-making. Moreover, the study analyzes how decision-making biases affect corporate investment strategies. ​Another key point reveals that such biases develop poor investment choices.
Furthermore, the research implements a mixed methods design to fully understand how behavioral biases affect corporate practices by uniting numeric data and user insights. Quantitative assessment investigates behavioral biases’ impact on investment results. However, it is performed through the evaluation of project returns by measuring investment achievement rates. Whereas a qualitative portion of this research combines information gathered during interviews. For instance, data is collected from senior executives, financial analysts, and decision-making investment professionals. The results demonstrate the role of behavioral biases that affect corporate investments. This is because overconfident executives both take unreasonable risks and evaluate project legitimacy. Hence, loss-averse managers reject advantageous financial projects. The interview information strengthens the argument that organizations must recognize behavioral biases for better decision quality enhancement.
Additionally, the research presents actionable suggestions that combine organizational training initiatives with strategic investment evaluation. Therefore, obtained insights deliver essential value to corporate managers investors, and policymakers to enhance investment strategies by properly handling behavioral finance. In addition, research demonstrates how behavioral finance interacts with investment decision systems operating in the business world. The impact of loss aversion on investment decisions causes investors to make protective strategies that limit their portfolio expansion. Finally, modifying investment approaches to incorporate loss aversion principles will create economic advantages for individual investors, institutional investors, financial advisors, and economic stakeholders.
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Role of Behavioral Finance in Investment Decision – A Study of Investment Behavior in India
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