Abstract
The study is focused on behavioural aspects in the financial decision-making process of wood-processing enterprises. The main aim was to map this topic and determine the key behavioural factors that lead management to make mistakes. Primary data on this issue were obtained from an empirical survey. The empirical survey was conducted through a questionnaire that contains questions focused on behavioural decision-making aspects. Using statistical methods, three key behavioural factors were determined. By selecting the given behavioural factors, it was established that love, hate, and sadness are the key factors that influence management behaviour and decision-making. In the real business environment, two managers working in a wood processing enterprise were chosen; they were willing to provide us with a review and opinion on the results of the survey. By analysing all the data, it has been concluded that, even though managers are trying to direct their behaviour and activities, they often do not notice the influence of these factors, and sometimes they are unable to make decisions. The managers should be able to direct their behaviour and activities, to provide self-control and take into consideration the fact that these factors are always present. Results determine the key and systematically occurring errors in the financial decision-making process, caused by the influence of the human factor. We have developed a model for activating the three key behavioural factors applied in the financial decision-making process as a tool that can help company managers not to make the wrong decisions.
Highlights
The study is focused on behavioural aspects in the financial decision-making process of woodprocessing enterprises
We have developed a model for activating the three key behavioural factors applied in the financial decision-making process as a tool that can help company managers not to make the wrong decisions
The main hypothesis can be defined as follows: We assume that the model of key behavioural aspects will be suitable for identifying the main causes of differences in decision-making in neoclassical and behavioural financing, and will serve as a starting point for preventing wrong financial decisions
Summary
Behavioural economics, currently one of the main economic directions, incorporates psychologically realistic thinking into economic decision-making analyses. It is not enough to rely solely on numbers and mathematical and statistical methods, and on memories and intuition in creating estimates of future results. Studies on investment behaviour of a number of authors at different times and places encouraged this new widely accepted inter-disciplinary field of finance: Behavioural Finance (Dervishaj, 2018; Kapoor and Prosad, 2016; Sedaghati, 2016; Shefrin, 2001; Thaler, 2005; Sewell, 2011). Behavioural aspects are related to psychology, they are based on emotional and cognitive perception. The position of a manager brings responsibility, the daily pressure of duties and tasks forces him to act spontaneously and not just think about rational decisions
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