Discussion on the innovation of enterprise investment management

The purpose of this study was to examine the impact of behavioral biases, such as overconfidence, disposition effect, herding, risk aversion, and financial literacy, on investment decision making. The sample was collected using a convenient method, and 338 respondents participated in the study. The study utilized descriptive statistics, ANOVA, independent sample t-tests, correlation, and linear regression analysis to analyze the data. The findings of the study suggest that overconfidence, disposition effect, and risk aversion have a significant positive impact on investment decision making, while herding does not have a significant effect. Furthermore, the results indicate that financial literacy moderate’s overconfidence, disposition effect, risk aversion, and herding negatively. This implies that higher financial literacy levels can help mitigate the impact of these biases on investment decisions. The study provides valuable insights for policymakers, stakeholders, and financial institutions to develop policies and strategies aimed at improving financial literacy. It can be useful for researchers and the general public as well, as it provides a deeper understanding of the behaviour bias and investment decision. Future research can broaden the scope of the study by including new independent variables, such as loss aversion and confirmation bias. Additionally, future research can explore the moderating effect of other factors, such as age and gender, on the relationship between behavioral biases and investment decision-making. Overall, the study highlights the importance of understanding and managing behavioral biases in investment decision making, and suggests that increasing financial literacy can help individuals make more informed investment decisions.

In recent advancements in finance field have been betray the human behaviour and psychology is occupying a very important role in designing the investment decisions. The understanding has given rise to the fascinate field of behavioural finance, which helps in knowing about the cognitive biases, emotions and social influence impact on the decision-making process of the investor. Behavioural finance addresses the investors often deviate from the rational decision-making framework due to psychological biases and irrational behaviour. The irrational biases may lead to the suboptimal investment choices and outcomes. Common behavioural biases include, overconfidence, loss aversion, anchoring and mentality. Knowing the impact of behavioural finance on investment decision is very important for both individual investor and financial professionals. By taking help of both the factors, will give valuable information about the market and it helps about knowing the overall functioning of financial market. By scrutinizing about the behavioural finance, the researcher aims to uncovered the psychology and the behavioural factors influencing the investors while making decisions. This investigation provides a deep understanding of the mechanism of the market anomalies, irrational market behaviour and persistent deviation from the traditional theories. However, the study about the behavioural finance has a practical implication for financial advisor, investors, and policymakers.

PurposeThis paper developed a theoretical and research framework by identifying the behavioral biases in investment decision and by presenting a review of the available literature in the field of behavior finance-related biases. This paper aims to present a compressive review of the literature available in the public domain in past five decades on behavior finance and biases and its role in investment decision-making process. It also covers insights on the subject for developing a deeper understating of the behavior of investor and related biases.Design/methodology/approachThe work follows the comprehensive literature review approach to review the available literatures. The review carried out on different parameters such as year of publication, journal of publication, country, type of research, data type, statistical technique used and biases identified. This is a funnel approach to decrease the number of behavior biases up to six for further research.FindingsMost of the existing works have summarized behavior finance as an emerging area in finance. This indicates the limited valuable research in developing economy in this area. This literature review helps in identifying major research gap in this domain. It helps in identifying the behavior biases which work dominantly in investment decision-making. It would be interesting to explore the area of behavior biases and their impact on investment decision of individual investors in India.Originality/valueThis paper worked on literature prevailing on the subject and available on various online research data source and search engines. It covers a long time frame of almost five decades (1970-2015). This paper is an attempt to look at the impact of behavior finance and biases and its role in investment decision-making process of the investor behavior. This study builds up a strong theoretical framework for researchers and academicians by detailed demonstration of available literature on behavior biases.

Investors’ financial literacy entails making sound investment decisions and the behavioural biases or irrational behaviour in decision-making that are collectively formed by heuristic bias, framing effect, cognitive illusions and herd mentality factors. The present study examines the combined impact of financial literacy and behavioural biases on investment decisions. A questionnaire was developed using Likert scaling technique to elicit study variables and collected data was analysed using SEM technique. The results showed that heuristic bias had a significant positive association with the creation of behavioural bias in decision-making. However, the framing effect, cognitive illusions and herd mentality have negative associations in the formation of behavioural biases. Further, investors often practice and follow heuristic biases rather than other irrational techniques for making investment decisions. Therefore, the financial literacy of individual investors has a significant impact on affecting stock market investment decisions.

This study delves into the profound impact of behavioral biases on investment decisions and provides valuable insights into methods for counteracting or surmounting these biases. Specifically, it focuses on four prevalent behavioral biases: loss aversion, endowment bias, framing bias, and overconfidence bias, examining how these biases can lead to potential investment mistakes or risks. To mitigate the influence of behavioral biases, the study proposes several strategies. Firstly, it emphasizes the importance of sourcing information from multiple perspectives and cross-referencing data to avoid reliance on biased or limited sources. Objective evaluation of one's skills and knowledge is also highlighted as a crucial step in reducing biases. Leveraging professional advice or feedback can provide an external perspective and help investors make more rational decisions. Furthermore, the study suggests that regular portfolio review and adjustments are essential to address biases and adapt to changing market conditions. Additionally, proactive visualization of potential outcomes can aid in mitigating biases by promoting a more realistic assessment of risk and reward. The study concludes that behavioral biases play a pivotal role in investment decisions. To bolster investment performance and satisfaction, investors are encouraged to comprehend and rectify these biases.

This paper analyzed the impacting factors of listed company's investment decision through utilizing all-path recursive model. The empirical result shows: Firstly, though the concentration ratio of shares doesn't directly affect enterprise's expenditure scale, it influences enterprise's investment decision indirectly through financing structure and enterprise performance. Secondly, there is a prominent positive correlation between financial leverage and enterprise's investment expenditure, it shows that financial leverage effect of investment decision in China's listed company follows management opportunism hypothesis. Thirdly, there is prominent positive correlation between enterprise's internal cash flow and investment expenditure, it shows that internal cash flow has already become the important factor affecting enterprise's investment decision, and market-oriented trend of financing behavior beyond enterprise is strengthened. Fourthly, there are a prominent positive correlation between the total assets turnover ratio of last period, investment ratio of last period and the investment expenditure of current period.

Behavioral finance challenges the traditional assumption of rationality in investment decision-making, revealing how cognitive and emotional biases shape financial behavior. This study explores the influence of behavioral biases on investor decisions, particularly in volatile markets like the Nairobi Securities Exchange (NSE). Drawing on theoretical frameworks such as Decision Theory, Herd Behavior Theory, Prospect Theory, and Overconfidence Theory, the review examines how psychological biases diverge from classical finance principles. For instance, Prospect Theory highlights loss aversion, where investors disproportionately fear losses, leading to suboptimal decisions like premature selling of profitable assets or holding onto underperforming ones. Similarly, herd behavior amplifies market volatility as investors emulate majority actions, while overconfidence leads to excessive trading and risk-taking, undermining rational market engagement.Empirical evidence corroborates these theoretical perspectives. Studies in developed and emerging markets, including the U.S., Lithuania, and Taiwan, demonstrate the prevalence of biases like overconfidence and loss aversion. Notably, Barber and Odean (2001) reveal that overconfident investors incur lower returns due to higher trade costs. In the context of the NSE, fluctuations in trading volumes and indices underscore the impact of biases, with the NSE 20 share index showing an 11% rise in 2019 and an 8% decline in 2018. This instability discourages consistent investor participation, emphasizing the need for bias mitigation strategies.Critically, while behavioral finance offers robust insights into irrational investment behavior, its applicability to emerging markets like Kenya requires further exploration. Existing research predominantly focuses on developed markets, with limited contextualization for regions with unique economic dynamics. This study underscores the importance of addressing behavioral biases to enhance rational investment decision-making and foster stable financial market participation, particularly in developing economies

The aim of the study, Investment choices that have historically been made using rational economic models are coming under increasing pressure from behavioral finance theories that take psychological factors into account. “This study examines how individual equity investors' investment decisions are influenced by behavioral biases that are both cognitive and emotional. The research examines how biases like overconfidence, anchoring, representativeness, loss aversion, herding behavior, and regret aversion affect investor behavior and frequently result in less-than-ideal outcomes, drawing on theories like Prospect Theory and Heuristics and Biases. Using structured surveys, a quantitative, cross-sectional research design was used to gather information from 200 individual stock market participants. The associations between behavioral biases and investment decision-making were examined using SmartPLS and structural equation modeling (SEM). All of the cognitive and emotional biases that were examined had a statistically significant effect on investment decisions, according to the results, with financial literacy, herding behavior, and representativeness bias showing the biggest effects. High factor loadings, composite reliability, and average variance extracted (AVE) values all showed that the measurement model was highly valid and reliable. The Heterotrait-Monotrait ratio and the Fornell-Larcker criterion were used to verify discriminant validity. The results emphasize how important it is to raise awareness of these biases and develop mitigation techniques, particularly for individual investors. This study highlights the value of incorporating psychological insights into financial education, policy-making, and advisory services while also adding to the expanding corpus of knowledge in behavioral finance. By addressing behavioral distortions, it also provides policymakers and financial advisors with useful implications for improving investor decision-making and advancing market efficiency”.

The area of behavioral finance integrates economic and psychological concepts to comprehend and elucidate the decision­making process involved in personal finance. The purpose of this paper is to determine the impact of anchoring, herding, and loss aversion on influencing working women investors’ investment decision-making. The sample size consists of 196 working women investors who are trading in the Indian Stock Market from Uttar Pradesh, India. A structured questionnaire is used for the collection of data, which is based on a five-point Likert scale. The SPSS (Version 22) software is used to analyze data employing the linear regression function. The result of this study confirmed that anchoring, herding, and loss aversion bias have a significant positive impact on working women investors’ investment decision-making. Based on the data obtained, this paper concludes that anchoring has the most influence on working women investors’ investment decisions, followed by herding, while loss aversion has the least influence on working women investors’ investment decision-making. The findings of this study have significant implications for working women investors, researchers, policymakers, and financial advisors. Awareness of these behavioral biases is vital for empowering working women to make informed and rational investment choices. It is important for financial advisors and policymakers to acknowledge these behavioral biases in order to offer customized counselling and support for working women investors. Even though these biases affect people of both genders equally, this research concentrates on how they particularly affect working women since they frequently deal with particular socio-cultural settings and expectations.

Traditional finance suggests that any investment made by a rational investor considers risk and return before making a decision to maximize return. Behavioral finance then challenges conventional finance and introduces psychological factors that influence decision-making on invesment. The purpose of this study is to investigate how behavioral biases affect investment decisions under. Relying on variables to make investment decisions is a complex activity that relies on individual resources. Based on this research, In this study examine the impact of alternative investment decisions by human rational and irrational behavior and then examine the impact of behavioral finance on the decision-making process. behavioral financial phenomenon variables; heuristics, prospect theory, Role of personality, and environmental factors are explored as part of this study. Overconfidence, representativeness, anchoring, regret avoidance, hindsight, the harding effect, and home bias are inherent in investor psychological behavior. A research questionnaire tool for collecting samples and conducting quantitative research. To test the hypothesis regression analysis performed by the SPSS as a result. We found that investment decisions are influenced by behavioral bias. Empirical results concluded that investment decisions are influenced more by heuristic behavior than by prospect theori or role of personality. The results showed that heuristic behavior, prospect theories and the role of personality. Significantly influences investment decisions. With this research, it is hoped that it can help novice investors who will make an investment and to other researchers in the financial institutions.

Aims: This research aimed to analyze the effect of Cognitive Dissonance Bias, Overconfidence Bias, Herding Bias, Endowment Bias, and Confirmation Bias on the investment decisions of the millennial generation in the capital market. Study Design: The sampling method used in this study was purposive sampling, which obtained 128 respondents. Place and Duration of Study: The research was conducted with investors in Banyumas Regency. Methodology: This research method uses the SEM (Structural Equation Modeling) analysis method with the Partial Least Square (PLS) approach. Each hypothesis is tested to understand the relationship between variables. To test the validity and reliability of research using an outer model. Hypothesis testing uses inner models. Results: The results of this study showed that cognitive dissonance bias, overconfidence bias, and endowment bias have an effect on investment decisions. However, herding bias and confirmation bias do not affect investment decisions. Conclusion: To increase investment opportunities, investors must pay attention to cognitive dissonance bias, overconfidence bias, and endowment bias because they can cause investment failure. Investors must also pay attention to information circulating in the media because analysis needs the latest information on investment transaction targets to avoid investment failure.

Background: Behavioral bias factors influence individual decision-making. Technological innovations in the financial services industry have introduced automated financial advisors, or robo-advisors, to assist in mutual fund investment decisions and reduce behavioral biases. Purpose: This study aims to prove the influence of overconfidence and loss aversion behavior bias on mutual fund investment decisions by using robo-advisors as moderator variables.Design/methodology/approach: The research sample was 100 respondents with the criteria of young investors in the age range of 18 to 25 who invested in mutual funds for the last five years and were officially registered with the Financial Services Authority. The data processing method uses multiple linear analysis with moderation dummy variable, using a robo-advisor or not.Finding/Result: The results indicate that overconfidence and loss aversion biases significantly impact mutual fund investment decisions positively. Apart from that, the results also show that robo-advisors succeed in weakening the relationship between overconfidence bias and mutual fund investment decisions. Meanwhile, robo-advisors show results that cannot moderate the relationship between loss aversion and mutual fund investment decisions.Conclusion: Robo-advisors moderate the relationship between overconfidence bias and investment decisions but do not moderate the relationship between loss aversion and mutual fund investment decisions. The high overconfidence is caused by the ease of access to information related to investment assets that is widely spread through social media. Young investors are expected to be able to screen all information related to investment knowledge to reduce loss aversion from young investors. It can help investors make more rational decisions.Originality/value (State of the art):This research is unique because it examines the behavioral biases associated with robo-advisors on investment decisions, especially investments in mutual funds. This research is novel and includes artificial intelligence technology developing in finance using robo-advisor and mutual fund investment. These have managerial implications, such as the high overconfidence in the younger generation due to easy access to information related to investment assets, which is widely spread via social media. Knowledge related to finance is considered capable of reducing loss aversion from young investors to help them make more rational and better decisions. Robo-advisor technology has reduced the irrationality of mutual fund investors' investment decisions. The research results show that overconfidence and loss aversion bias positively and significantly influence investment decisions. Apart from that, the results also show that robo-advisors succeed in weakening the relationship between overconfidence bias and investment decisions. Meanwhile, robo-advisors show results that cannot moderate the relationship between loss aversion and investment decisions. Keywords: Robo-advisor, behavioral bias, overconfidence, loss aversion, mutual fund investment decision

This study aims to analyze the influence of Risk Preference, Article Preference, and Gender on Investment Decision-Making, with Confirmation Bias as a mediating variable. The research was conducted among students of Politeknik Negeri Semarang, representing a young generation with high digital literacy and a tendency toward cognitive biases. A quantitative approach was applied using an online survey with 116 respondents, and the data were analyzed using Structural Equation Modeling–Partial Least Squares (SEM-PLS). The results indicate that Risk Preference significantly affects both Confirmation Bias and Investment Decision, while Article Preference only affects Confirmation Bias. Gender shows no significant influence on either variable. Furthermore, Confirmation Bias plays a mediating role between Risk Preference and Investment decisions, but not between Article Preference or Gender and investment decisions. These findings highlight that psychological factors, especially risk tolerance and the tendency to favor information aligned with existing beliefs, are more influential in shaping investment decisions than demographics or content preferences. Confirmation Bias functions as a psychological mechanism that amplifies the influence of risk behavior on financial decision-making. Therefore, financial literacy programs should integrate behavioral and psychological components to foster more rational decision-making among young investors. Future studies are encouraged to expand the respondent base beyond students and explore other psychological factors such as overconfidence, herding behavior, or loss aversion to gain deeper insights into the behavioral dynamics of investment decisions.

This study aims to analyze the influence of Risk Preference, Article Preference, and Gender on Investment Decision-Making, with Confirmation Bias as a mediating variable. The research was conducted among students of Politeknik Negeri Semarang, representing a young generation with high digital literacy and a tendency toward cognitive biases. A quantitative approach was applied using an online survey with 116 respondents, and the data were analyzed using Structural Equation Modeling–Partial Least Squares (SEM-PLS). The results indicate that Risk Preference significantly affects both Confirmation Bias and Investment Decision, while Article Preference only affects Confirmation Bias. Gender shows no significant influence on either variable. Furthermore, Confirmation Bias plays a mediating role between Risk Preference and Investment decisions, but not between Article Preference or Gender and investment decisions. These findings highlight that psychological factors, especially risk tolerance and the tendency to favor information aligned with existing beliefs, are more influential in shaping investment decisions than demographics or content preferences. Confirmation Bias functions as a psychological mechanism that amplifies the influence of risk behavior on financial decision-making. Therefore, financial literacy programs should integrate behavioral and psychological components to foster more rational decision-making among young investors. Future studies are encouraged to expand the respondent base beyond students and explore other psychological factors such as overconfidence, herding behavior, or loss aversion to gain deeper insights into the behavioral dynamics of investment decisions.

Cryptocurrencies have gained dominance in the digital currency market as the number of investors is increasing day by day. Cryptocurrencies have emerged as highly sought-after assets among investors worldwide. Forbes reports that in 2024, the entire market capitalization of the cryptocurrency market has surpassed USD 3.64 trillion. The role of behavioral biases in investment decision-making within this area remains unexplored. This paper aims to fulfill this gap by addressing a literature review on the topic of behavioral biases and their impact on cryptocurrencies. It specifically emphasizes how behavioral biases, like herding behavior, overconfidence, loss aversion, fear of missing out, and several other biases affect investing decision-making in cryptocurrencies. This study has been done through an extensive literature review by synthesizing various research articles. To identify the relevant studies, databases such as Google Scholar, Scopus, and Web of Science have been used by employing different keywords like “behavioral finance,” “behavioral biases,” “cryptocurrency,” “investment,” etc. These studies have been reviewed and critically analyzed to identify the major biases, obstacles, and future research directions. This paper has shown that behavioral biases significantly influence investment decisions among cryptocurrencies. For instance, cryptocurrency does contribute to the herd mentality of the investors. Likewise, loss aversion bias significantly impacts investment decisions, suggesting that individuals fearful of financial loss tend to favor lower-risk ventures. Despite these insights, limited empirical studies focus specifically on cryptocurrency, highlighting a research gap that needs to be addressed. Future research will include the need for longitudinal studies to examine the importance of behavioral biases in cryptocurrency markets and the identification of regulatory interventions to mitigate irrational behavior. This study contributes to enhancing the understanding of cryptocurrency investment and provides fruitful insights to the researchers, practitioners, and policymakers by shedding light on the interaction of behavioral biases and cryptocurrency investment decision-making.