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Drivers and Consequences of Behavioral Bias and Strategies for Reducing the Effects of Bias in Institutional Investors (in Persian)

Author

Listed:
  • Rohei Moghadam, Hamidreza

    (Qom Branch, Islamic Azad University. Qom, Iran.)

  • Abbasi, Ebrahim

    (Department of Management, Faculty of Social Sciences and Economics, Alzahra University, Tehran, Iran,)

  • Kashanipour, Mohammad

    (Department of Accounting, Faculty of Management and Accounting, College of Farabi, University of Tehran, Tehran, Iran.)

  • Pourfakharan, Mohammadreza

    (Department of Accounting, Qom Branch, Islamic Azad University, Qom, Iran.)

Abstract

Market disorder and irrational behavior of investors escalate stock market volatility. This research has been conducted to identify drivers and consequences of behavioral bias and strategies for reducing the effects of bias behavioral in institutional investors by implementing the correlation research method. The evidence collected from a possible statistical sample of 607 legal investors has been analyzed using a questionnaire, confirmatory factor analysis, and structural equation modeling. The results have shown that increasing the causes and bases of bias (social and psychological factors, knowledge and experience, and market) leads to an increase in behavioral biases and the use of behavioral biases strategy in investors' decision-making. Also, the strategy to reduce behavioral biases is influenced by behavioral biases, background factors, and intervening factors. In the end, the success of investors is significantly influenced by behavioral bias reduction strategy, the causes of the behavior biases, and the behavioral biases. Evidence has shown that the investigated model has predictive validity for investment performance, and institutional investors can benefit from this study by understanding the influence of behavioral factors on investors' decisions.

Suggested Citation

  • Rohei Moghadam, Hamidreza & Abbasi, Ebrahim & Kashanipour, Mohammad & Pourfakharan, Mohammadreza, 2023. "Drivers and Consequences of Behavioral Bias and Strategies for Reducing the Effects of Bias in Institutional Investors (in Persian)," The Journal of Planning and Budgeting (٠صلنامه برنامه ریزی Ùˆ بودجه), Institute for Management and Planning studies, vol. 28(4), pages 141-164, December.
    • Handle: RePEc:auv:jipbud:v:28:y:2023:i:4:p:141-164
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    More about this item

    Keywords

    Bias Drivers; Behavioral Bias; Behavioral Bias Reduction Strategy; Capital Market Efficiency; Investors' Success.;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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