Impact of psychological and emotional factors on managerial financial decisions: an analysis from behavioral finance and its repercussions on business performance

Abstract

Investigate how mental aspects and emotions, such as thinking distortions, influence financial choices in small businesses in Cúcuta, Norte de Santander. Investigate how biases such as initial reference points, fear of loss, and overestimation can bias leaders' decisions, affecting asset allocation and company results.

The research emphasizes the importance of behavioral economics in understanding why executives do not consistently make logical decisions in financial matters. Its objective is to detect mental errors and shortcuts that cause consistent errors in choices. The goal is to develop methods and tools to improve choices, minimizing the dangers linked to these biases.

Research is needed because behavioral finance is not widely used in real-world studies in Colombia, and it is necessary to understand how emotions affect monetary choices in Cúcuta. A numerical and linked method with a nonexperimental, cross-sectional design is suggested to examine the connection between mental shortcuts, emotions, and monetary choices in small businesses in Cúcuta. The program features deliberately chosen financial supervisors and those in charge of these companies. Colombian law requires leaders to act wisely and logically, emphasizing the need to reduce personal biases in financial management.