THE IMPACT OF BEHAVIORAL FINANCE ON EFFICIENT MARKET HYPOTHESIS

Abstract

Purpose: The purpose of this research is to understand the behavioral aspects of a investor and their impacts on investment decision making. Investors possess cognitive skills that they use in making investment choices. They use their past knowledge of investment for making successful decisions. Effort is made to determine their cognitive ability and to focus on the investor’s decision as well as its role in investment decision making. Methodology/Sample: The research, being explanatory in nature, involved quantitative data collection through questionnaire. The data was collected through a sample of 150 investors, compulsory was that all of them must be doing some sort of investment and do also take investment decisions independently with the authority of making their own decisions. The instrument used was SPSS, and data was analyzed by regression and correlation test. Findings: Through this study, it was investigated that investors are rational while making investment decisions. They relate their brain process with their decisions. They are motivated to make the right investment choices. Investors are also aware with the fear that can cause damage to their decisions. Investors are more towards rationality then to use emotional aspects in their investment decisions. Practical Implications: The findings/results of this research are likely to help those who make their financial and business decisions. This research is focused on the rational styles of decisions that are better choices for investors. In taking critical decisions, investors use their rational decision making capabilities for the better results.