Behavioral CorporateFinance: A Survey

ArXiv ID: ssrn-602902 “View on arXiv”

Authors: Unknown

Abstract

Research in behavioral corporate finance takes two distinct approaches. The first emphasizes that investors are less than fully rational. It views managerial fi

Keywords: behavioral finance, corporate finance, irrational investors, managerial decision-making, agency theory, Corporate Equity

Complexity vs Empirical Score

• Math Complexity: 4.0/10
• Empirical Rigor: 2.0/10
• Quadrant: Philosophers
• Why: The paper is a survey of theoretical models and empirical challenges in behavioral corporate finance, featuring conceptual frameworks and literature review rather than dense mathematical derivations or new backtested strategies. Empirical evidence is discussed but not presented with implementation-heavy data or quantitative results.

  flowchart TD
    A["Research Goal:<br>Understand Behavioral Biases in<br>Corporate Finance Decisions"] --> B{"Key Methodologies"}
    B --> C["Investor-Level Analysis<br>(Less than Fully Rational)"]
    B --> D["Manager-Level Analysis<br>(Psychological Biases)"]
    
    C --> E["Data/Inputs:<br>Market Anomalies<br>Pricing Errors"]
    D --> F["Data/Inputs:<br>Financial Statements<br>Corporate Events"]
    
    E --> G["Computational Process:<br>Market Efficiency Tests<br>Asset Pricing Models"]
    F --> H["Computational Process:<br>Agency Theory Models<br>Decision Frameworks"]
    
    G --> I["Key Findings:<br>Investor irrationality drives<br>market mispricing"]
    H --> J["Key Findings:<br>Managerial biases affect<br>capital structure & M&A"]
    
    I --> K{"Outcome:<br>Integrated Behavioral<br>Corporate Finance Framework"}
    J --> K