What is behavioral corporate finance?

Behavioral corporate finance is the study of how owners and managers of publicly traded companies take decisions that affect the values ​​of these companies. It offers a way to understand how it decides in business financing, which reflects the reality that markets are not always effective. As a result, people who manage these companies can take decisions that are equally inefficient in terms of the long -term value of the company. Those who study behavioral corporate finances understand that company managers can decide what could be in the best interests of their companies, but instead it is based on their own personal styles and strategic beliefs. These individuals often increase the values ​​of companies that operate in terms of stock prices. As the ride goal can be very different from company to company and from powerful powerful performance. Behavioral corporate finance is an effort to understand this decision -making process. In other wordsY, the company's price does not always reflect its long -term value. In fact, prices sometimes do not even match the current value of society. The company management must be ready to accept this reality so that their decisions are not short -sighted.

For example, executive decisions such as the use of assets of the company or issue more shares of shares in an effort to increase the price of shares must realize that these decisions may have short -term effects that do not match long -term consequences. Such actions can create immediate, positive reactions from investors in bringing the future of society to a threat. Behavioral corporate finances assume that endless search for higher stock prices, which often evoke stock options for managers who achieve them may not be in the best of the company.

is also a statement of advocates of behavioral corporate financing that the conduct of the leaderThe workers are often based on personal bias rather than the best interests of society. In other words, managers who tend to be aggressive with their own investments are likely to do the same with the assets of the company they run. Those who are of a conservative nature will probably act equally on behalf of their companies.