Abstract:
Behavioural finance is the study of psychology and cognitive biases and how these
impact on the decision-making of the investor. These biases affect the decisions that
the investor makes. The research was conducted to understand whether the
investors at the IDC are impacted by the same biases that impact investors who
invest in the stock market. Most of the research was conducted on investors investing
in the stock market and not in corporate companies. Investors at the IDC invest in
corporate entities. The five biases that were investigated are heuristics, regret
aversion, anchoring, overconfidence and financial cognitive dissonance.
A qualitative research study was conducted using semi-structured interviews to
interviews investors at the IDC. A total of Twelve interviews were conducted with
investors who had been working at the IDC for over five years. These investors were
from various industries at the IDC, which are agro-processing, automotive, basic and
speciality chemicals, capital equipment heavy manufacturing, media and motion
pictures and textiles.
The findings revealed that the investors at the IDC experienced the same biases as
investors in the stock market. The results also showed the advantages and
disadvantages of investors having biases. The study’s limitation was that the
research was only conducted at the IDC.
