Understanding Investor Behavior Through Cognitive, Emotional, And Neural Mechanisms: The Role Of Financial And Non-Financial Reporting

Investor decision-making is shaped by a complex interplay of cognitive processes, emotional reactions, and neural mechanisms, especially when responding to corporate information. This paper proposes an integrated framework that combines insights from behavioral finance, cognitive psychology, and neurofinance to explain how financial and non-financial reporting influences investor attitudes, expectations, and choices. The rational–cognitive layer captures analytical evaluation, information processing, and forecasting behaviors, while the behavioral– emotional layer highlights the role of biases, heuristics, and emotional cycles triggered by uncertainty. At a deeper level, the neural–biological layer describes how instinctual responses, affective systems, and executive control shape attention, reward sensitivity, and risk perception. Financial reporting, sustainability disclosures, and other narrative or quantitative forms of corporate communication act as stimuli that activate processes across all three layers, influencing market sentiment and decision outcomes. By integrating classical behavioral research with recent insights from neurofinance, the proposed model offers a comprehensive explanation of how investors interpret information, react under uncertainty, and form investment decisions. This multilayer perspective contributes to the literature by linking reporting practices to the cognitive, emotional, and neural foundations of investor behavior and provides a conceptual basis for future empirical work.