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Behavioral Finance and Sustainability: Unveiling Risk Biases in Investment Decisions

In: Proceedings of the Sustainability in Emerging Economies - Integrating Business Excellence in Management Education (SEE-IBEME-2024)

Author

Listed:
  • Aradhana Sorout

    (MVN University, Research scholar)

  • N. P. Singh

    (MVN University, Professor)

  • Anil Anand Pathak

    (MDI Gurgaon, Associate Professor)

Abstract

Traditional belief holds that goals of sustainable investment and financial returns are at odds with each other. However, progressive investors argue that this perceived conflict can be eased through a strategic approach that aligns economic goals with environmental, social, and governance (ESG) considerations. ESG considerations are now being incorporated into their decision-making procedures, prioritizing sustainability even it may require sacrificing financial gains. On the contrary, investors who are less aware might not concentrate on sustainability. Thus, it was thought prudent to conduct research to examine the nuanced relationship between “Sustainable Business Practices” (SBP) and the behavioral risk biases of individual investors specifically, “risk perception” and “risk-taking propensity”. By analyzing data from Indian stock market investors collected via a structured questionnaire, this research paper uses ‘Partial Least Squares Structural Equation Modeling’ (PLS-SEM) technique backed by boot-strapping method. This empirical analysis revealed key insights about the impact of “Sustainable Business Practices” (SBP) on “investment decisions” and integration of ESG considerations in financial decision making.

Suggested Citation

  • Aradhana Sorout & N. P. Singh & Anil Anand Pathak, 2025. "Behavioral Finance and Sustainability: Unveiling Risk Biases in Investment Decisions," Advances in Economics, Business and Management Research, in: Rohit Sindhwani & Jyotsna Bhatnagar & Ritu Srivastava & Neera Jain & Ruchi Agarwal (ed.), Proceedings of the Sustainability in Emerging Economies - Integrating Business Excellence in Management Education (SEE-IBEME-2024), pages 169-179, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-696-3_11
    DOI: 10.2991/978-94-6463-696-3_11
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