Behavioral factors influencing investment decisions of institutional investors: Evidence from asset management industry in Pakistan

Abstract

The purpose of this study is to investigate behavioral factors influencing investment decisions of institutional investors at asset management Industry in Pakistan. Behavioral factors investigated in current study are disposition effect, overconfidence behavior, mental accounting and diversification heuristic bias. In order to achieve objectives of the study survey data has been collected from 244 institutional investors through a self-administered structured questionnaire. The analysis was conducted by applying Partial Least Square Structural Equation Model (PLS-SEM) using SmartPLS 3.2.2 software. The findings revealed that disposition effect, overconfidence behavior, mental accounting and diversification heuristic bias have a significant influence on investment decisions of institutional investors. The article provide novel insight on the role of behavioral factors in investment decisions of institutional investors in Pakistan. Further, it enhance body of knowledge in understanding the behavioral aspects of investment decision in emerging market.