Meta-method of evaluating behavioral biases in financing

Meta-Method of Evaluating Behavioral Biases in Financing



Raheleh Dabiri (Ph.D. student, Economics, University of Isfahan, Iran, dabiri.raheleh@ase.ui.ac.ir)

Mohammad Vaez Barzani (corresponding author, Associate Professor, Economics, University of Isfahan, Iran, vaez@ase.ui.ac.ir)

Saeed Samadi (Associate Professor, Economics, University of Isfahan, Iran, s.samadi@ase.ui.ac.ir)



Abstract



Introduction and objectives

The way of financing is also effective on other issues such as profit, efficiency and expansion of production. Managers have an effective role in this field, they usually have their own styles when making decisions about financing and are not completely rational (Bertrand and Schoar, 2003). Research shows that managerial traits such as behavioral biases are important factors for capital structure decisions (Hackbarth, 2008). In most of the conducted researches, the existence of behavioral bias in managers has been confirmed. On the one hand, bias in decisions related to financing causes non-optimality and wastage of financial resources, and on the other hand, the issue of financing in Iran has deficiencies such as disproportionate distribution of risk, lack of proper monitoring system, lack of connection between real and credit sectors of the economy and the existence of unused capacities are faced (Mousavi, 2016). Therefore, investigating the behavioral biases of managers under the field of financing in Iran is important to control and reduce these biases. According to the growing trend of behavioral financial studies in the last decade, it is necessary to conduct researches with a forward-looking approach for the growth and guidance of future researches in order to identify the gaps and neglected points in the researches. The purpose of this study is to analyze the methods of evaluating behavioral biases, especially in research related to financing methods. This article deals with the analysis and criticism of the methodology of the researches done in this field in the form of meta method. meta method is used in selected studies by using the analysis of statistical methods and monitoring methods of bias evaluation. Considering that so far, no research has been done in the field of pathology of behavioral bias evaluation methods, especially researches related to financing methods; The results of this research can be used by researchers for future studies.



Method

This research is developmental in terms of its purpose, and since it examines the methodology of studies in the field of evaluating behavioral biases, it is of the content analysis type. To collect data, library study and document review were used. The statistical population of the present research is domestic and foreign articles in the field of behavioral finance, behavioral biases in financing methods, and evaluation of behavioral biases. The research method in this study is meta method. In the present research, according to the purpose of the research, the analysis of statistical methods, the monitoring of methods for evaluating biases in selected studies have been used. Considering that the purpose of this research is to investigate the methods of evaluating behavioral biases in research related to financing methods, keywords such as behavioral finance, evaluation of behavioral biases, and financing methods are used to select articles. After searching in reliable domestic and foreign databases, and after studying the researches, articles related to the subject of the research were collected. To investigate the methods of evaluating behavioral biases, more than 200 articles have been studied, of which 33 related articles have been selected because some articles have used similar methods. Due to the lack of a single method in the field of meta method, in this research, an innovative framework is used in the area of meta method. In this way, researches are reviewed in two parts. In the first part, the statistical methods for evaluating behavioral biases in selected researches are reviewed, and in this way, the available methods for evaluating each bias are presented separately. In the second part, the monitoring of the number of repetitions of the use of bias assessment methods in the researches is discussed. In this part, for two methods of statistical data analysis, i.e., descriptive statistics and inferential statistics in general and the subsections of this Two methods, i.e., descriptive indices, graphs and tables for descriptive statistics and parametric and non-parametric methods for inferential statistics, the number of evaluation methods are given.



Findings

In order to find different methods of evaluating behavioral biases in researches related to financing methods, selected studies were reviewed and methods of measuring that bias were obtained for each bias separately. In these studies, both descriptive statistics and inferential statistics have been used to evaluate biases. Among the 20 behavioral biases, the overconfidence bias was tested more than the other biases, and then the anchoring bias was tested. The biases of conformism, innovation and illusion of control have the least number of evaluations in these studies. To analyze the data in the selected studies, two methods of descriptive statistics and inferential statistics have been used; But the inferential method has been noticeably used to evaluate behavioral biases in research related to financing methods; Inferential statistics were used in 30 studies, but descriptive statistics were used in 14 studies. It should be noted that among the numerous studies, 33 related studies have been examined, some of which have used both descriptive statistics and inferential statistics in their research. In the selected studies to evaluate the biases in terms of time dimension, in the studies of the first researchers in this field, such as Kahneman and Tversky, the descriptive statistics method has been used more to evaluate and prove the existence of behavioral biases. In subsequent studies, especially in the last decade, more inferential statistics have been used in this field.



Discussion and Conclusions

Paying attention to the results of the research, research problems and gaps are observed in this field. For example, some biases such as compatibilism bias have been neglected, and it is suggested that biases should be investigated more comprehensively in future. It was also observed that studies in this field have mostly used descriptive methods or the regression family, which indicates the low variety of statistical analysis methods in this field. Therefore, researchers need to use other up-to-date analytical methods. Reasons for these research gaps can be mentioned: deficiency in the teaching of research methods in universities, the reluctance of researchers to choose uncommon methods in research, and the procedure of journals to accept articles. It is recommended that research centers, universities and scientific and research journals provide grounds for solving these problems so that researches can benefit from more richness.





Keywords: behavioral finance, behavioral biases, financing, meta-study, meta-method

JEL Classification: G40، D92