Behavioral Finance and Sustainability: Unveiling Risk Biases in Investment Decisions

Aradhana Sorout (), N. P. Singh and Anil Anand Pathak
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Aradhana Sorout: MVN University, Research scholar
N. P. Singh: MVN University, Professor
Anil Anand Pathak: MDI Gurgaon, Associate Professor

A chapter in Proceedings of the Sustainability in Emerging Economies - Integrating Business Excellence in Management Education (SEE-IBEME-2024), 2025, pp 169-179 from Springer

Abstract: 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.

Keywords: ‘Behavioral risk biases’; ‘Sustainable business practices’ (SBP); ESG considerations; ‘Investment decision making’ (search for similar items in EconPapers)
Date: 2025
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DOI: 10.2991/978-94-6463-696-3_11

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