Economic Themes (2010) 48 (4) 12, 629-640
Nikola Milović
Abstract: Traditional financial theory is based on normative decision-making and unrealistic assumptions about the behavior of financial managers and financial market participants. Behavioral finance, based on the analysis of the impact of psychological factors on the decisioning, gives a great contribution to the analysis of financial theory and practice. Decisions on financial structure of enterprises, investment and dividends should be considered in light of various rational and irrational incentives that financial managers are facing.
Keywords: behavioral finance; financial management; financing; investing; dividend policy; psychology
BEHAVIORAL FINANCE AND FINANCIAL MANAGEMENT
Nikola Milović
Abstract: Traditional financial theory is based on normative decision-making and unrealistic assumptions about the behavior of financial managers and financial market participants. Behavioral finance, based on the analysis of the impact of psychological factors on the decisioning, gives a great contribution to the analysis of financial theory and practice. Decisions on financial structure of enterprises, investment and dividends should be considered in light of various rational and irrational incentives that financial managers are facing.
Keywords: behavioral finance; financial management; financing; investing; dividend policy; psychology
