Behavioral and Managerial Antecedents of Investment Performance: Mediating Role of Strategic Decision-Making Quality

Abstract

This study aimed to explore how behavioral finance and managerial traits influence investment performance in organizational settings. It particularly examined the mediating role of strategic decision-making quality in the relationship between overconfidence bias, transformational leadership, and risk perception with investment performance. A quantitative research design was employed using structured questionnaires collected from 280 middle and top-level managers in finance-related roles across medium to large firms in Pakistan. Structural equation modeling (SEM) was used to assess direct and indirect relationships among the variables. The results showed that overconfidence bias had a negative impact on strategic decision-making quality, whereas transformational leadership and risk perception positively influenced it. Strategic decision-making quality was found to significantly mediate the relationship between all three independent variables and investment performance. The findings emphasize the need for leadership development and behavioral awareness training in financial decision-making contexts. Enhancing strategic decision-making capacity can mitigate cognitive biases and improve investment outcomes. This study contributes to both behavioral finance and management literature by integrating psychological traits and leadership behavior into a unified framework of financial decision-making effectiveness.