This study sought to establish whether there are relationships between particular elements of behavioral finance such as investor psychology, cognitive biases, emotions, and financial literacy, and strategic decision policies of a leading textile company in Beijing, China. Through the use of a quantitative comparative correlational study design, data was gathered from 280 purposely sampled respondents with the aid of a reliable and valid researcher made questionnaire. The Pearson correlation was used to determine relationships between the policy formulation, policy implementation, policy impact, and policy compliance domains. These results suggest there were no behavioral finance characteristics that resulted in changing the strategic policies of the firm, save for the previously mentioned strong negative relationship between cognitive bias and policy formation. This suggests that cognitive biases negatively hinder the strategic regard for policy formulation. The evidence suggests that decision policies of the firm are highly insulated from influences of behavioral finance since probably other factors are more important. These results provide justification for the need to mitigate the cognitive biases mentioned above and also address other factors like organizational culture, leadership, and even the regulatory environment as means of improving policy formulation.

Author Name: Wang Xinxiu, Lorenzo C. Lorenzo,

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Keywords: behavioral finance, strategic policy decisions, textile corporation, Beijing, corporate strategy

ISSN: 2644-0679

EISSN: 2644-0695

EOI/DOI: 10.47191/ijsshr/v8-i1-83

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