Investigating the Role of Investor Behavior Bias on Traders' Financial Performance with a Focus on the Role of Financial Literacy

Subject Areas : Management

Alireza Khamesi ¹ , Abdollah Nazari ² , Farhad Hanifi ³ , Hamidreza Jafari ⁴

1 - Department of Management, Ab.C., Islamic Azad University, Abhar, Iran.
2 - Management Department, Abhar Branch, Islamic Azad University, Abhar, Iran.
3 - Department of Management, Central Tehran Branch, Islamic Azad University, Tehran, Iran.
4 - Engineering Department, Abhar Branch, Islamic Azad University, Abhar, Iran.

Received: 2025-04-15 Accepted : 2025-07-08 Published : 2025-09-12

Keywords: Behavioral Bias, Investor Narcissism, Investor Stress, Financial Literacy, Financial Performance, Capital Market Traders. ,

Abstract :

The present study investigated the role of investors' behavioral biases on traders' financial performance, focusing on the moderating role of financial literacy. Behavioral biases, which include psychological and emotional deviations in financial decision-making, can have significant effects on investment performance. Narcissism and stress were examined as the two main behavioral biases in this study. This study is applied in terms of purpose and descriptive survey method. The statistical population of the study consists of capital market traders in Tehran. Theoretical information was collected using the library method, and practical data using a questionnaire. Sampling was carried out using the convenience method, and using the Cochran formula for an unlimited population, the sample size was determined to be 384 people. To ensure data adequacy, 410 questionnaires were distributed, of which 384 questionnaires were ultimately analyzable. The results showed that there is a significant relationship between investors' narcissism and traders' financial performance. Also, investors' stress has a negative and significant effect on their performance. In addition, financial literacy, as a moderating variable, has affected the relationship between investors' narcissism and stress on their financial performance. This study emphasizes the need to improve financial literacy to reduce the negative effects of behavioral biases and improve investment performance.

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