Behavioural Finance: Corporate Social Responsibility Approach

AbstractThis research presents the majority of classical financial theories and models are based on the assumption of a rational investors’ behaviour in the market regarding modern business, focusing on socially responsible activities is determined by general trends, where individuals and business companies realize their responsibility towards all those who are affected by the outcomes of their activities. The conducted research has proved that when making decisions under the uncertainty and risk conditions, people experience the effect of different illusions, emotions, false perception of information and other “irrational” factors.Corporate social responsibility reflects a new role of business in society. Recently, the corporate social responsibility tradition has started to spread quite rapidly in both large international corporations and small and medium-sized enterprises. The spread of socially responsible business ideas has encouraged the need to invest in companies which apply such a business practice