Behavioural Finance and Investment Decision Biases Among Portfolio Managers in Nigeria

Behavioural finance has demonstrated convincingly that cognitive biases and emotional heuristics systematically distort investment decisions even among trained financial professionals, with potential consequences for portfolio performance and market efficiency. This study examines the prevalence and impact of behavioural biases on investment decision-making among portfolio managers at asset management firms, pension fund administrators, and bank investment divisions in Nigeria. Primary data are gathered from 70 portfolio managers in Lagos and Abuja through validated behavioural finance questionnaires adapted for the Nigerian context, assessing overconfidence, herding behaviour, anchoring, loss aversion, and representativeness bias. Data are analysed using descriptive statistics, confirmatory factor analysis, and regression to test whether bias scores predict portfolio performance deviations from benchmark returns. The study employs a quasi-experimental design with a risk-adjusted performance comparison between managers exhibiting high versus low bias profiles. The theoretical framework draws on prospect theory, the adaptive markets hypothesis, and the cognitive hierarchy model as applied to professional investment settings. The study contextualises findings against the Nigerian capital market's specific characteristics including limited short-selling mechanisms, low liquidity in mid-cap stocks, and high macroeconomic uncertainty that may amplify certain bias effects. Existing literature confirms widespread behavioural biases among professional investors globally, but Nigerian-specific evidence is sparse. Findings carry implications for portfolio management training programmes, the Securities and Exchange Commission's investor protection frameworks, and the Chartered Institute of Stockbrokers' professional development curriculum. Keywords: behavioural finance, investment biases, portfolio managers, prospect theory, Nigeria