Effects Of Managers Attitude and Regret Aversion Bias on Financing Decision Quality of SMEs in Uganda

Abstract

Firms draw upon various perspectives and theories to determine their capital structures, sparking ongoing debate among scholars. While numerous factors influence financing decisions, our paper zeroed on the impact of managers attitudes, and regret Aversion bias on the quality of financing decisions in Small and Medium Enterprises. Data was collected from 356 small and medium in Mbale city, Uganda through a cross-sectional survey using a structured questionnaire. Descriptive analysis was performed, and the hypothesized relationships between the variables was examined using Structural Equation Modeling (SEM). Our findings unveil that
managers' attitudes and regret aversion bias significantly predict the quality of financing decisions, shedding light on the profound impact these attitudes exert on decision quality. The study's findings carry considerable implications for both policy makers and SME owners. For policy makers, it provides valuable insights into creating policies for SME financing that take into account the influence of managers' attitudes and fear of regrets. This understanding can guide the development of more effective and targeted policies to support SME growth.
Similarly, for SME owners, grasping the impact of attitude and regret-based decisions enables them to strategize effectively and mitigate any potential adverse effects, thereby enhancing their decision-making processes and overall business performance.

Keywords: Manager Attitude, Regret Aversion Bias Financing Decision Quality, Small and Medium Enterprises