Measures to mitigate cognitive biases in business valuation

Authors

  • Maroua BOUALAM National School of Business and Management, Ibn Tofail University of Kenitra, Morocco
  • Khalid RGUIBI National School of Business and Management, Ibn Tofail University of Kenitra, Morocco

Keywords:

cognitive biases; business valuation; behavioral finance; valuation errors; overconfidence; anchoring; availability bias; confirmation bias; bias mitigation; valuation methods; financial decision-making; governance; behavioral analysis

Abstract

Business valuation, widely used in finance, taxation and strategic decision-making, is traditionally grounded in rational models. Yet practical observation shows that cognitive biases strongly influence the formulation of assumptions, the selection of information and the interpretation of results. This article analyses the mechanisms that can mitigate the impact of cognitive biases in valuation processes. Drawing on behavioral finance theories (Kahneman, 2011; Tversky & Kahneman, 1974) and contemporary research on valuation practices, the study examines how analytical tools, organizational structures, governance mechanisms and emerging technologies contribute to enhancing objectivity.

Findings reveal that persistent biases—such as overconfidence, anchoring, availability and confirmation—lead to recurrent errors in forecasting cash flows, assessing risk or estimating terminal value. Introducing structured mechanisms such as cognitive checklists, peer review, probabilistic modelling or artificial intelligence can significantly reduce distortions. The article proposes an integrated mitigation framework combining human intervention, standardized procedures and technological tools to support more accurate and bias-resilient valuation practices.

Classification JEL : G32 ; G41 ; D81 ; D91 ; M21

Paper type: Theoretical Research

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Published

2026-03-05

How to Cite

BOUALAM, M., & RGUIBI, K. (2026). Measures to mitigate cognitive biases in business valuation. International Journal of Accounting, Finance, Auditing, Management and Economics, 7(3), 287–307. Retrieved from https://ijafame.org/index.php/ijafame/article/view/2319

Issue

Vol. 7 No. 3 (2026): March

Section

Articles

License

Copyright (c) 2026 Maroua BOUALAM, Khalid RGUIBI

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