Deconstructing the Normative-Descriptive Gap in Financing Decisions: A Hybrid SEM-AHP Analysis of Managerial Biases in an Emerging Market

<title>Abstract</title> <p> Classical finance prescribes optimal capital structures, yet managerial practices consistently deviate from these benchmarks, creating a persistent normative-descriptive gap. This study investigates the psychological underpinnings of this gap by examining how cognitive and emotional biases influence financing choices among industrial managers in a volatile emerging market. We deploy a hybrid framework: PLS-SEM analyzes the impact of twenty behavioral biases on financing preferences among 56 managers from Iran’s Shiraz Industrial Estate, while AHP establishes an expert-derived normative ranking of financing methods. Results confirm a significant relationship between biases and financing choices (p &lt; 0.05). Overconfidence was negligible (5.36%), whereas Anchoring (55.36%) and Regret Aversion (53.57%) dominated. The AHP model prioritized Bank Loans and Internal Investment as optimal, but actual behavior diverged significantly: Asset Divestiture was overutilized, and Equity Issuance underutilized. This study challenges the universality of overconfidence bias and proposes a context-dependent “Hierarchy of Fear and Anchoring” that recalibrates the Behavioral Pecking Order Theory for high-uncertainty environments. Methodologically, it is the first to integrate SEM and AHP to quantify the normative-descriptive gap in corporate finance, offering empirical evidence for capital structure anomalies in volatile emerging economies. <bold>JEL Classification</bold> G30 · D63 · D03 · D81 · C44 </p>