Investigating the effect of emotional tendency and mass behavior of shareholders on the risk of falling stock prices

Subject Areas : Financial Markets and Institutions

Rozhein Shakornia ¹ , Mohsen Dastgir ² , Afsaneh Soroshyar ³

1 - Department of Accounting, Isfahan(Khorasgan)Branch, Islamic Azad University, Isfahan, Iran.
2 - Department of Accounting, Isfahan(Khorasgan)Branch, Islamic Azad University, Isfahan, Iran.
3 - Department of Accounting, Isfahan(Khorasgan)Branch, Islamic Azad University, Isfahan, Iran.

Received: 2023-05-11 Accepted : 2023-09-29 Published : 2023-08-23

Keywords: Emotional Tendency, mass behavior of shareholders, risk of falling stock price,

Abstract :

Purpose: The purpose of this research i The risk of falling stocks is one of the concerns of investors, and increasing the risk of falling stocks causes pessimism among investors in the stock exchange, and this massive behavior leads to the aggravation of market fluctuations, destabilization of markets, and increased fragility of financial systems, The investors in the stock market is to obtain a reasonable return, is obtained from the two parts of stock price changes and dividends, so that investors financial analysts should be able to predict stock prices returns using investment models.Methodology: The present research is objective, practical and in terms of nature; It is descriptive and correlational. For this purpose, two hypotheses were formulated and data related to 100 member companies of Tehran Stock Exchange were used for the time period of 1391 to 1399. To test the hypotheses, the multivariate regression technique using the panel data method was used. Findings: There is a positive and significant relationship between the emotional tendency of investors and the risk of falling stock prices, and there is also a positive and significant relationship between the collective behavior of shareholders and the risk of falling stock prices.Research methodology: the present research is objective, practical and in terms of nature; It is descriptive and correlational. For this purpose, two hypotheses were formulated and data related to 100 member companies of Tehran Stock Exchange were used for the period of 2011 to 2019. To test the hypotheses, the multivariate regression technique using the panel data method has been used.Originality / Value: The results showed that the behavioral biases of investors, including emotional tendency and mass behavior, have led to a decrease in the efficiency of the stock market, as well as a decrease in the rationality of investors' decision-making, which results in an increase in the risk of falling stock Prices.

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