Analysis of Loss Aversion and Overconfidence of Investors in Shaping Future Scenarios of Market Value and Asset Returns of Banks Listed on the Tehran Stock Exchange: A Futures Research Approach

Subject Areas : Financial and Behavioral Researches in Accounting

محمدطاهر احمدی شادمهری ¹ , Ebrahim ghaed ² , Mohsen Raji Asadabadi ³

1 - دانشکده اقتصاد دانشگاه فردوسی مشهد
2 - Ph.D. Student, Department of Economics, Ferdowsi University of Mashhad, Mashhad, Iran
3 - دانشگاه آزاد اسلامی واحد یزد

Received: 2025-09-12 Accepted : 2025-11-30 Published : 2025-12-20

Keywords: Loss Aversion, Investor Overconfidence, Banks Listed on The Tehran Stock Exchange, Panel Data,

Abstract :

Investors in financial markets are influenced by behaviors such as loss aversion and overconfidence, which can affect banks’ market value and asset returns. This study examines the role of these behavioral biases in the financial performance of banks listed on the Tehran Stock Exchange during 2016–2023. The results indicate that investors’ loss aversion has a significant negative impact on banks’ return on assets (ROA), meaning that higher loss aversion reduces banks’ asset returns. This suggests that excessive caution in facing market risks limits profitable investment opportunities. Moreover, the findings show that investors’ overconfidence has a significant negative effect on banks’ market value (MV), with higher overconfidence leading to a decline in market value. These results imply that excessive investor confidence can create imbalances in stock pricing and lower the market value of banks. The study suggests that, to enhance bank valuation, managers should avoid fostering loss aversion and overconfidence in their policies and adopt more balanced strategies for risk management and increasing market value

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