Studying the Effects of the Locus of Control on the Perceptual Errors in the Decision Making of the Investors in the Tehran Stock Exchange

Subject Areas : Journal of Investment Knowledge

Mirfeyz Fallah Shams ¹ (Assistant Professor, Management Faculty, Tehran Central Branch Islamic Azad University)
Farideh Haghshenas Kashani ² (Assistant Professor, Management Faculty, Tehran Central Branch Islamic Azad University)
Firouzeh Afsharhajari ³ (Master of Public Administration on Financial Management, Management Faculty Tehran Central Branch, Islamic Azad University.)

Received: 2012-05-09 Accepted : 2012-09-21 Published : 2012-09-21

Keywords: locus of control, Perceptual Errors, Decision making,

Abstract :

    This research introduces the behavioral finance. Investment in a coherent state requires analyzing the main character of the investors decisions. In this case, the activities related to the decision making process are such very important factors in the investors working environment and affect their decisions. Some psychological factors including the perceptual errors are effective in their financial decisions. The existence of the psychological factors, prevent the investors from making perfectly rational decisions and this is in contradiction with the efficient market hypothesis. The purpose of this study is to examine the effects of the locus of control on the perceptual errors in the decision making of the investors, reducing such errors, and eventually lead the markets toward efficiency.                                                                        From the purpose point of view, this research is an applied one, and it   has a descriptive correlation nature. In this study, the information is collected by the questionnaire, and the questionnaire distribution among the sample members is carried out through the simple, random sampling. The statistical population includes the whole actual investors in the Tehran Stock Exchange, the stockbrokerages and the common funds of investment in the Tehran Stock Exchange. Some statistical softwares such as the “spss 19” and “lisrel 8.7” were applied to test the hypothesis. The research hypothesis was tested through structural equation modeling, and the results indicated that some factors like job satisfaction, motivation, efficiency, positive experiences of working, and stress are proved effective on the perceptual errors of the investors, but the managerial strategies do not have such effects.