Analysis on trading behavior of individual and institutional investors in Tehran Stock Exchange From the perspective of behavioral bias and factors affecting it

Subject Areas : Financial Knowledge of Securities Analysis

Naser Jamshidi ¹ , Hassan Ghalibaf Asl ²

1 - Ph.D. Student in financial management, Faculty of Management and accounting, University of Shahid Beheshti, Tehran, Iran
2 - Associate Prof. in financial management, Faculty of Social and Economic Sciences,, University of Alzahra, Tehran, Iran

Received: 2018-12-25 Accepted : 2019-04-20 Published : 2020-06-21

Keywords: Trading behavior, Overconfidence, Representativeness, disposition effect,

Abstract :

The aim of this study is to investigate the behavior of individual and institutional investors in Tehran Stock Exchange. For this purpose, we examined the portfolio statement of individual and institutional investors during a five-year period from 2012 to 2016. The result show that Investors’ behavior reflects some behavioral biases. Specifically, both individual and institutional investors tend to sell stocks that have appreciated in price, but not those that have depreciated in price (consistent with a disposition effect), although this tendency is more for individual investors. They also appear to believe that past returns are indicative of future returns (a representativeness bias), and their trading behavior shows that they are overconfidence. In the following, to investigate the effect of characteristics of investors on the cognitive errors, behavioral biases and trading error are investigated based on characteristics of investors.

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