Investment Decisions Based on Disposition Effect, Mass Behavior, and Blue Chip Stocks in Tehran Capital Market

Subject Areas : Ethics and accounting

Meysam Kaviani ^{1 *} , Maryam Gavara ² , Mahdi Nemati ³

1 - Assistant Professor, Department of Finance, Faculty of Management and Accounting, Karaj Branch, Islamic Azad University, Karaj, Iran
2 - Assistant Professor, Department of Accounting, Faculty of Management and Accounting, Karaj Branch, Islamic Azad University, Karaj, Iran
3 - Master's Student, Department of Financial Management, Karaj Branch, Islamic Azad University, Karaj, Iran.

Received: 2024-03-06 Accepted : 2024-05-14 Published : 2024-06-26

Keywords: Disposition Effect, Mass Behavior, Blue Chip, Risk Perception, Investment Decisions.,

Abstract :

Purpose: The purpose of this study is to investigate investment decisions based on behavioral biases, considering the disposition effect, mass behavior, and blue-chip stocks in the Tehran capital market.

Method: In this research, to collect data, an online questionnaire was distributed among 420 individual investors, of which 395 were received and analyzed. The data were analyzed using structural equation modeling (SEM) with Smart PLS software.

Findings: The results show that the disposition effect, mass behavior, and blue-chip stocks have a positive and significant effect on risk perception. Risk perception, in turn, has a positive and significant impact on investors' decisions. The results also indicate that desire and mass behavior positively and significantly influence investors' decisions.

Conclusion: This research challenges the concepts of market efficiency and rational decision-making by highlighting the factors that affect financial bias in investment decision-making. This suggests that financial markets may not always function efficiently, and mispricing in markets where inefficiencies are evident can lead to economic distortions and affect resource allocation, potentially resulting in a market bubble.

 

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