In collaboration with Iranian Association for Energy Economics(IRAEE) and Scientific Association of Defence Economics of Iran(SADEI)

Document Type : applicative

Author

Associate Professor of the Department of Economics, Naragh Branch, Islamic Azad University, Naragh, Iran

10.30473/jier.2024.70421.1439

Abstract

A B S T R A C T
The existence of uncertain conditions affects the confidence level of investors, which leads to a change in approach from rational to behavioral, judgments based on subjective perceptions, non-scientific information,  rumors, and prevailing market conditions, and it causes blindly following by some market activists, which is called herd behavior.  In the present study, the presence or absence of herding behavior of investors of industrial companies in the Tehran Stock Exchange is investigated. This research based on the data of the Tehran Stock Exchange from July 2018 to July 2021 and by considering various factors such as institutional investment, fundamental factors, and factors with lag as past trends through a regression equation, the presence or absence of herding behavior of investors evaluates. The results showed that there was herding behavior during the study period. However, by adding a) fundamental factors of variables such as P/E ratio, share turnover, capital of market, and market liquidity b) calculation of external factors such as political instability, global financial crisis, and oil price fluctuations, and c) Lagged effects, the intensity of herding behavior with a low change is observed. However, the key and final finding indicates the existence of herding behavior from July 2018 to July 2021, which is exactly consistent with what was formed in the Tehran stock market during this period.  In other words, investors blindly follow the actions of a group of people in the market irrationally and without paying attention to personal information or following scientific principles about a specific investment or decision. The feelings transmitted among people due to emotional behavior of entering the stock market affect their decision or it can be deliberative, conscious, and controlled in which social norms affect their decisions.
 

Keywords

Main Subjects

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