significant weaknesses in internal controls and collective behavior: Evidence fromTehran Stock Exchange

Many behavioral biases affect investors when making decisions. Behavioral distortions divert the investor from rational decisions, and as a result, resources are not diverted to appropriate investments. Behavioral biases can be evaluated in different types including collective behavior. data are collected of financial statements and stock returns of 125 companies listed on the Tehran Stock Exchange during 2012-2017. Data analysis was performed in eviews software version 10 The single variable results indicate there is no significant difference between the rates of investors' collective behavior in two groups of companies with and without weaknesses. While multivariate data analysis in the form of regression models showed that the auditor's report about the presence of significant weakness in internal control (which indicates high agency costs and high information asymmetry between managers and shareholders), strengthens investors' collective. Based on the results, it seems that investors' behavioral biases are based on the priority and importance of good and bad news in the market, and as long as there is bad news in the stock market towards the company, good news cannot cause behavioral bias in investors.