Investor sentiment under representativeness heuristic: The case of Tehran Stock Exchange

Too many researches, in spite of standard finance show that investors are not completely rational and investor sentiment plays a key role in prediction of their behavior. Behavioral finance claims that agents, under the psychological phenomenas, deviate from rational behavior. In this research we have investigated the effects of unexpected earnings on investor sentiment, under the representativeness heuristics phenomena. Investor sentiment is measured by ARMS index and the research methodology is based on Granger causality test and also event study. Data's are market and accounting data of Tehran stock exchange listed companies, between the years 2001 to 2013. Results indicate that investor sentiment is predictable by past unexpected earnings.