Air Pollution and Stock Return in the Companies Listed on the Tehran Stock Exchange

The Related researches to health indicate that air pollution has a negative effect on people's psychological moods. The experimental researches in psychology demonstrate that bad psychological moods lead to increase risk-aversion in people. The conducted studies in financial and economic fields state the effect of bad psychological moods on the rate of stock return.
The current research is applied in terms of purpose, and it is a correlational research on the basis of characteristics and content. This research investigates the effect of bad psychological moods caused by air pollution, and it sets the relationship between air pollution and stock return in the companies listed on the Tehran Stock Exchange during 2011-2013 using daily data of Pollutant Standards Index and the information of stock return. Time Series Regression and Eviews Software Version 7 have been used to analyze the data.
The results of testing the hypothesis of the research indicate that air pollution has a negative relationship with the rate of the return of total stock of the Tehran Stock Exchange.
The Decisions of investors are greatly under the influence of their psychological moods, and air pollution is among the factors that can affect the character and psychological moods of humen. The results of the research indicate a significant and negative relationship between air pollution and stock return. This confirms the theories of Behavioral Finance. Although according to the adjusted R-squared coefficient resulted from the Regression model, air pollution explains a little changes in the return of security.