The Impact of Investor's herding Behavior on the Stock Returns Using Huang and Solomon Model

Due to the key role of capital market in macroeconomic variables, addressing to investors’ tendency to imitate the actions of others, the formation of herding behavior, and the impact of this behavior on firms’ stock returns is crucial. For investigating these issues Huang and Solomon's model is used for 49 firms during of 2009-2013. This paper is a practical study and method and nature of this paper is a correlation study and in this regard, Kolomogrov-Smirnov test is used for normality test of data. Furthermore, t-test is used to assess the statistical hypotheses of the research. The SPSS19 and EXCEL software are used to data analyzing. The results suggest that there is a significant relationship between herding behavior of investors and stock returns, and this relationship in large firms is greater than small firms. Moreover, this relationship in firms with high financial leverage is more than firms with low financial leverage.