Assay the Impact of Investors' Emotional Decisions on Occurrence Crisis in Tehran Stock Exchange

Investors' emotions can lead to emotional and sometimes irrational decisions and as a result, it can cause anomalies such as sharp price fluctuations and even a crisis in the stock markets. Accordingly, this study intends to investigate the influence of Investors' Sentiment and other economic variables on the occurrence of crisis in the Tehran Stock Exchange. This research has been conducted for a period of 15 years, from April 2006 to March 2017 on 179 companies listed on the Tehran Stock Exchange. The stock market crisis as a dependent variable using Patel and Sarker model (1998) and investor sentiment as an independent variable was measured using the Bandopadhyaya and Jonse (2006) Model. we tests hypotheses by maximum likelihood or logistic regression. We found that nominal interest rates, inflation rates, GDP, P/E, ROA, can predict the occurrence of a crisis in tehran stock market. Our findings also show that investors' sentiment alone and by considering economic variables as control variables can predict the occurrence of a crisis in stock market. In general, our findings show the role of emotions in investors' decisions is significant in Tehran Stock Exchange and is one of the main causes in this market.