A Study on the Trend of Investor's Behavior Effect in Tehran Stock Exchange

A major concern over studies on value relevance of accounting information, relates to their underlying assumption that market prices provide unbiased proxies for fundamental values. Motivated by growing evidence in the behavioral finance literature that market prices deviate from their underlying fundamental values, and by using of residual income valuation model, this study argues, and demonstrates empirically, that the investor behaviors’ effect caused by growing influence of non-fundamental factors in investor pricing decisions, has an inclining trend and can’t be neglected in value relevance studies.Results show an inclining trend for investors’ behavior effect for companies listed on Tehran Stock Exchange (TSE) during the period between 1378 and 1387. The study demonstrates that investors’ behavior has a growing and important role in equity valuation and it is essential to take it into consideration in value relevance studies to prevent any misleading results and related explanations.