Salience Theory and Pricing Stock of Corporates in Tehran Stock Exchange

Document Type : Research Paper

Authors

1 Department of Accounting, Qazvin Branch, Islamic Azad University, Qazvin, Iran

2 Department of Accounting, Tarbiat Modares University, Tehran, Iran

3 Accounting, Qazvin Branch, Islamic Azad University, Qazvin, Iran

Abstract

How the investors react to the received information plays a crucial role in determining the return of stock exchange market. Supply and demand based upon incorrect decisions lead to the price deviation of inherent values. This paper aims to study the impact of salience phenomenon on disproportionate pricing and investor overreaction in the corporates in Tehran stock exchange. Research methodology is correlative. Statistical sample involves 120 corporates accepted by Tehran stock exchange during 2012-2016. To test the hypotheses, a regression analysis method has been selected. Research findings have indicated that there exists a promising phenomenon in Tehran stock exchange causing the investors overreaction followed by the disproportionate pricing and also, the results have shown that the impact of salience is different on strong and weak information environments.

Keywords

Main Subjects

References

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Advances in Mathematical Finance and Applications
Volume 3, Issue 4
December 2018
Pages 1-16

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History

  • Receive Date: 26 October 2018
  • Revise Date: 03 January 2019
  • Accept Date: 03 January 2019
  • First Publish Date: 03 January 2019

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