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Investigating the Role of Financial Self-Efficacy in the Relationship Between Investors' Experience and the Effect of Herd Mentality on Their Decisions (Case Study: Tehran Stock Exchange)

Malek Mohammadi, Elaheh | 2022

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  1. Type of Document: M.Sc. Thesis
  2. Language: Farsi
  3. Document No: 55315 (44)
  4. University: Sharif University of Technology
  5. Department: Management and Economics
  6. Advisor(s): Isaai, Mohammad Taghi
  7. Abstract:
  8. The present study has been conducted with the purpose of investigating how to reduce behavioral biases in investors' decisions, which has become very important in the recent situation of Tehran Stock Exchange and with the entry of a large number of inexperienced investors. In this research, an attempt is made to examine the relationship between investors' trading experience and the effect of herd mentality on their investment decisions through the perspective of social cognitive theory and using financial self-efficacy. Multiple regression analysis and Bootstrap mediator relationship analysis were performed on data collected from 502 active investors in the Tehran Stock Exchange, and the research hypotheses were supported. Based on this, it can be argued that part of the inverse relationship between investors' trading experience and the effect of herd mentality on their decisions is due to increased financial self-efficacy, which increases their belief in their capabilities, their willingness to make personal decisions and not follow the crowd. The results of this study can be a response to the contradictory evidence in the literature that shows the lack of effect or even the inverse effect of investors' experience in reducing biases and highlight the role of financial self-efficacy in this. The findings of this study can also be used to improve policy-making and, more importantly, investor awareness and education, in order to increase market stability and efficiency.

  9. Keywords:
  10. Investor Experience ; Behavioral Finance ; Stock Market ; Tehran Stock Exchange ; Herd Behavior ; Social Cognitive Theory ; Financial Self-Efficacy

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