The Modeling of the Role of Institutional Ownership in the Amount of Anchoring Bias Explanation about the Excess Return Resulting from the Earning Announcements

Document Type : Research Paper


1 Ph.D. Candidate, Department of Financial Management, Faculty of Management, Qazvin Branch, Islamic Azad University, Qazvin, Iran.

2 Assistant Prof., Department of Financial Management, Faculty of Management, Qazvin Branch, Islamic Azad University, Qazvin, Iran.

3 Associate Prof., Department of Management, Faculty of Management, Alzahra University, Tehran, Iran.

4 Associate Prof., Department of Management, Faculty of Management, Qazvin Branch, Islamic Azad University, Qazvin, Iran.

5 Assistant Prof., Department of Management, Qazvin Branch, Islamic Azad University, Qazvin, Iran.


Objective: The purpose of this study was to investigate that behavioural factors play an important role in decision-making and subsequently formation of markets phenomena.
Methods: The population of this study consist of all companies listed in The Tehran Stock Exchange of various industries and groups and samples were collected between the years 2007 and 2017. Using regression analysis, we estimated the influence of institutional investors anchoring bias on the 52-week highest price by the cross-sectional regression model, as well as measuring the effect of increasing proximity of price to the 52-week highest price next abnormal returns in parallel with controlling of the other factors over PEAD.
Results: Given the statistically significant anchorage coefficient, it can be stated that there is a significant relationship at a 95% confidence level between the anchorage bias and the abnormal returns resulting from the profit declaration. Also, the level of institutional ownership has a significant relationship with the abnormal returns of profit declarations. In institutionally-owned companies, the role of the anchor variable is not even significant. However, in companies with low institutional ownership, this role is positively significant with a 0.13 coefficient.
Conclusion: Anchoring bias plays a minor role in explaining the additional returns resulting from the profit declaration in companies that are institutionally owned. Therefore it can be said that the first hypothesis of this research on the minor effect of anchorage variable in case of low institutional ownership is confirmed.


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