چكيده لاتين
Since investorsʹ feelings are one of the effective factors in the flow of capital and the overall movement of the market, it seems necessary to know the factors that influence the decisions of investors. One of the behaviors in the market is that investors sometimes ignore the value-related earnings information in their business decisions, and as a result, they give asymmetric responses to companiesʹ income announcements. This means that investors tend to ignore information that does not match their current sentiments during optimistic or pessimistic market sentiments. One of the causes of this behavior of investors can be considered as a result of their cognitive dissonance. Behavioral biases such as cognitive dissonance may prevent individual investors from considering profit news in their trading. Cognitive dissonance refers to a state of distress in which people hold two or more contradictory beliefs. To reduce such unpleasant situations, one can be motivated to interpret evidence to support existing beliefs but downplay information that increases dissonance. In other words, evidence contrary to investorsʹ beliefs will be disproportionately weighed by them. According to the above explanations, the general aim of the research is to determine the role of cognitive dissonance on the effectiveness of investorsʹ initial response to earnings announcements under optimistic and pessimistic market conditions.
For this purpose, a sample consisting of 127 companies accepted in the Tehran Stock Exchange was selected in the period from 2010 to 2022. To calculate the emotion variable by principal component analysis, a composite index and emotion unit was created. Also, to calculate the cumulative abnormal return of the company from a five-day window centered on the quarterly profit announcement date, to measure liquidity, stock turnover index, to measure the uncertainty of information on the companyʹs size criteria, the visibility of assets and the fluctuation of net profit, to calculate transparency Company information from optional accruals model has been used to measure the stability of profit from the estimate of net profit of the current season on the net profit of the previous season and finally to measure the uncertainty of the market from the fluctuation of market returns.
The results of the hypotheses test showed that investorsʹ reactions to good and bad profit news are asymmetric, and in conditions of optimistic feelings, investors react positively to good news and muted response to bad news, while in conditions of pessimistic feelings, investors They react negatively to bad news and muted to good news. These results confirm the existence of cognitive dissonance in optimistic and pessimistic market conditions. In addition, increasing liquidity, reducing the uncertainty of company information, increasing profit stability and reducing the uncertainty of market did not have a significant effect on weakening the cognitive dissonance of investors regarding profit news. In addition, increased credibility of financial reporting weakens investorsʹ muted response to bad earnings news under optimistic sentiment conditions, while investorsʹ muted reaction to good earnings news under pessimistic sentiment conditions does not.
