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Assessment of Relationship Between Market Anomalies and Investors’ Decisions: Evidence from Tehran Stock Exchange

Received: 23 October 2016     Accepted: 10 November 2016     Published: 12 December 2016
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Abstract

This study aimed to assess the relationship between market anomalies and investors' decisions. To this end, using correlation and regression analyses, the impact of market anomalies indices in a prevailing approach, the stock price to earnings(P/E) ratio, operating cash flow to price ratio and accruals to investors' decisions ratio were assessed and measured in six hypotheses based on two criteria of investment in workforce and investment in capital assets. The results obtained from testing the hypotheses by investigating75companies listed in Tehran Stock Exchange during 2009-2013 revealed that there was no relationship between P/E ratio and accruals indices with investing in the workforce; but presence of a relationship between operating cash flow to price ratio and investment in workforce was confirmed. Also, the association between two indices of stock price to earnings ratio and operating cash flow to price ratio with investments in capital assets was confirmed. However, no significant relationship was found between accruals and investment in capital assets.

Published in Journal of Business and Economic Development (Volume 1, Issue 1)
DOI 10.11648/j.jbed.20160101.14
Page(s) 25-30
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2016. Published by Science Publishing Group

Keywords

Market Anomalies, Investors' Decisions, Tehran Stock Exchange

References
[1] Akhavi babi, M. (2015). "The effects of financial risks on the relationship between earnings and stock returns". International journal of organizational leadership, volume 4; No.1; 154-169, industrial management institute.
[2] Chan, K, Chan, L, Jegadeesh, N. and Lakonishok, J. (2006). "Earning Quality and Stock Returns". On Line Available at: http://www.jstor.org/stable/pdfplus/10.1086/500669.pdf?acceptTC=true&jpdConfirm=true.
[3] Dolinar, Alesa, (2013). "Spectral analysis of exchange rates”. International journal of organizational leadership, volume 2; No.1; 21-28, industrial management institute.
[4] Fama, E. F, and French, K. (2008). "Dissecting anomalies". The Journal of Finance, No.4, pp. 1653-1677.
[5] Fairfield, P, Whisenant, S. and Yohn, T. (2003). "Accrued earnings and growth: Implications for future profitability and market mispricing". The Accounting Review, Vol. 78, pp. 353-371.
[6] Gong, G, Yue Li, L. and Xie, H. (2009). "The Association between Management Earning Forecast Errors and Accruals" Accounting Review, Vol. 84, No. 2, PP. 497-530.
[7] Kevin, K. and Vicki, W. (2008). “Earnings Quality and Future Capital Investment: Evidence from Discretionary Accruals”. On Line Available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1107492.
[8] Kothari, S. P, Loutskina, E. and Nikolaev V. (2006). "Agency theory of overvalued equity as an explanation for the accrual anomaly". Available at:http://papers.ssrn.com/sol3/papers.cfm?abstract_id=871750.
[9] Machayekhi, B, Kalateh, R, (2010), Market anomalies, Accountant EconomyJournal, 2010, No. 214, pp 70-75.
[10] Machayekhi, B, FadaieeNejad, M. E, Kalateh, R, (2011), Capital expenditures, accruals and stock returns, Financial Accounting Research Journal, No. 2, pp. 77-92.
Cite This Article
  • APA Style

    Hossein Parsian, Mohammad Jahangirian, Esmaill Beigiharchegani. (2016). Assessment of Relationship Between Market Anomalies and Investors’ Decisions: Evidence from Tehran Stock Exchange. Journal of Business and Economic Development, 1(1), 25-30. https://doi.org/10.11648/j.jbed.20160101.14

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    ACS Style

    Hossein Parsian; Mohammad Jahangirian; Esmaill Beigiharchegani. Assessment of Relationship Between Market Anomalies and Investors’ Decisions: Evidence from Tehran Stock Exchange. J. Bus. Econ. Dev. 2016, 1(1), 25-30. doi: 10.11648/j.jbed.20160101.14

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    AMA Style

    Hossein Parsian, Mohammad Jahangirian, Esmaill Beigiharchegani. Assessment of Relationship Between Market Anomalies and Investors’ Decisions: Evidence from Tehran Stock Exchange. J Bus Econ Dev. 2016;1(1):25-30. doi: 10.11648/j.jbed.20160101.14

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  • @article{10.11648/j.jbed.20160101.14,
      author = {Hossein Parsian and Mohammad Jahangirian and Esmaill Beigiharchegani},
      title = {Assessment of Relationship Between Market Anomalies and Investors’ Decisions: Evidence from Tehran Stock Exchange},
      journal = {Journal of Business and Economic Development},
      volume = {1},
      number = {1},
      pages = {25-30},
      doi = {10.11648/j.jbed.20160101.14},
      url = {https://doi.org/10.11648/j.jbed.20160101.14},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jbed.20160101.14},
      abstract = {This study aimed to assess the relationship between market anomalies and investors' decisions. To this end, using correlation and regression analyses, the impact of market anomalies indices in a prevailing approach, the stock price to earnings(P/E) ratio, operating cash flow to price ratio and accruals to investors' decisions ratio were assessed and measured in six hypotheses based on two criteria of investment in workforce and investment in capital assets. The results obtained from testing the hypotheses by investigating75companies listed in Tehran Stock Exchange during 2009-2013 revealed that there was no relationship between P/E ratio and accruals indices with investing in the workforce; but presence of a relationship between operating cash flow to price ratio and investment in workforce was confirmed. Also, the association between two indices of stock price to earnings ratio and operating cash flow to price ratio with investments in capital assets was confirmed. However, no significant relationship was found between accruals and investment in capital assets.},
     year = {2016}
    }
    

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    T1  - Assessment of Relationship Between Market Anomalies and Investors’ Decisions: Evidence from Tehran Stock Exchange
    AU  - Hossein Parsian
    AU  - Mohammad Jahangirian
    AU  - Esmaill Beigiharchegani
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    N1  - https://doi.org/10.11648/j.jbed.20160101.14
    DO  - 10.11648/j.jbed.20160101.14
    T2  - Journal of Business and Economic Development
    JF  - Journal of Business and Economic Development
    JO  - Journal of Business and Economic Development
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    UR  - https://doi.org/10.11648/j.jbed.20160101.14
    AB  - This study aimed to assess the relationship between market anomalies and investors' decisions. To this end, using correlation and regression analyses, the impact of market anomalies indices in a prevailing approach, the stock price to earnings(P/E) ratio, operating cash flow to price ratio and accruals to investors' decisions ratio were assessed and measured in six hypotheses based on two criteria of investment in workforce and investment in capital assets. The results obtained from testing the hypotheses by investigating75companies listed in Tehran Stock Exchange during 2009-2013 revealed that there was no relationship between P/E ratio and accruals indices with investing in the workforce; but presence of a relationship between operating cash flow to price ratio and investment in workforce was confirmed. Also, the association between two indices of stock price to earnings ratio and operating cash flow to price ratio with investments in capital assets was confirmed. However, no significant relationship was found between accruals and investment in capital assets.
    VL  - 1
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Author Information
  • Department of Management, Islamic Azad University, Qazvin, Iran

  • Department of Management, Islamic Azad University, Qazvin, Iran

  • Faculty of Entrepreneurship, University of Tehran, Tehran, Iran

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