The Relationship between Credit Rating and Stock Returns with an Emphasis on the Role of Investors' Emotions

Conventionally, it is thought that stocks with a high risk should yield higher returns. However, this notion is empirically incorrect. The reason for such a contradiction can be investors' feelings. Therefore, the purpose of this study was to investigate the relationship between investors` sentiments, business credit, and stock returns. For this purpose, the data of 130 companies were collected monthly for the period 2013-2019 (10,920 months-companies). The results supported the view that credit risk has a negative relationship with future stock returns. In the same way, it was observed that the investors' sentiments in speculative stocks are were on average higher than the investment stocks. Also, the results of univariate analysis based on quantile regression showed that there was a negative relationship between credit rating and the investors' sentiments in all the quantiles. Crowdfunding has become a modern and favorite financing channel worldwide. Crowdfunding is a new financing method that helps entrepreneurs acquire the financial resources needed for their projects. This study aimed to investigate the factors affecting individuals' interest in participating and investing in crowdfunding projects. Using the Structural Equations Modeling (SEM) technique, the developed model was tested with the help of Amos software via the data obtained from 318 individuals. This paper examined the direct and indirect contextual variables: awareness of need, altruism, reputation, psychological benefits, efficacy, funder’s trust, and institution-based trust in the investment intention. Finally, it was observed that awareness of need, altruism, values, reputation, psychological benefits, efficacy, funder’s trust, and institution-based trust were the factors influencing people's intention to invest in crowdfunding projects.