Financial reporting and the phenomenon of investors' mental anchors in the Tehran Stock Exchange

The phenomenon of anchoring is one of the topics in behavioral finance that was first proposed by Torsky and Kahnemann (1974). The purpose of this study is to investigate the severity of investors' reaction to management profit forecasts from the mental anchor phenomenon and also investigating the impact of quality financial information and the expected profits of companies is effective in weakening and reducing the error of judgment and the mental anchor of investors. For this purpose, by four regression models, four hypotheses for 116 companies of Tehran Stock Exchange in a period of nine years (2009 to 2018) with 1052 observations were examined. To analyze the data of research hypotheses, panel data method was used for the first model and for the second, third and fourth models, the combined data method was used. The results showed that investors in their financial decisions compared to the projected profit of the previous year and the profit of the previous year have a mental anchor phenomenon and rely on the profit of the previous year, but did not rely on the Predicted profit of the industry in their assessments and forecasts. They do not make a mental anchor. Also, in companies with high accuracy in the Predicted profits, the mental anchor of investors is adjusted, but the mental anchor of investors is not adjusted in companies that have quality accounting information.