The effect of managers’ ethical and behavioral characteristics on investors’sSentiment

Behavioral and psychological factors, such as power, agency costs, profit management, and myopic behavior of managers can affect information transparency and cause significant changes. Evidence, on the other hand, suggests that investors determine the value of stocks under the influence of judgments based on mental imagery, unscientific information, and the psychological and emotional conditions of the stock exchange. However, investors can be present in this market relying on information transparency.  Therefore, considering the importance of these relations for market, the present study is an attempt to investigate the effect of managers' ethical and behavioral characteristics on investors’ sentiments in companies listed on the Tehran Stock Exchange. For this purpose, hypotheses are developed and data of Companies listed on Tehran Stock Exchange during 2009 to 2018 are analyzed. The statistical population of the study includes 150 companies, selected by systematic elimination. The regression model of the research is tested using panel data method with integrated effects approach. The results show that with regard to the effect of managers’ ethical and behavioral characteristics, optimism, short-sightedness, agency behavior, and profit management intensify investors' sentiment and have a positive and significant effect on it by reducing transparency in firms’ decision-making environment. Moreover, the results confirm that the managerial power index, which reflects manager's authoritative behavior, has no significant effect on investors' sentiment.