Investigating the Relationship Between Investors' Behavior and Managers' Expected Returns in the Tehran Stock Exchange

Behavioral finance is the investigation of distortions and irregularities in the behavior of investors. Herding behavior, as an instance of such distortions, is not limited to investors alone, as corporate managers also exhibit this type of turmoil. The collective behavior of investors and managers can create asset bubbles, causes market inefficiencies, and slows the incorporation of new information into stock prices. It also causes managers to focus on short-term results at the expense of longterm value creation. Understanding these consequences is crucial for investors to make more informed decisions. The present study, using the composite data model from 2021 to 2024, selects and studies a sample of 156 firms listed on the Tehran Stock Exchange by the systematic elimination method. The results of this study indicate that the investors' herding behavior affects the expected returns of shareholders; however, the effects of the herding behavior of managers are not statistically significant.