Factors Affecting the Disposition Effect in Tehran Stock Market

Given the significance and perceived inevitability of disposition effect and its impact on investment decisions, we investigate factors affecting the disposition effect in the Tehran Stock Exchange. Four hypotheses were developed and the data used in the study were collected through availability sampling. One-sample t-test, two-sample t-test and one-way ANOVA were run to analyze the data while Pearson correlation test and multiple regressions were used to assess relationships among variables in question. The results of the analyses indicate that overconfidence and mental accounting were not significantly correlated with disposition effect. Regret aversion had a positive relationship with disposition effect while self control was negatively associated. It was also observed that there was a negative relationship between participants’ level of education and their disposition effect indicating that the higher the level of education, the less the rate of disposition effect. Furthermore, the results of the study show that males enjoy a higher level of overconfidence than females, and 20 to 30 year-old age groups displayed much overconfidence than other age groups.