International Journal of Finance & Managerial Accounting

International Journal of Finance & Managerial Accounting

Study on the Effect of Accounting Biases on Financial Policies in the Iranian Stock Market

Document Type : Original Article

Authors
Naser Yazdani far 1
MohammadAli Moradi 2
Mahdi Faghani 3
1 Department of Accounting, Zahedan Branch, Islamic Azad University, Zahedan, Iran
2 Assistant professor, Department of Accounting, Faculty of Management & Economics, University of Sistan and Baluchestan, Zahedan, Iran
3 Assistant professor, Department of Accounting, Faculty of Management & Economics, University of Sistan and Baluchestan, Zahedan, Iran
10.30495/ijfma.2025.78100.2202
Abstract
This study investigates the effect of accounting biases on the financial policies of companies listed on the Tehran Stock Exchange. The statistical population comprises 14 leading investment firms along with their investee companies, totaling 109 companies over the period from 2011 to 2017. In this research, three indicators—(a) financial leverage, (b) cash dividends, and (c) the debt ratio—are used as criteria for financial policy assessment. The data was analyzed using a panel data model and STATA software. The results indicate that the investment firms studied demonstrated behavioral accounting biases in 71.35% of cases. Additionally, it was observed that investors' accounting biases have a significant negative impact on financial leverage, a negative effect on cash dividends, and a significant positive effect on the debt ratio as indicators of companies' financial policies. This is because accounting biases, as an irrational behavior, lead to loss aversion and a tendency to revert to the mean returns of stocks, ultimately resulting in decreased stock returns and reduced ability to finance companies from internal sources, thereby increasing reliance on external financing.
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