Iranian Journal of Accounting, Auditing and Finance

Iranian Journal of Accounting, Auditing and Finance

Identifying Behavioral Financial Components Using Emotional-Cognitive Dimensions and its Role in the Capital Market Crisis

Document Type : Original Article

Authors
Helsa Babaei
Nader Rezaei
Asgar Pakmaram
Rasoul Abdi
Department of Accounting, Bonab Branch, Islamic Azad University, Bonab, Iran
10.22067/ijaaf.2025.45734.1465
Abstract
The current mixed type of research (qualitative and exploratory) aims to identify behavioral financial components using emotional-cognitive dimensions and their role in the capital market crisis. The research findings contribute to academic knowledge and have significant practical implications, providing valuable insights for professionals in the finance and investment field, policymakers, and other stakeholders. In the first stage of the research, interviews were conducted with 21 experts, including professors of accounting and finance, managers of official brokerages, and official analysts of the capital market. The factors affecting behavioral finance with an emotional-cognitive approach and its role in the capital market crisis were presented. The results showed that the most important causes of financial behavior are people's social attitudes towards the investment field, emotional and cognitive factors, the type and manner of accessing information, and behavioral and individual tendencies of investors. The basis of this irrational behavior can be factors such as the economy involved in sanctions and inflationary conditions, the lack of dynamics of capital market rules, the misperception of investors, and the type of ownership of stock companies. The diverse characteristics of industries, the policies of the stock exchange organization and the governors, the uncertainty of economic policy, the society itself, and political factors can be raised as interventionists in creating critical conditions and moving towards behavioral finance. Appropriate training, governance attitudes to this matter, the presence of consultants and analysts, and monitoring and increasing the financial literacy of investors are suitable strategies to respond to the efficiency of the capital market. Not paying attention to behavioral finance will adversely affect investors, macroeconomics, society, and the capital market. In the second stage of the research, by using exploratory analysis and by distributing a questionnaire made by the researcher and taken from the qualitative model of the study among 340 capital market participants and with exploratory analysis, it was determined that 11 basic concepts (influential factors) of behavioral finance have the most significant impact. It has emotional and cognitive biases in Iran's capital market crisis.
Keywords
Behavioral Finance
Components of Behavioral Finance
Cognitive Biases
Emotional Biases
Subjects
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