The effect of investor sentiment on Value Relevance of Accounting Information

 
 Introduction
 A decrease or increase in the correlation between market prices or stock returns and accounting information should not be considered immediately as a real decrease or increase in the value relationship; Rather, it should be noted that the relationship has two parties (market price or share return and accounting information) and any deviation from the fundamental value attributed to each party in the relationship will reduce or increase their correlation. However, in the traditional approach as well as previous studies, it has always been assumed that the decrease or increase in this correlation is real and only the effect of accounting measurements, and it is possible that the correlation between market price or share return and information may decrease or increase. Unrealistic accounting and the consequence of market price deviation from the core value, i.e., the effect of investor behavior, have been ignored.
The effect of investor behavior is a phenomenon beyond the realm of financial reporting. Therefore, it seems unreasonable to downplay and ignore the effect of this factor on the value relationship of accounting information. The latter is a very important point that has not been addressed in previous research. Therefore, the present study tries to study the effect of investor sentiment on value relevance of accounting information.
 
 Hypothesis
H1: In periods when investors' sentiment is high, the relationship between earnings and stock returns is stronger than in low emotional periods.
H2: In periods when investors' sentiment is high, the relationship between earnings and stock prices is stronger than in low emotional periods.
H3: In periods when investors' sentiment is low, the relationship between stock returns and other accounting variables (book value of total assets per share, book value of equity per share, operating cash flow per share) is stronger than when Market excitement is high.
H4: In periods when investors' sentiment is low, the relationship between stock prices and other accounting variables (book value of total assets per share, book value of equity per share, operating cash flow per share) is stronger than when Market excitement is high.
3- Methods: To determine the effect of investor sentiment on Value Relevance of Accounting Information, four hypotheses were tested and for this purpose, the annual data of 97 companies listed on the Tehran Stock Exchange during the period were analyzed using multivariate regression.
4-Results: The findings of this study confirm the first and second hypotheses of the research on the effect of management's attitude towards risk in the occurrence of fraudulent financial reporting. Overall, the findings of this study show that fraudulent financial reporting follows four patterns of risk attitude, in other words, when the probability of reference profit or the probability of reference loss is high, the probability of fraudulent financial reporting increases, but, the lower the probability of reference losses, the lower the likelihood of fraudulent financial reporting.
 Discussion and Conclusion
The present study examines a distinct effect of market sentiment on investors' information processing strategy. The results show that investors tend to choose different strategies and focus on different sets of information to adjust valuations in periods of high versus low emotions.
 Overall, he concluded that the intensity of the value relationship of accounting information is not only the result of decreasing or increasing the relevance of accounting information and financial reporting (the effect of accounting measurements) that has been emphasized in previous research, but as in research. It was also argued that the intensity of the value relationship of accounting information is due to the speculative behaviors of investors in the field of pricing and as a result, the position of non-core value in the market price (the effect of investor behavior).
In summary, it can be stated that based on the empirical findings of the present study, the behavior of investors has an important place in valuing the equity. In addition, the research results show that the main source of the decreasing or increasing trend observed in the value relationship of accounting information is the intensity of investors' emotional behavior; Behavior that cannot be attributed to fundamental value changes. In addition, according to the results of the present study, it seems that some of the criticisms made in previous studies regarding the reduction of the relevance of accounting information from the perspective of valuation have reduced its usefulness in decisions in this area, to some extent.