A Multifactorial Analysis of Herding Behavior in the Stock Market: A Theory-Driven Survey in the Tehran Stock Exchange

Ahadzadeh, Mohamad; Shabani Heydarabadi, Vahid; Eshaghzadeh, Ali; Moradi, Ruhollah

doi:10.48308/jep.2025.240334.1227

A Multifactorial Analysis of Herding Behavior in the Stock Market: A Theory-Driven Survey in the Tehran Stock Exchange

Document Type : Original Article

Authors

Mohamad Ahadzadeh ¹

Vahid Shabani Heydarabadi ²

Ali Eshaghzadeh ³

Ruhollah Moradi ⁴

¹ islamic azad university science and research branch

² Master's Degree in Business Administration, field of study: international commercial law, Shahid Beheshti University, Tehran, Iran.

³ Ph.D. of Finance, Faculty of Management, imam Sadiq University, Tehran, Iran.

⁴ Associate Professor, Department of Management and economics, Science and Research Branch, Islamic Azad University, Tehran, Iran.

10.48308/jep.2025.240334.1227

Abstract

Herding behavior in the stock market disrupts market efficiency as investors imitate others instead of relying on independent analysis. This study examines the impact of Trust in Economic News (TEN), Social Media Influence (SMI), Market Volatility (MV), Behavioral Triggers (BT), and External Economic Factors (EEF) on herding behavior, particularly among Millennials and Gen-Z investors. A survey of 350 retail and institutional investors was conducted in 2025, and data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) with Smart PLS 3.2.9. The results show that MV is the strongest driver of herding behavior (β = 0.470, p = 0.000), while SMI (β = 0.368, p = 0.000) and TEN (β = 0.287, p = 0.000) amplify the influence of economic news and social media. Additionally, BT (β = 0.393, p = 0.000) and EEF (β = 0.236, p = 0.000) significantly contribute to herding through emotional and systemic mechanisms. The novelty of this study lies in its comprehensive analysis of the combined influence of cognitive, social, and macroeconomic factors on herding behavior in the stock market, offering both theoretical and practical insights for understanding investor behavior. This research highlights the crucial role of psychological, social, and economic factors in shaping herding behavior.

Keywords

Herding Behavior

Trust in Economic News

Social Media Influence

Market Volatility

Behavioral Triggers and External Economic Factors

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