Life Science Journal, 2012;9( 4) http://www.lifesciencesite.com 447 Investors Behaviour and Information Asymmetry: an Experimental Research in Iran Ghodratollah Talebnia; Zahra Poorzamani; Ahmad Yaghoobnezhad; Ali Bayat Department of Accounting, Science and Research branch, Islamic Azad University, Tehran, Iran Tel: +989123360370 E- mails: GH_Talebnia@yahoo.com Department of Accounting, Science and Research branch, Islamic Azad University, Tehran, Iran Tel: +989123502196 E- mails: zpoorzamani@yahoo.com Department of Accounting, Science and Research branch, Islamic Azad University, Tehran, Iran Tel: +989121138500 E- mails: yaghoob_acc@yahoo.com (Corresponding author) Department of Accounting, Science and Research branch, Islamic Azad University, Tehran, Iran Tel: +989127413313 E- mails: Ali.Bayat22@yahoo.com Abstract: Voluntary disclosure reduces information asymmetry between investors and stakeholders. In this study, to evaluate different decision-making styles, a cognitive and behavioural model is used. The field of this research are in the Processing "Brunswick Leans Model" is placed in behavioural accounting. This research uses a quasi- experimental method. The research is conducted in 2012 in Tehran Stock Exchange (TSE.). For purposes of this study, an Experimental group (176 respondents) and a control group (158 respondents) in is divided into four new ones, which represent the four dominant styles of decision-making, namely directive, analytical, conceptual, and behavioural. As an addition, investors are divided according to their brains’ dominant style of decision-making and cognitive complexity so that uncertainties about the tolerance level are classified. Evidence shows that those who have their left brain as more dominant are likely to use more items, on average, to process information. As an addition, Behavioural decision-making style uses lowest items to process information than other styles. Indeed, the results show that all styles in the Experimental group have less information asymmetry than the control group. These findings support the voluntary disclosure of information by companies to reduce the level of information asymmetry that the market offers. [Ghodratollah Talebnia; Zahra Poorzamani; Ahmad Yaghoobnezhad; Ali Bayat. Investors Behaviour and Information Asymmetry: an Experimental Research in Iran. Life Sci J 2012;9(4):447-457] (ISSN:1097-8135). http://www.lifesciencesite.com . 67 Keywords: Voluntary disclosure, decision styles, lens processing model, information Asymmetry. 1. Introduction Information asymmetry occurs when one or more investors possess private information about a firm’s value. Asymmetry creates an adverse selection problem in the market as informed investors’ trade on the basis of their private information. These trading activities manifest themselves as unusually large imbalances in the observed order flow; therefore, the extent of information asymmetry among investors can be characterized as the probability that a particular buy or sell order comes from an investor with private information. In this section, a firm’s choice of disclosure quality that potentially influences the level of information asymmetry is discussed. This study combines the foundations of information asymmetry, information overload theory and the decision style theory to address a current problem. The environment in which investors must make decisions is rich with complex information about numerous investment opportunities. Unstructured information environment, such as voluntary disclosure, can affect an investor’s decision-making patterns. Many studies have documented the negative effects, which are resulted from a decision maker’s attempt to process more information than what is cognitively possible. Another study (Barber & Odean, 2008) finds that individual investors buy attention grabbing stocks. Those are the stocks that were in the news and experienced high abnormal trading volumes as well as extreme one-day returns. The researchers theorize that investors do not have the time to analyse all investment opportunities, therefore, they filter their search to the stocks that grab their attention. Consistent with this do-it-yourself trend, a recent study on investor decision-making reveals that accounting information is the most influential factor, followed by self-image/firm-image confidence, neutral information, advocate recommendation and personal financial needs (Al-Tamimi, 2006). One of the ways for disclosure quality to affect information asymmetry is by altering the trading behaviour of uninformed investors. According to the Investor Recognition Hypothesis (Merton, 1987), such investors are more likely to invest and trade in firms that are well known or that