Essays On Behavioral Finance
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Three Essays In Behavioral Finance
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Author : Michael Young
language : en
Publisher:
Release Date : 2018
Three Essays In Behavioral Finance written by Michael Young and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018 with categories.
Over the last two decades, there has been a significant increase in research related to behavioral finance. As Barberis and Thaler (2002) point out, there are two main aspect of behavioral finance: limits to arbitrage and the effects of psychology. My dissertation will focus on the second aspect, the effects of psychology on individual investor behavior. The first essay examines an important question in this behavioral finance literature: changes in aggregate risk aversion. I use changes in the level of terrorism in the United States as a shock to the aggregate mood of American investors, and examine changes in flows to mutual funds as a proxy for investor risk preferences. After examining investors vulnerable to changes in mood after attacks, and ruling out any possible effect due to changes in expect risk, and changes to expected returns, the first essay concludes that mood driven risk aversion is the likely cause of the change in behavior. In the second essay, we use the insights gained from Essay 1 regarding the change in behavior of U.S. investors following an increase in terrorist attacks. Using household level of equity market participation and individual trading data the second essay examines the array of decisions investors make. The second essay finds that households participate less in equity markets, trade less, but purchase more local stocks in response to terrorist attacks. Additionally, this change in behavior is especially apparent in households where the designated head is a male. Finally, in the third essay we turn away from terrorism, and examine the effects that local NFL team performance on equity market participation. Examining the most popular spectator sport in the U.S. the third essay shows that poor performance by local NFL teams correlates with fewer households in that state owning equity. While previous studies argue that sentiment is the driver of sports related behavior, the third essay find that gambling losses may also play a role in the drop in equity market participation following seasons with a low number of wins. Taken together, the dissertation demonstrates the importance of examining external shocks and the effect they have on the behavior of investors. From terrorism to something as seemingly benign as the NFL, the dissertation adds to the behavior finance literature by identifying new shocks that effect the investing behavior of individuals.
Essays On Behavioral Finance
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Author : Michael Schneider
language : en
Publisher:
Release Date : 2014
Essays On Behavioral Finance written by Michael Schneider and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014 with categories.
Essays In Behavioral Finance
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Author : Karen Vanessa Selody
language : en
Publisher:
Release Date : 2008
Essays In Behavioral Finance written by Karen Vanessa Selody and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008 with categories.
Essays In Behavioral Finance And Social Economics
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Author : Samir M. Hammami
language : en
Publisher:
Release Date : 2006
Essays In Behavioral Finance And Social Economics written by Samir M. Hammami and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006 with Self-control categories.
Three Essays On Behavioral Finance
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Author : Gabriele M. Lepori
language : en
Publisher:
Release Date : 2008
Three Essays On Behavioral Finance written by Gabriele M. Lepori and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008 with Efficient market theory categories.
Essays On Behavioral Finance
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Author : Hai Huang
language : en
Publisher:
Release Date : 2006
Essays On Behavioral Finance written by Hai Huang and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006 with Businesspeople categories.
Essays In Behavioral Finance
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Author : Xing Huang
language : en
Publisher:
Release Date : 2013
Essays In Behavioral Finance written by Xing Huang and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013 with categories.
This dissertation contains three essays in behavioral finance. It explores investors' (non-standard) behaviors and their impacts on market efficiency and market valuations. I strive to empirically characterize how market participants behave, and to identify how these behaviors can improve our understanding of the financial market. The first chapter studies the impact of prior investment experience in an industry on the subsequent purchase of new stocks in the same industry. Using trading records data for households at a large discount broker from 1991 to 1996, I establish that the experience of positive excess returns in a given industry increases the probability of purchasing similar stocks in that industry relative to other industries. This result is robust to industry momentum, wealth effects, and investor heterogeneity. The effect decays when the experience is further in the past. Furthermore, I find that investor sophistication mitigates this experience effect. These results are consistent with mechanisms where investors put more weight on their own experience than on other available historical information when updating the beliefs about an industry's future return. The results are also consistent with investors learning about their stock-picking ability in an industry from their experienced outcomes. In the second chapter, I ask the question: do investors slow to incorporate return-relevant information if it reflects firms' operations abroad? Using the corresponding industry return in the foreign countries, I show that foreign operations information is slowly incorporated into stock prices. A trading strategy exploiting the foreign operations information of multinational firms generates a monthly abnormal return of approximately $0.80$ percentage points, controlling for risk-based factors. The return predictability is not driven by U.S. industry momentum, global industry momentum or foreign country-specific industry momentum. The third chapter further explores the underlying mechanism to explain the market under-reaction to foreign information identified in the second chapter. The return predictability becomes more pronounced for smaller firms and firms with less analyst coverage, lower institutional holdings, lower fraction of foreign operations and more complicated international operations structure. I also find that stock prices respond more to foreign operations information during the month of a quarterly earnings announcement or when there is more foreign news relative to domestic news appearing in the media. In addition, information about firms' operations in Asia is delayed more than information about operations in Europe and English-speaking countries. These results are consistent with the hypothesis that news about multinational firms' foreign operations diffuses gradually, indicating investors' limited attention and processing capacity for foreign information.
Essays In Behavioral Finance
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Author : Zwetelina Iliewa
language : en
Publisher:
Release Date : 2015
Essays In Behavioral Finance written by Zwetelina Iliewa and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015 with categories.
Essays In Behavioral Finance
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Author : Javier Rodríguez
language : en
Publisher:
Release Date : 2002
Essays In Behavioral Finance written by Javier Rodríguez and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2002 with Investments categories.
Financial Literacy Motivated Reasoning And Gender
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Author : Thérèse Lind
language : en
Publisher: Linköping University Electronic Press
Release Date : 2019-05-16
Financial Literacy Motivated Reasoning And Gender written by Thérèse Lind and has been published by Linköping University Electronic Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-05-16 with categories.
I wrote this thesis to create a better understanding of how individual characteristics influence our feelings, our behavior and our way of interpreting information. My focus is on financial behavior and financial information, however I also consider a political context. I investigate the (usually) enabling abilities of financial literacy and numeracy. I also consider impediments such as stereotype threat and motivated reasoning, which can prevent people from engaging in certain behaviors or from interpreting information objectively. Both processes stem from valued beliefs and psychological foundations, consequently peoples’ efforts, decisions, and evaluations are based on them. The first essay, “Competence, confidence, and gender: The role of perceived and actual financial literacy in household finance,” broadens our understanding of the benefits of financial competence. I contrast perceived and actual levels of financial literacy, and consider the role of numeracy and cognitive reflective ability. I conclude that perceived and actual levels of financial literacy positively affect behavior and wellbeing; however, perceived financial literacy more so than actual financial literacy. No such effect is observed for numeric ability and cognitive reflection. Furthermore, women are more anxious about financial matters even though they tend to engage more frequently in the considered financial behaviors. The second essay, “Threatening finance? Examining the gender gap in financial literacy,” continues my exploration of the relationship between gender and financial literacy. In a series of studies, I investigate whether the observed gender gap in financial literacy can be identified in nonnumerical contexts, if it can be associated with confidence in financial matters, and if it can be attributed to stereotype threat, which posits that inbuilt prejudices about gender and finance undermine women’s performance of tasks that involve finance. The results show that the observed gender gap in financial literacy is robust even in nonnumerical financial contexts and suggest that a stereotype threat for women in the financial domain might be present. The gender gap in financial literacy could not be attributed to a difference in (displayed) confidence. In the third essay, “Preferences for lump-sum over divided payment structures,” I investigate whether or not people display systematic preferences for lump–sum or divided payment structures and how these preferences differ in gain (benefit) and loss (payment) situations. I investigate what happens when payments belong to a single underlying event, such as when people can choose to pay immediately or in installments. I also examine whether or not individual differences in time preferences, risk preferences, numeracy, and financial literacy are associated with preferences for one payment structure or the other. The aggregate results show a tendency for people to prefer obtaining and paying money in lump sums. I find no systematic indication that the considered individual differences play a role in this type of decision. The fourth essay, “Motivated reasoning when assessing the effect of refugee intake,” inquires into differences in worldview ideology, whether people identify as nationally or globally oriented, hinder them from objectively interpreting information. I use an experiment to find out if people display motivated reasoning when interpreting numerical information about the effects of refugees on the crime rate. Our results show evidence of motivated reasoning along the lines of worldview ideology. However, individuals with higher numeric ability were less likely to engage in motivated reasoning, leading to the conclusion that motivated reasoning is more likely to be driven by feelings and emotional cues than by deliberate analytical processes.