Behavioral Finance

//Behavioral Finance

Decision Fatigue

By | 2017-08-18T17:06:55+00:00 September 15th, 2011|Behavioral Finance|

All of us are faced every day with a myriad of choices, but if you’re like me, you don’t spend much time thinking about how the choices you make affect your decision making.  Luckily, we [...]

Investor Recognition and Stock Returns

By | 2017-08-18T17:01:42+00:00 February 3rd, 2011|Research Insights, Behavioral Finance|

“We analyze the relation between investor recognition and stock returns. Consistent with Merton’s (1987) theoretical analysis, we show that (i) contemporaneous stock returns are positively related to changes in investor recognition, (ii) future stock returns are negatively related to changes in investor recognition, (iii) the above relations are stronger for stocks with greater idiosyncratic risk and (iv) corporate investment and financing activities are both positively related to changes in investor recognition. Our results demonstrate that investor recognition is an important determinant of both stock returns and real corporate activity.” Abstract: “We analyze the relation between investor recognition and stock returns. Consistent with Merton’s (1987) theoretical analysis, we show that (i) contemporaneous stock returns are positively related to changes in investor recognition, (ii) future stock returns are negatively related to changes in investor recognition, (iii) the above relations are stronger for stocks with greater idiosyncratic risk and (iv) corporate investment and financing activities are both positively related to changes in investor recognition. Our results demonstrate that investor recognition is an important determinant of both stock returns and real corporate activity.”