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Loss aversion and focal point bias: Empirical evidence from housing markets Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2024-04-07 Stephen L. Ross, Tingyu Zhou
Most research documenting correlation between behavioral biases use survey or experimental data, often focusing on related biases. We test whether evidence of loss aversion in housing sales prices is stronger among individuals who exhibited focal point tendencies when selecting their mortgage amount at purchase, allowing for market impacts of both behavioral biases in high-stakes contexts. We find
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The influence of trauma insurance on quality of life among cancer survivors Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2024-04-04 David Todd Hatswell, Vikash Ramiah, Damien Wallace, P.P. Nithi Krishna, Glenn Muschert, A.V. Nair Biju, Krishna Reddy
This study investigates Australian cancer survivors' Quality of Life (QOL) concerning whether they own trauma insurance. This research examines (1) whether financial planning mechanisms alleviate financial stress, maintaining the QOL of cancer survivors, (2) how receipt of financial proceeds impacts QOL, and (3) whether emotion affects the financial decisions of cancer patients. Researchers used qualitative
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Does every cloud (bubble) have a silver lining? An investigation of ESG financial markets Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2024-04-04 Matteo Foglia, Federica Miglietta
This paper investigates the presence of financial bubbles in the environmentally friendly investments captured by the ESG markets. By using the log-periodic power law singularity framework, we identified several periods of positive and negative bubbles in the short, medium, and long term. Moreover, we examined the relationship between ESG attention sentiment and financial bubbles. We found an asymmetric
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Home bias and the returns of strategic portfolios: Neither always so good nor so bad Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2024-04-01 Fernando Vega-Gámez, Pablo J. Alonso-González
Home Bias is a phenomenon that has been sufficiently addressed from many different perspectives, such as active management or structural investment constraints. However, there is little work about the economic effects of these situations. This work aims to quantify the impact of this effect on the returns of a set of strategic portfolios with the same allocation between fixed income and equity assets
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Investor heterogeneity and anchoring-induced momentum Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2024-04-01 Olena Onishchenko, Jing Zhao, Sampath Kongahawatte, Duminda Kuruppuarachchi
This paper investigates how anchoring-induced investors’ trading behavior drives momentum anomaly. The results show that price momentum does not retain its ability to predict future returns after considering the stock’s nearness to its 52-week high. The stock price’s nearness to the 52-week high is a stronger return predictor for stocks with a higher retail trading proportion. This suggests an anchoring-induced
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Herding behaviour and monetary policy: Evidence from the ZAR market Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2024-03-20 Xolani Sibande
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Nonspeculative bubbles revisited Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2024-03-19 Steven Tucker, Yilong Xu
In an important contribution, Lei et al. (2001, Econometrica) argue that speculation is not the driver of bubbles in the absence of common knowledge of rationality, suggesting a focus on mistakes and confusion. We revisit Lei et al.’s (2001) design, confirming the existence of bubbles. However, we argue that, although their design removes the ability to speculate, it introduces several unintended design
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Skill, effort, luck: Determinants of rank-based endowments and risk-taking in a social setting Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2024-03-16 Sebastian Krull, Matthias Pelster, Petra Steinorth
Social comparisons and rank-based endowments impact risk-taking decisions. We provide experimental evidence indicating that rank-based endowments have differential impacts on risk-taking decisions based on the aspect used to rank individuals. We observe the largest rank-based differences when such endowments are determined based on individuals’ effort or skill. Compared to individuals who rank first
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Voluntary insurance vs. stabilization funds: An experimental analysis on bank runs Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2024-03-12 Iván Barreda-Tarrazona, Gianluca Grimalda, Andrea Teglio
Banking crises have recurrently emphasized the crucial need for establishing effective mechanisms to prevent bank runs, and different organizations are exploring a range of potential measures. With the aim of contributing to this debate, we run a laboratory experiment to study the effectiveness of two untested devices: Stability funds that automatically limit depositors’ possibility of withdrawing
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Investment motives and performance expectations of impact investors Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2024-03-11 Kremena Bachmann, Julia Meyer, Annette Krauss
Using a unique sample of retail impact investors, this study evaluates how investors deal with the challenge of aligning their financial and their nonfinancial goals. We find that investors with stronger nonfinancial motives are more likely to expect the overperformance of an impact investment and the underperformance of traditional equity and bond investments than investors with weaker nonfinancial
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Resource allocation, computational complexity, and market design Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2024-03-11 Peter Bossaerts, Elizabeth Bowman, Felix Fattinger, Harvey Huang, Michelle Lee, Carsten Murawski, Anirudh Suthakar, Shireen Tang, Nitin Yadav
With three experiments, we study the design of financial markets to help spread knowledge about solutions to the 0-1 Knapsack Problem (KP), a combinatorial resource allocation problem. To solve the KP, substantial cognitive effort is required; random sampling is ineffective and humans rarely resort to it. The theory of computational complexity motivates our experiment designs. Complete markets generate
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Lottery demand, weather and the cross-section of stock returns Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2024-03-07 Reza Bradrania, Ya Gao
We investigate the role that weather-induced mood plays in underperformance of lottery stocks. We hypothesize that during pleasant weather conditions, investors are more likely to become risk-taking and optimistic, and invest more in lottery stocks. This results in overpricing and lower expected return for these stocks. We use sky cloud cover as a proxy for the weather condition and show that the MAX
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The clientele effects in equity crowdfunding: A complex network analysis Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2024-03-02 Riccardo Righi, Alessia Pedrazzoli, Simone Righi, Valeria Venturelli
The study develops an original interdisciplinary approach, leveraging complex networks through which it identifies groups of investors and projects in equity crowdfunding, investigates whether clientele effects arise resulting in specific investor-entrepreneur matching, and explores which investor-entrepreneur combinations can lead to the emergence of collective behaviors. Data about campaigns and
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Judging a book by its cover: Fund investors’ physical attractiveness stereotypes and investor behavior Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2024-03-02 Guo Feng, Jiayi Zhuo, Fangzhuo Hou, Shuo Yan
This paper documents that fund investors’ behavior is biased by the physical attractiveness stereotypes that they hold about fund managers. In an experimental setting, we find that although there is no information about highly attractive fund managers outperform their peers, respondents still perceive highly attractive managers to possess superior management skills and are willing to allocate more
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Examining the bidirectional ripple effects in the NFT markets: Risky center or hedging center? Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2024-02-23 Xu Zhang, Muhammad Abubakr Naeem, Yuting Du, Abdul Rauf
This study introduces a novel bidirectional ripple effect method to identify the risky center, hedging center, and duration of ripple effects. This method is used to examine the static and dynamic ripple effects among NFTs using idiosyncratic volatility measures. The findings indicate that, overall, correlations and bidirectional ripple effects among NFTs are prominent over the sample period. Only
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Does the investment performance measure matter? A perspective from regulatory focus theory Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2024-02-23 Alfred Ma, Tse-Mei Shu, Jieyu Chen, Man Foon Chau
An experimental study with a sample (N = 213, 49.8% male, 18-year-old or above) indicates that investment performance measures based on drawdown duration can capture investors’ preference when other investment measures focusing on risk-adjusted returns such as the Sharpe ratio fail to. Based on the result, the prevention-focused investors are found to be more sensitive to, and easily affected by the
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Sanpo-yoshi, top management personal values, and ESG performance Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2024-02-20 Thi Khanh Giang Nguyen, Tomoyuki Ozawa, Pengda Fan
While ESG is a relatively recent concept, the traditional Japanese business philosophy of Sanpo-yoshi, which prioritizes harmonious relationships with stakeholders over profitability, has been deeply ingrained in Japan's corporate culture for more than three centuries and has contributed to the longevity of Japanese businesses. Despite the lasting impact of Sanpo-yoshi on Japanese corporate culture
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Financial Freedom Perception Scale (FFPS): Construction and validation Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2024-02-20 Kelmara Mendes Vieira, Taiane Keila Matheis, Ani Caroline Grigion Potrich, Mayara de Carvalho Puhle, Aureliano Angel Bressan, Leander Luiz Klein
The main motivation of this study is the absence of consolidated measures to evaluate individuals' perceptions of financial freedom. So this study has the objective of constructing and validating a Financial Freedom Perception Scale (FFPS). Furthermore, it seeks to provide the first evidence for differences in the perception of financial freedom according to gender, age, race and formal education.
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Unpacking the relevance of interpersonal trust in the blockchain era: Theory and experimental evidence Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2024-02-15 Đorđe Milosav, Marina Nistotskaya
Despite being proclaimed a “trust-free” technology, the link between blockchain and interpersonal trust remains understudied. By considering one of the most prominent use-cases of blockchain - smart contracts, we argue that the non-punitive nature of smart contracts may facilitate trustworthy behavior in human interaction by encouraging trustees to view themselves as internally motivated cooperators
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Honesty is predicted by moral values and economic incentives but is unaffected by acute stress Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2024-02-15 Nina M. Sooter, Rajna Gibson Brandon, Giuseppe Ugazio
Being truthful in financial decision-making often implies giving up higher monetary rewards associated with acting dishonestly. Is this trade-off affected by acute stress? We ran an experimental study to answer this question. Using three separate tasks to measure honesty, we examined whether decision-making in this context is influenced by a) the intrinsic value that subjects assign to honesty, b)
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Benefits of consistent and comprehensive financial advice during the Great Recession Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2024-02-15 Aman Sunder, Lance Palmer, Swarn Chatterjee, Joseph Goetz
Financial advice can be valuable during periods of economic uncertainty but measuring this value can be difficult. Using a nationally representative dataset of U.S. households during the Great Recession, we compare the net worth of households that retained a comprehensive financial adviser, a specialized financial adviser, or no financial adviser. A difference-in-difference analysis reveals that maintaining
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Dynamics of momentum in financial markets based on the information diffusion in complex social networks Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2024-02-09 Xing Cai, Wei Xia, Weihua Huang, Haijun Yang
This paper focuses on why momentum expresses different dynamics based on complex social networks. We construct an epidemiological information transmission model under the assumption of complex investor networks. We consider two kinds of networks with different degree distributions: uniform distribution and power-law distribution, and then we discuss the scenarios when the networks are assortative or
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Gender differences and measurement error in financial literacy Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2024-02-07 Edoardo Lanciano, Daniele Previati, Ornella Ricci, F. Saverio Stentella Lopes
We study gender differences in stock market participation and financial resilience, appropriately controlling for financial literacy, as suggested by Almenberg and Dreber (2015). Financial literacy is very difficult to measure accurately, and our proxies generally contain a random error that spills over to other correlated variables, such as gender. Our main results show that after addressing measurement
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Price clustering on cryptocurrency order books at a US-based exchange Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2024-02-01 SeungOh Han
We investigate the price clustering effect in cryptocurrency limit order books, where traders tend to place orders in round numbers. Analyzing 10-minute snapshots of five USD-denominated cryptocurrencies over 35 weeks (January–August 2020), we find that the frequency of specific cent components (e.g., 00, 50) increases significantly at higher price levels. Subsample analyses reveal that this effect
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Do people gamble or invest in the cryptocurrency market? Transactional-level evidence from Thailand Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2024-01-26 Voraprapa Nakavachara, Roongkiat Ratanabanchuen, Kanis Saengchote, Thitiphong Amonthumniyom, Pongsathon Parinyavuttichai, Polpatt Vinaibodee
Should cryptocurrencies be viewed as a gambling tool or a risky investment instrument? While their unpredictable returns resemble gambling, recent studies show their prices having a time-varying correlation with traditional risky assets like the S&P 500. Many institutional investors have, thus, included cryptocurrencies in their portfolios for diversification. This paper examines the behavior of cryptocurrency
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Intraday herding and attention around the clock Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2024-01-24 Stefan Scharnowski, Yanghua Shi
This paper analyzes the relationship between investor herding and attention in the decentralized cryptocurrency market with its continuous, around the clock trading and large share of retail investors. Herding behavior is stronger when market returns are positive but is negatively related to both the level and cross-sectional dispersion of investor attention. Moreover, there are pronounced intraday
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Tail risk connectedness in G7 stock markets: Understanding the impact of COVID-19 and related variants Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2024-01-22 Chunlin Lang, Yang Hu, Shaen Corbet, Yang (Greg) Hou
This study uses a time-varying parameter vector autoregression (TVP-VAR) approach to examine the transmission of tail risk among G7 stock markets from January 2000 to September 2022, focusing on major financial episodes like the dot-com collapse, the 2008 Global Financial Crisis, and the European debt crisis, as well as the COVID-19 pandemic and its variants. Our analysis shows fluctuating tail risk
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Take the aTrain. Introducing an interface for the Accessible Transcription of Interviews Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2024-01-17 Armin Haberl, Jürgen Fleiß, Dominik Kowald, Stefan Thalmann
Research in behavioral and experimental finance becomes more multifaceted and the analysis of data from speech interactions more important. This raises the need for technical support for researchers using qualitative data generated from speech interactions. aTrain serves this need and is an open-source, offline transcription tool with a graphical interface for audio data in multiple languages. It requires
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The role of job titles in online peer-to-peer lending: An empirical investigation on skilled borrowers Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2024-01-17 Zagdbazar Davaadorj, Bolortuya Enkhtaivan, Wenling Lu
We examine the role of borrowers' job titles in the online peer-to-peer (P2P) lending market. Using the U.S. Occupational Information Network database, we define skilled borrowers as the borrowers with their job titles in Job Zone 5, a group of occupations requiring individuals with the most extensive skill, knowledge, education and related experience. Analyzing data from Lending Club, one of the largest
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Sustainable risk preferences on asset allocation: a higher order optimal portfolio study Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2024-01-14 Antonio Díaz, Ana Escribano, Carlos Esparcia
This paper empirically investigates the financial performance of asset allocation strategies under “sustainable” risk preferences and conventional risk preferences. We assume that traditional investors and ESG investors behave differently in their investment decisions. The optimal portfolio choice is developed including dynamic higher order conditional co-moments and time-varying risk aversion. From
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Societal secrecy and ADR IPOs underpricing Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2024-01-11 Axel Grossmann, Thanh Ngo, Marc W. Simpson
This study examines 350 Level III ADR IPOs from 35 countries between 1990 and 2020 to explore the link between societal secrecy and IPO underpricing. Focusing on ADR IPOs, we hypothesize that firms from higher secrecy countries, compared to firms from low secrecy countries, benefit more from public offerings in a low secrecy country. U.S. investors might value these firms relatively more due to the
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Ambiguity attitudes and demand for weather index insurance with and without a credit bundle: experimental evidence from Kenya Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2023-12-15 Francesco Cecchi, Robert Lensink, Edwin Slingerland
We investigate the impact of ambiguity attitudes on the willingness-to-pay (WTP) for index insurance among female smallholders in Kenya. We gauge incentive-compatible measures of ambiguity aversion and insensitivity in the domain of gains and losses, as well as loss aversion. Next, we setup a framed experiment to measure WTP for insurance with basis risk. For a random subsample we introduce an alternative
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Does overconfidence affect venture capital firms’ investment? Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2023-12-15 Salma Ben Amor, Maher Kooli
We examine the effect of overconfidence bias on VC firms’ investment. Using a sample of U.S. venture capital exits by IPOs and M&As between 2000 and 2019, we construct an overconfidence index and find a strong positive relationship between the follow-on funds and the degree of overconfidence. We also find that the higher the VC’s overconfidence, the shorter the time to raise new capital. Further, we
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Can a machine learn from behavioral biases? Evidence from stock return predictability of deep learning models Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2023-12-13 Suk-Joon Byun, Sangheum Cho, Da-Hea Kim
We examine how the return predictability of deep learning models varies with stocks’ vulnerability to investors’ behavioral biases. Using an extensive list of anomaly variables, we find that the long-short strategy of buying (shorting) stocks with high (low) deep learning signals generates greater returns for stocks more vulnerable to behavioral biases, i.e., small, young, unprofitable, volatile, non-dividend-paying
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Wall street watches Washington: Asset pricing implications of policy uncertainty Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2023-12-13 Ralph C. Verhoeks, Willem F.C. Verschoor, Remco C.J. Zwinkels
We examine the effect of economic policy uncertainty (EPU) on sell-side analysts’ forecasts, the allocation of attention, and the stock market reaction to earnings news. We find that periods of high EPU are associated with higher analyst disagreement and a decrease in forecast accuracy. Specifically, we show that analysts issue on average more pessimistic forecasts when EPU is high. Second, we show
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Which ESG+F dimension matters most to retail investors? An experimental study on financial decisions and future generations Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2023-12-12 Matteo Benuzzi, Klaudijo Klaser, Karoline Bax
In this study, we address the ongoing debate about the relative importance of the three dimensions of the ESG framework and whether they are sufficient to capture the full scope of sustainability. We propose a new dimension, the Future Generations pillar (F-pillar), which aims to account for intergenerational equity and sustainability. Our online experiment explores how retail investors make investment
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Reconciling sustainability preferences and behavior — The case of mutual fund investments Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2023-12-06 Åsa Löfgren, Katarina Nordblom
This study analyzes the interaction between sustainability preferences and investment behavior, particularly in the context of mutual fund investments. Based on survey data from a representative sample of Swedish mutual fund investors, we observe that while a majority of respondents express a willingness to sacrifice returns for more sustainable investments, only a minority claim to have actively invested
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Powerful female CEOs and the capital structure of firms Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2023-12-03 Xiaohong Huang, Rezaul Kabir, Maximiliaan Willem Pierre Thijssen
This study examines the impact of female CEOs and their power on corporate debt usage. Adopting the framework of Finkelstein (1992), we distinguish different power dimensions to analyze a sample of 418 CEOs of non-financial U.S. listed firms over the time period of 2007–2015. We find that the leverage of firms run by female CEOs is not different from that of firms run by male CEOs. However, when firms
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Emotional spillovers in the cryptocurrency market Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2023-12-01 Md Iftekhar Hasan Chowdhury, Mudassar Hasan, Elie Bouri, Yayan Tang
Using 10 significant cryptocurrencies, we construct emotional spillovers and provide inferences about the transmission of fear and greed shocks. The results show intense emotional bonding signifying a high level of cryptocurrency interdependence through the sentiment channel of crypto traders and investors. The amplitude of idiosyncratic (own) connectedness increases significantly for most cryptocurrencies
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CEO-director ties and board gender diversity: US evidence Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2023-11-10 Hoa Luong, Mehdi Khedmati, Lan Anh Nguyen, Asror Nigmonov, Nafisa Zabeen Ovi, Syed Shams
The gender legislation enacted around the world has put enormous pressure on companies to increase the number of women on their boards. Employing US firm-specific data, we document a significant negative relationship between CEO-director ties and female representation on the board, suggesting that socially connected directors are detrimental to gender parity in senior management. We find that the situation
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Customer concentration and shareholder litigation risk: Evidence from a quasi-natural experiment Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2023-11-07 Nopparat Wongsinhirun, Pattanaporn Chatjuthamard, Pornsit Jiraporn, Sang Mook Lee
Capitalizing on a unique ruling by the Ninth Circuit Court of Appeals that unexpectedly raised the difficulty of shareholder litigation, we examine how an exogenous reduction in litigation risk influences customer concentration. A more concentrated base of customers is generally viewed as more risky. Our difference-in-differences estimates reveal that an unanticipated decline in litigation risk results
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Proportional warm-glow theory and asset pricing Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2023-11-04 Johannes Kabderian Dreyer, William Smith
Dreyer, Sharma and Smith (2023) conjecture that investors may feel good about themselves from making socially responsible investments; they may get a “warm glow” from going green. They estimate a model of “warm glow” investment where investors derive utility from the amount invested in green assets. In this paper we quasi-replicate their paper to estimate an alternative form of warm-glow preferences
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Does DeFi remove the need for trust? Evidence from a natural experiment in stablecoin lending Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2023-10-19 Kanis Saengchote, Talis Putniņš, Krislert Samphantharak
Decentralized Finance (DeFi) is built on a fundamentally different paradigm. Rather than trusting individuals and institutions, DeFi participants, in principle, only need to trust computer code enforced by a decentralized network of computers. We examine a natural experiment that exogenously stress-tests this alternative paradigm by revealing the identities of individuals (including a convicted criminal)
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The impact of more able managers on corporate trade credit Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2023-09-28 Hui Liang James, Thanh Ngo, Hongxia Wang
We investigate how high-ability managers affect trade credit policies of U.S. publicly traded companies from 2003 to 2016. Consistent with the prediction of an “Imbalance of power” in the supply chain, we find that firms with more able managers implement more favorable trade credit policies with both upstream and downstream business partners (i.e., fewer trade credit days in receivables, more trade
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Socially responsible local firms and stock market participation: Evidence from the U.S. household survey Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2023-09-20 Albert Tsang, Li Yu
In this study, we examine the relation between local firms’ corporate social responsibility (CSR) engagement and households’ stock market participation. Using data from U.S. household surveys, we find that households are more likely to participate in the stock market and hold a larger proportion of their portfolios in stocks when the average level of CSR performance of local firms is high. Results
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Editorial Board Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2023-09-14
Abstract not available
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The informational role of imagery in financial decision making: A new approach Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2023-09-15 Joshua Ronen, Tavy Ronen, Mi (Jamie) Zhou, Susan E. Gans
This study develops a novel approach to identify characteristics of images and a combination thereof (expressiveness) that are likely to and found to be associated with investment decisions. We also create new methodologies to quantify these characteristics. We further develop a new machine learning-based measure of informativeness called additivity, which is the degree to which the images convey information
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Mobility restrictions and payment choices: The case of the Covid-19 pandemic Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2023-09-14 Santiago Carbó-Valverde, Pedro J. Cuadros-Solas, Francisco Rodríguez-Fernández, José Juan Sánchez-Béjar
This paper examines the impact of the Covid-19 mobility restrictions on the payment choices at brick-and-mortar establishments. The asymmetries in the implementation of the Covid-19 mobility restrictions across the Spanish provinces serves as a quasi-natural experiment. The findings show that the severity of the mobility restrictions had an impact on payment choices. Individuals in areas with more
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What is risk to managers? Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2023-09-09 Jeppe Christoffersen, Felix Holzmeister, Thomas Plenborg
In an online experiment with a sample of 4287 managers from small- and medium-sized enterprises in Denmark, we present participants with scenario-dependent outcomes of a hypothetical investment prospect and elicit their perception of risk and their perception of the investment’s attractiveness (as a proxy for investment preferences). The experimental data is merged with a set of background variables
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Estimating the effect of climate change exposure on firm value using climate policy uncertainty: A text-based approach Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2023-09-09 Viput Ongsakul, Suwongrat Papangkorn, Pornsit Jiraporn
Exploiting innovative measures of climate policy uncertainty and firm-specific climate change exposure derived from state-of-the-art textual analysis, we examine the impact of climate policy uncertainty on firm-specific climate change vulnerability and find that a rise in policy uncertainty exacerbates firm-specific exposure significantly. Then, using climate policy uncertainty to generate exogenous
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Do political connections or elite capture matter in access to financial services? Evidence from Indian households Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2023-09-01 Suganya Balakumar, Debasish Maitra
The extant literature has witnessed that local political executives tend to misallocate and limit information and public goods sources for their private gains rather than the overall public interest in developing economies. This results in the development of political connections by the households to access more benefits. Using nationwide household survey data in India, we examine whether households
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Probability distortions, collectivism, and international stock prices Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2023-08-28 Fabian Hollstein, Vulnet Sejdiu
There are substantial differences in the return premia due to probability distortions in individualist and collectivist cultures. Consistent with the substantially lesser degree of probabilistic thinking in collectivist cultures documented by the psychology literature, probability-distortion-related return premia are substantially higher there than in individualist cultures. Our methodology applies
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Herding in the non-fungible token (NFT) market Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2023-08-09 Te Bao, Mengzhong Ma, Yonggang Wen
In this study, we empirically examine the existence and dynamics of herding in the burgeoning market of non-fungible tokens (NFT) with transaction-level data from November 23, 2017 to April 27, 2021. We adopt both macro- and micro-approaches to detect herding and find supportive evidence of the existence of herding in this market, the dynamics of which appears to be event-driven. A large inflow of
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Déjà Vu: CEO overconfidence and bank mortgage lending in the post-financial crisis period Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2023-08-09 Shaojie Lai, Shiang Liu, Qing Sophie Wang
This study examines the impact of CEO overconfidence on banks’ mortgage lending decisions in the post-financial crisis period. We find that banks with overconfident CEOs are more likely to approve mortgage loan applications of risky borrowers. Overconfident CEOs contribute to the riskiness of mortgage lending by encouraging banks to take on more risk. The positive effect of CEO overconfidence is more
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Beta, value, and growth: Do dichotomous risk-preferences explain stock returns? Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2023-08-06 Maurizio Montone
I propose a Capital Asset Pricing Model in which investor demand exhibits a speculative component. In equilibrium, investors’ optimal trade-off between diversification and speculation generates predictable patterns for stocks with extreme book-to-market ratios. Using data on U.S. stocks, I find evidence consistent with the model predictions. I show that the value premium varies with investors’ propensity
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Ballot order effects in independent director elections Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2023-08-04 Tanja Artiga González, Paul Calluzzo, Georg D. Granic
Using a sample of individual mutual voting records, we examine ballot order effects in independent director elections. Our results show that down-ballot directors receive considerably less opposition from shareholders. This result holds in a sample where directors are positioned alphabetically on the proxy ballot, and, thus unrelated to the directors’ ability or position on the board. We find that
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Stop-loss rules and momentum payoffs in cryptocurrencies Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2023-08-04 Mohsin Sadaqat, Hilal Anwar Butt
Keeping in view the extreme volatility of cryptocurrencies, this study analyzes the efficacy of stop-loss rules for the momentum strategy across 147 cryptocurrencies for the period of January 2015 to June 2022. We find that the stop-loss momentum strategy provides exceedingly higher returns, the Sharpe ratio, and alphas in comparison to other benchmark momentum strategies. In the context of prospect
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Social capital and the riskiness of trade credit Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2023-07-23 Hui L. James
This paper investigates how social capital, defined by the strength of civic norms and the density of social networks, affects firms’ trade credit risk. The results show that social capital is negatively related to accounts receivables that are unlikely to be collected, suggesting that social capital can mitigate collectability risk. Furthermore, this negative effect is stronger in firms subject to
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Frenzied buyers and sophisticated sellers: How short sellers trade individual investors’ most purchased stocks Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2023-07-18 Dominique Outlaw
Prior literature describes individual investors as “dumb money” and finds that they are irrational, frenzied buyers who display herd-like trading behavior. Using a dataset of individuals’ transactions, I examine how short sellers, who are considered sophisticated investors, trade during these periods of intense buying by individual investors. I find that, after controlling for institutional ownership
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Do election cycles, political stability, and government effectiveness matter for the risk of banks? Evidence from Indian banks Journal of Behavioral and Experimental Finance (IF 8.222) Pub Date : 2023-07-17 Jagannath MVK, Debasish Maitra
We examine whether parliamentary elections, political stability, and government effectiveness affect banks’ risk in one of the largest democracies – India. We employ four measures of bank risk – net and gross Non-Performing Loans (NPL), the extent of loans restructured, and lending to the priority sector. Using dynamic panel data with a two-step system GMM approach, we find that NPL and lending to