Behavioral Corporate Finance: An Updated Survey
HANDBOOK OF THE ECONOMICS OF FINANCE, Vol. 2, George M. Constantinides, Milton Harris, and Rene M. Stulz, eds., Elsevier Press, 2012
106 Pages Posted: 15 Aug 2011
There are 4 versions of this paper
Behavioral Corporate Finance: An Updated Survey
Behavioral Corporate Finance: An Updated Survey
Behavioral Corporate Finance: An Updated Survey
Behavioral Corporate Finance: An Updated Survey
Date Written: August 12, 2011
Abstract
We survey the theory and evidence of behavioral corporate finance, which generally takes one of two approaches. The market timing and catering approach views managerial financing and investment decisions as rational managerial responses to securities mispricing. The managerial biases approach studies the direct effects of managers’ biases and nonstandard preferences on their decisions. We review relevant psychology, economic theory and predictions, empirical challenges, empirical evidence, new directions such as behavioral signaling, and open questions.
Keywords: Behavioral, Corporate Finance, Sentiment, Catering, Market Timing, Irrational, Bias, Overconfidence, Optimism, Signaling, Behavioral Signaling
JEL Classification: G14, G30, G31, G32, G34, G35
Suggested Citation: Suggested Citation
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