Do entrepreneurs consider the risk of their business equity when making investment portfolio allocations? Many people compartmentalize different risks and consider them separately, called mental accounting. Alternatively, the risk substitution hypothesis suggests that entrepreneurs would offset...

We find individuals are four times more likely to purchase stocks of their local direct utility company as opposed to utility companies operating outside their state of residence. Our tests reveal that individuals do not possess superior or private information about their local utilities....

When determining a stock to buy, Strahilevitz et al. (2011) demonstrate that individual investors often repurchase a stock previously traded for a profit as a learning process. When evaluating a decision, people use the most available information that comes to mind. We posit that the most...

Compared to conventional mutual funds, socially responsible mutual funds outperform during periods of market crisis. This dampening of downside risk comes at the cost of under performing during non-crisis periods. Investors with Prospect Theory utility functions would value the skewness of these...

We test the predictability of eighteen stock return predictors, including classic factors such as firm size, book-to-market, and momentum, along with other proposed predictors from firm-specific, corporate investment, financing, and stock characteristic anomalies. These predictors have power to...

The underlying physiological mechanisms of biases are not well understood. As such, we examine the impact of testosterone and cortisol levels on several commonplace investment biases using realistic trading simulations. Cortisol, the biological marker of stress, is positively related to the...

We examine the relation between minority shareholder protection laws, ownership concentration, and board independence. Minority shareholder rights is a country-level governance variable. Ownership structure and board composition represent firm-level governance variables. Prior research...

Using brokerage account data from China, we study investment decision making in an emerging market. We find that Chinese investors make poor trading decisions: the stocks they purchase underperform those they sell. We also find that Chinese investors suffer from three behavioral biases: (i) they...

We examine the relation between testosterone, cortisol, and financial decisions in a sample of naïve investors. We find that testosterone level is positively related to excess risk-taking, whereas cortisol level is negatively related to excess risk-taking (correlation coefficient [r]: 0.75 and...