This paper shows that an important link between investor sentiment and firm overvaluation is optimistic earnings expectations, and that management earnings guidance helps resolve sentiment-driven overvaluation. Using previously identified firm characteristics, we find that most of the negative...

Prior research provides only weak and controversial evidence that people overestimate the likelihood of desirable events (wishful thinking), but strong evidence that people bet more heavily on those events (wishful betting). Two experiments show that wishful betting contaminates beliefs in...

In this study, 144 professional accounting data entry clerks took part in a fully randomized field experiment using a 4 (mode of participation) \times 2 (task meaningfulness) design. Participants were full-time, mandatory users of payroll applications. The nature of the experiment engaged these...