Does more bargaining power of managers inside a firm lead to larger allocations of capital? To tackle this question, we use unique and proprietary panel data on planned and realized capital allocations inside a very large conglomerate. The firm operates worldwide, is headquartered in Europe and...

In this study, we analyze whether volatility forecasts (judgmental confidence intervals) are influenced by the specific elicitation mode (i.e. whether forecasters have to state future price levels or directly future returns as upper and lower bounds). We present questionnaire responses of about...

The design of financial products, such as options or reverse convertibles, is guided by considerations that are all within the standard finance world where investors maximize expected utility and care about cash flows, but are indifferent among frames of cash flows. This case study describes the...

Anecdotal evidence and recent theoretical models argue that past stock returns affect subsequent stock trading volume. We study 3,000 individual investors over a 51 month period to test this prediction using linear panel regressions as well as negative binomial panel regressions and Logit panel...

In this paper, we propose a measure of individual investor sentiment that is derived from the market for bank-issued warrants. Due to a unique warrant transaction data set from a large discount broker we are able to calculate a daily sentiment measure and test whether individual investor...

Recently, researchers have gone a step further from just documenting biases of individual investors. More and more studies analyze how experience affects decisions and whether biases are eliminated by trading experience and learning. A necessary condition to learn is that investors actually know...

Although bank-issued warrants are increasingly popular, little is known about institutional details of this market and about which investors trade and how these investors trade in those securities. In this paper, we try to fill this gap. In the first part, we extensively describe institutional...

In this study, we analyze whether individual expectations of stock returns are influenced by the specific elicitation mode (i.e. whether forecasters have to state future price levels or directly future returns). We thus examine whether there are framing effects in stock market forecasts. We...

It is often argued that the internet influences investor behavior. Furthermore, the recent 'bubble' in internet stocks is sometimes ascribed, at least in part, to online trading. However, little is known about how online investors actually behave. This paper contributes to fill this gap. A...

This paper analyzes the relation between momentum strategies (strategies that buy stocks with high returns over the previous three to 12 months and sell stocks with low returns over the same period) and turnover (number of shares traded divided by the number of shares outstanding) for the German...