This paper gives a complete characterization of the equilibria in Shleifer and Vishny's (1997) model of "Limits of Arbitrage". We show that expected wealth (the arbitrageurs' objective function) is a possibly non-concave function of investment and that the relation between investment and prices...

This paper tests the hypothesis that irrational market misvaluation affects firms' takeover behavior. We employ two contemporaneous proxies for market misvaluation, pre-takeover book/price ratios and pre-takeover ratios of residual income model value to price. Misvaluation of bidders and targets...

L'objectif de la Finance comportementale est de proposer une alternative théorique à la Théorie des Marchés Efficients, en introduisant des hypothèses moins restrictives quant à la rationalité des individus. La compréhension de la formation des prix sur les marchés financiers lorsqu'une...

If investors have limited attention, then accounting outcomes that saliently highlight positive aspects of a firm's performance will promote high market valuations. When cumulative accounting value added (net operating income) over time outstrips cumulative cash value added (free cash flow), it...

Some recent empirical works indicate that investor performance and market patterns are primarily information driven instead of a behavioral phenomenon. However, Grossman and Stiglitz information theory and its variations offer little guidance in identifying informed investors and in...

This paper uses the structure of institutional economics to provide an explanation of the recent U.S. financial crisis. Institutional theory suggests that a county’s political, legal, social, and cultural institutions determine and characterize its economy. An institutional perspective of...

We analyze the trading activity in an Internet chat room with approximately 1,300 participants. Traders make posts in real time about their activities. We find these traders are more skilled than retail investors analyzed in other studies. 55% make profits after transaction costs, and they earn...

New bank regulations include macroprudential policies to control bank loan growth. We find bank funding costs and supervisory monitoring intensity to be the most important determinants of loan growth followed by loan portfolio performance and bank profitability. Bank capital and liquidity ratios...

In his new book, Peter Wallison argues the Dodd-Frank Act was the result of a false narrative about the 2008 financial crisis, blaming the crisis on the private sectors when in fact it was caused by the US government’s housing policies. This was not harmless error; the act will suppress...

This paper will review the development process of China\\\'s government bond market, analyze the current situation and problems as well as the status of economic reform in China and for And make policy recommendations on the development of the government bond market in China from a strategic...