We introduce a simple and highly portable measure capturing the impact of price path visualizations on investor behavior, beliefs, and financial market outcomes: the visual shape score (VSS). The score reflects the degree of convexity of a price path. Although VSS is only a single metric, it...

We explore in a series of incentivized experiments how stock market developments affect emotional arousal (proxied by pupil dilation, electrodermal activity, and heart rate variation), and how this emotional arousal in turn affects investment behavior. Experiencing stock market downswings...

Experimental evidence shows that recent observations have a stronger impact on the formation of beliefs than observations from the more distant past. Thus, if investors judge upon a stock's attractiveness based on historical return data, they presumably overweight the most recent returns. Based...

The proportion of exchange-listed firms with negative earnings has increased to over 40% in recent years. Given that the fundamental value of these loss firms is difficult to determine, we expect particularly strong value effects among these firms. We find that the return predictability...

We propose and test a catering theory of earnings guidance. Managers cater to reference point dependent investor preferences by issuing excessively optimistic earnings forecasts if investors' stock returns since purchase are comparably low and vice versa. As predicted by our model, earnings...