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Empirical research documents that temporary trends in stock pricemovements exist. Moreover, riding a trend can be a profitable investment strategy. (...)
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Experiments are an underused method in finance and have natural advantages for behavioral finance. Experiments can … self-selection. Experiments can extend the theoretical models they test by relaxing various assumptions or examining …, experiments are most informative when they rely on controlled manipulation, which is the source of their inferential power …
Persistent link: https://www.econbiz.de/10013144280
We use a laboratory experiment to study the extent to which investors‘ choices are affected by limited loss deduction in income taxation. We first compare investment behavior in the no tax baseline to a tax control setting, in which the income from investments is taxed. We find that investors...
Persistent link: https://www.econbiz.de/10013069147
trajectory affects the level of adherence to fundamentals. In contrast to previous experiments with long-lived assets, there is a …
Persistent link: https://www.econbiz.de/10013059603
This paper investigates the impact of socially responsible investment on individuals’ risk taking behavior and portfolio rebalancing decisions. We find that concerns for social responsibility do not impact stock market participation and willingness to take risk but simply alter individuals’...
Persistent link: https://www.econbiz.de/10014238026
We create an experimental asset market in which we conduct share repurchases and share issues. Although the intrinsic value of the shares is independent of the quantity outstanding, the interventions result in changes in asset price. Specifically, we find the following. (1) A repurchase of...
Persistent link: https://www.econbiz.de/10013097704
We examine how the presentation of investment results affects risk taking using an experiment in which participants view results either asset by asset or aggregated into a portfolio result. Our experiment examines the investment choices of a nationwide sample of 249 participants in a simulation...
Persistent link: https://www.econbiz.de/10013094529
We study a natural experiment in which 1.5 million investors participate in allocation lotteries for Indian IPO stocks. Investors who win the lottery and obtain IPO stocks that rise in value increase portfolio trading volume in non-IPO stocks relative to lottery losers; the effects are negative...
Persistent link: https://www.econbiz.de/10012856323
The underpricing of initial public offerings is a well-documented fact of empirical equity market research. Theories explain this underpricing with market imperfections. We study three empirically relevant IPO mechanisms under almost perfect market conditions in the laboratory: a stylized book...
Persistent link: https://www.econbiz.de/10012233231