This study presents evidence suggesting that investors do not fully unravel predictable pessimism in sell-side analysts' earnings forecasts. We show that measures of prior consensus and individual analyst forecast pessimism are predictive of both the sign of firms' earnings surprises and the...

This paper introduces the concept of divergence of sentiment to the behavioral finance literature. We measure the distance between people with positive and negative sentiment on a daily basis for 20 countries by using data from status updates on Facebook. The prediction is that a higher...

We show that short sellers are constrained by their losses. Using unique data on the mark-to-market profits of short sellers of U.S. stocks, we document an asymmetric response of short selling to gains versus losses. Short selling substantially falls following large losses but does not respond...

Survey evidence shows CFOs to believe that earnings management can enhance investor valuation of their firms. This evidence raises the question of correspondence between the beliefs of CFOs and investors. Surveying financial analysts to gain insight into how earnings management influences...

Investor demand for convertible debt may change over time, due to changes in investor tastes and/or in funds available for convertible investment. We examine whether security-issuing firms cater to temporal fluctuations in investor demand for convertible debt. We find that investor demand...

Convertible debt represents an important source of financing for U.S. companies. We examine whether convertible bond issuance activity is influenced by changes in investor demand for convertible debt. We find that investor demand proxies are able to explain approximately one-third of the...