In this paper, we develop a model in which overconfident market participants and rational speculators trade against trend-chasers. We show that the growth and the burst of a financial bubble stem from positive feedback trading. However, the presence of overconfident traders and the risk aversion...

We test whether ratings are comparable across asset classes over a 30-year sample. We examine default rates by initial rating, accuracy ratios, migration metrics, instantaneous upgrade and downgrade intensities, and rating changes over bonds' entire lives in multivariate regressions. These...

We document that analysts cater to short-term investors by issuing optimistic target prices. Catering dominates among analysts at brokers without an investment banking arm as they face lower reputational cost. The market does not see through the analyst catering activity and their forecasts lead...

Using a unique, hand-collected database of all venture- backed firms listed on Germany's Neuer Markt, we analyze the history of venture capital financing of these firms before the IPO and the behavior of venture capitalists at the IPO. We can detect significant differences in the behavior and...

In this paper, we analyze the investment and divestment patterns of different types of venture capitalists. Using a data set em- bracing all venture-backed IPOs that occurred on Germany's Neuer Markt we investigate whether the governance structures, objectives, abilities and track records of...

The subprime crisis would never have occurred had investors not been such enthusiastic consumers of subprime securities. The investors now say, somewhat self-servingly (but probably correctly), that they did not understand the securities - securities for which they were willing to pay very high...

We study whether analysts' recommendations and the market's reactions to recommendation changes are influenced by the structure of analysts' research portfolios. We find that analysts maintain more positive recommendations for stocks that belong to the “core industry” in their research...

This paper presents a novel take on the effect of uncertainty on investor learning about managerial skills by examining the fund flow-performance relationship in ESG rated funds in the context of climate uncertainty. Utilizing a large sample of mutual funds domiciled in Australia and New Zealand...

Since an underwriter sets an IPO's offer price without knowing its market value, investors can acquire information about its value and avoid overpriced deals ("lemon-doge"). To mitigate this well-known risk, the bank enters into a repeat game with a coalition of investors who do not lemon-dodge...

Using a unique, hand-collected database of all venture-backed firms listed on Germany's Neuer Markt, we analyze the history of venture capital financing of these firms before the IPO and the behavior of venture capitalists at the IPO. We can detect significant differences in the behavior and...