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We study the bond price reaction of a merged firms peers, in order to better understand how the market responds to a … equity holders expect a direct benefit from a potential acquisition - in the form of a price premium-peer firm bond holders … reduction in risk as the explicit return driver, we show that abnormal bond returns within firm (between different bond issues …
Persistent link: https://www.econbiz.de/10012534527
We investigate how individuals use measures of apparent predictability from price charts to predict future market prices. Subjects in our experiment predict both random walk times series, as in the seminal work by Bloomfield & Hales (2002) (BH), and stock price time series. We successfully...
Persistent link: https://www.econbiz.de/10013285949
We experimentally investigate how price expectations are formed in a large asset market where subjects' only task is to forecast the future price of a risky asset. The realized prices depend on these expectations. We observe small (6 participants) and large markets (about 100 participants). In...
Persistent link: https://www.econbiz.de/10011979625
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
In financial markets, professional traders leverage their trades because it allows to trade larger positions with less margin. Violating margin requirements, however, triggers a margin call and open positions are automatically covered until requirements are met again. What impact does margin...
Persistent link: https://www.econbiz.de/10010291801
We experimentally explore how investor decision horizons influence the formation of stock prices. We find that in long-horizon sessions, where investors collect dividends till maturity, prices converge to the fundamental levels derived from dividends through backward induction. In short-horizon...
Persistent link: https://www.econbiz.de/10010332266
In an experimental setting in which investors can entrust their money to traders, we investigate how compensation schemes affect liquidity provision and asset prices. Investors face a trade-off between risk and return. At the benefit of a potentially higher return, they can entrust their money...
Persistent link: https://www.econbiz.de/10010530580
We investigate the relationship between anchoring and the emergence of bubbles in experimental asset markets. We show that setting a visual anchor at the fundamental value (FV) in the first period only is sufficient to eliminate or to significantly reduce bubbles in laboratory asset markets. If...
Persistent link: https://www.econbiz.de/10010365125
We experimentally explore how investor decision horizons influence the formation of stock prices. We find that in long-horizon sessions, where investors collect dividends till maturity, prices converge to the fundamental levels derived from dividends through backward induction. In short-horizon...
Persistent link: https://www.econbiz.de/10002868667
This paper explores how ambiguous signals and ambiguity aversion influence individuals' expectations and the pricing of asset in experimental financial markets. In line with the theory of Epstein and Schneider (2008) we find that subjects' degree of ambiguity aversion is positively correlated...
Persistent link: https://www.econbiz.de/10012835148