We find evidence that public firm disclosure, in the form of Management Discussion and Analysis (Sections 7 and 7a of annual reports), is more informative about the firm's future risk following the passage of the Sarbanes-Oxley Act of 2002. Employing a novel text regression, we are able to...

A basic tenet of financial economics is that asset prices change in response to unexpected fundamental information. Since Roll's (1988) provocative presidential address that showed little relation between stock prices and news, however, the finance literature has had limited success reversing...

We provide new empirical evidence suggesting that the marginal investor in mutual funds behaves differently across market conditions. If the marginal investor allocates capital across mutual funds rationally, then the relative performance of funds should be unpredictable. We find however that...

We conduct an experiment designed to understand how social preferences affect investment decisions by observing subjects' stock allocations and probability assessments. Key to the design is that subjects' investment outcomes are treated by neutral, negative or positive payoff externalities on...

This paper studies the causal effect of individuals' overconfidence and bounded rationality on asset markets. To do that, we combine a new market mechanism with an experimental design, where (1) players' interaction is centered on the inferences they make about each others' information, (2)...

Sentiment indices, such as measures of consumer confidence, are often discussed as potential indicators of future investment, consumption and growth. However, documenting a causal relationship between consumer confidence and output — and understanding the precise nature of the relationship —...

What moves stock prices? Prior literature concludes that the revelation of private information through trading, and not public news, is the primary driver. We revisit the question by using textual analysis to identify fundamental information in news. This information accounts for 49.6% of...

We develop a model linking stock ownership and returns to the distribution of private information and quality of public information. Supporting the model, we find that the firm's information environment affects investors' propensity to hold and trade its stocks, but its effects hinge on...

We show that business microloans to U.S. subprime borrowers have a very large impact on subsequent firm success. Using data on startup loan applicants from a lender that employed an automated algorithm in its application review, we implement a regression discontinuity design assessing the causal...