In this research authors show that institutional investors' skill matters the most during high sentiment periods when market signals are noisy. The results reveal that fund managers with the highest (lowest) skill add (lose) $7.71 ($5.64) million of value during high sentiment periods, compared...

This study presents a theoretical model that links chief executive officer (CEO) overconfidence to the value loss of corporate diversification. Consistent with the model's prediction, the findings show that diversified firms run by overconfident CEOs experience value loss compared to diversified...

The security market line (SML) accords with the capital asset pricing model (CAPM) by taking on an upward slope in pessimistic sentiment periods, but is downward sloping during optimistic periods. We hypothesize that this finding obtains because periods of optimism attract equity investment by...

This paper sheds empirical light on whether sentiment affects the profitability of price momentum strategies. We hypothesize that news that contradicts investors' sentiment causes cognitive dissonance, which slows the diffusion of signals that oppose the direction of sentiment. This phenomenon...

This study presents a theoretical model that links chief executive officer (CEO) overconfidence to the value loss of corporate diversification. Consistent with the model's prediction, the findings show that diversified firms run by overconfident CEOs experience value loss compared to diversified...

We examine whether involuntary CEO replacements pay off by improving firm prospects. We find CEO successors' acquisition investments to be associated with significantly higher shareholder gains relative to their predecessors and the average CEO. This improvement in post-turnover acquisition...

Divergence of opinions among investors, manifested in the dispersion of analysts' earnings forecasts, may play an important role in asset pricing. This article reports tests of whether disagreement can explain the cross-sectional return difference between value and growth (or glamour) stocks in...

In this paper we examine whether the negative excess value of stocks (stock discounts in the Berger and Ofek (1995) spirit) is associated with low excess analyst coverage over the 1979-1997 period. We define excess analyst coverage as the difference between a firm s actual analyst following and...

In this paper we examine the valuation effects and long-term performance of U.S. multinational firms involved in forced transfers of their foreign operating assets during the 1965-1988 period. The evidencesuggests that the operational hedging ability of the firm to address country risk...

This paper examines the agency conflicts between shareholders and bondholders of multinational and nonmultinational firms and provides an explanation for the puzzle that multinational firms use less long-term debtbut more short-term debt than domestic firms. Using a sample of 6,951 firm-year...