SYNOPSIS: This study examines whether financial analysts and institutional investors play a disciplinary role in monitoring corporate financial reporting and disclosure. Using a sample of firms that meet or marginally beat analysts’ forecasts, likely through upward earnings management and downward expectations management, this study shows that managers’ use of the two tactics is associated with...

Investors, like any decision maker, feel regret when they compare the outcome of an investment with what the outcome would have been had they invested differently. We argue and show that this counterfactual comparison process is most likely to take place when the decision maker’s expectations are violated. Across five scenario experiments we found that decision makers were influenced only by fo...

In order to explore the incentives for information acquisition in financial markets, a model of the joint information and portfolio choice is developed. Investors are allowed to acquire a number of signals that inform about a risky asset’s dividend, and “informational efficiency” is defined as a social planner’s preferred signal allocation. If prices are fully revealing, a complete rational exp...

Can investors with incorrect beliefs survive in financial markets and have a significant impact on asset prices? My paper addresses this issue by analyzing a dynamic general equilibrium asset pricing model with some investors having rational expectations while others having incorrect beliefs concerning the mean growth rate of the economy. In contrast to the existing literature such as Sandroni ...

This paper provides a dynamic rational expectations equilibrium model in which investors have heterogeneous information and investment opportunities. Informed investors privately receive advance information about future earnings that is unrelated to current earnings. In response to good advance information, stock prices increase and informed investors act as trend chasers, increasing their inve...

The article aims at studying the approaches of international investment tribunals to definition and protection legitimate expectations investors in renewable energies sector case where a host state changes or cancels previously established incentive schemes. author also provides recommendations for Ukrainian authorities regarding treatment order settle existing conflicts prevent them future. re...

Financial literacy of investors reduces uncertainty on future decisions and increases predictability of investment policies in financial markets. Thus, the lack of clear information on financial markets is a determining factor in the arrival of domestic and foreign capitals and their quick exit in case of crisis. The lack of transparency and basic knowledge on decisions and failure to provide r...

The predictability of stock and bond excess returns is investigated from an investment perspective in the presence of Knightian uncertainty. Uncertainty about the return distribution is formalized with the maxmin expected utility approach of Gilboa and Schmeidler (1989). It is analyzed how risk and uncertainty aversion di¤er in their e¤ects on optimal portfolio choice. Most importantly, it is s...

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 sessions, where investors exit the market by receiving the price (not dividends), price levels and pa...