This paper demonstrates that investor irrationality can be contagious across markets. Studies addressing the pros and cons of opening derivatives markets have failed to pay sufficient attention to the roles of speculative activities. This paper investigates how trading activities that are unrelated to fundamentals affect the impact of derivatives on stock markets. By using unique data from the ...

This paper considers an investor who, at a cost, can acquire a signal about whether an entrepreneurial project will generate positive surplus. The problem for the potentially informed investor is that uninformed investors can compete to provide funding and the informed investor’s contract offer conveys a signal to the entrepreneur about the project’s likely payoffs, affecting the attractiveness...

This paper presents an extension of the Fisher Separation Theorem applicable in multiperiod, "partially complete" markets where some, but not all, risks may be hedged by trading securities. Given necessary and sufficient conditions on preferences, an investor contemplating investments in productive opportunities (or projects) and financial securities can decompose this problem into production a...

the emergence and unprecedented growth of joint stock companies is undoubtedly one of the most significant economic developments.one of the outcomes of this development is the separation of ownership and control of the companies. such separation make it possible for the managers of the companies to make dicisions to serve their interes at the expense of the companies shareholders .this conflict...

The pending Trans-Pacific Partnership (TPP) trade agreement has raised controversy, fueled by leaks of the draft text and congressional debate over fast-track negotiation authority. Like similar agreements, the TPP creates the risk of government liability for enacting regulations, especially new or comprehensive measures to address climate change. This Article analyzes how the TPP’s investor pr...

Article history: Received 22 September 2011 Received in revised form 28 January 2013 Accepted 2 February 2013 Available online 9 February 2013 This paper analyzes the investor sentiment effect in four key European stock markets: France, Germany, Spain and the UK. The findings show that sentiment has a significant influence on returns, varying in intensity across markets. The variation appears t...

The paper deals with the problem of optimal behavior of an investor in the option market with own opinion on market properties. We tell the difference between investor's and market probability distribution functions of future prices of underlier. In this case, the investor might gain in the average income. If the investor, however, is guided by the presently popular Value-at-Risk criterion in t...

While neoclassical models of profit-maximization assume static cost-minimizing behavior, agency models of managerial behavior, particularly under regulation, suggest that managers may not minimize costs in less-competitive environments. We test whether the transition from cost-of-service regulation to more marketoriented environments affected input demand at U.S. electric generating plants. We ...

We study the portfolio selection problem of an investor who can optimally exert costly effort for more income. The possibility of generating more income, if necessary, increases the risk-taking appetite of the investor. We find the optimal allocation to the risky security as a proportion of financial wealth and as a proportion of the total wealth, defined as the combination of the financial wea...