Learn More
Security analysts tend to bias stock recommendations upward, particularly if they are affiliated with the underwriter. We analyze how investors account for such distortions. Using the NYSE Trades and Quotations database, we find that large traders adjust their trading response downward: they exert buy pressure following strong buy recommendations, no(More)
Using options-and press-based proxies for CEO overconfidence (Malmendier and Tate 2005a, 2005b, 2008), we find that over the 1993-2003 period, firms with overconfident CEOs have greater return volatility, invest more in innovation, obtain more patents and patent citations, and achieve greater innovative success for given research and development (R&D)(More)
Why do security analysts issue overly positive recommendations? We propose a novel empirical strategy to assess the relative importance of the leading explanations: strategic distortion, which reflects incentives to trigger small-investor purchases and please management, and non-strategic distortion, which reflects genuine over-optimism, due to(More)
Traditional economic analysis of markets with asymmetric information assumes that the uninformed agents account for the incentives of the informed agents to distort information. We analyze whether investors in the stock market internalize such incentives in practice. Security analysts provide investors with information about investment opportunities by(More)
Traditional economic analysis of markets with asymmetric information assumes that the uninformed agents account for incentives of the informed agents to distort information. We analyze whether investors in the stock market are able to account for such incentive distortions. Security analysts provide investors with information about investment opportunities(More)
We test the hypotheses that (i) poor accounting quality is associated with delayed stock price adjustment to information, and (ii) investors require higher future stock returns for the price delay associated with poor accounting quality. We define accounting quality as the precision with which financial reporting informs equity investors about future cash(More)
The spike in restatements in the early 2000s prompted an important question: Are retail investors able to react to the large volume of restatements, and in particular are they able to differentiate between non-fraud restatements and more serious fraud-related restatements? The latter are associated with more negative announcement-window and(More)
Using a sample of secured syndicated loans, I explore the use of intangible assets as loan collateral and whether this credit practice was an innovation or a negative mutation in the corporate loan market. While intangible assets were not traditionally considered as eligible collateral, I find that twenty-one percent of U.S.-originated secured syndicated(More)