Devin Shanthikumar

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Using optionsand 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)
Security analysts tend to bias stock recommendations upwards, particularly if they are affiliated with the underwriter. We analyze whether and why investors fail to account for such distortions. Using the NYSE Trades and Quotations database, we find that large traders correct for the upward bias and exert positive abnormal trade reaction to strong buy(More)
Why do analysts display overoptimism about the stocks they cover? According to the selection hypothesis, analysts are truly too optimistic about the stocks they choose to cover. According to the conflict-of-interest hypothesis, analysts choose to distort their view to maximize profits via commissions and underwriting business, in particular if affiliated(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)
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)
We examine the selection and performance of stocks recommended by analysts at a large investment firm relative to those of sell-side analysts during the period mid-1997 and 2004. The buy-side firm’s analysts issued less optimistic recommendations for stocks with larger market capitalizations and lower return volatility than their sell-side peers, consistent(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)