{"title":"Evidence on Behavioral Biases in Trading Activity","authors":"Laura Frieder","doi":"10.2139/ssrn.479983","DOIUrl":"https://doi.org/10.2139/ssrn.479983","url":null,"abstract":"This paper is concerned with how the psychological biases of investors are reflected in trading around earnings announcements. We analyze order imbalances (buy orders less sell orders) following earnings surprises to determine whether traders invest in a manner that is consistent with the representativeness and availability heuristics (manifested respectively by undue extrapolation of perceived patterns in random sequences and overreaction to dramatic or vivid events). We then test whether such trading patterns affect returns. Our stimulus for the representativeness heuristic is a string of same-sign earnings surprises, and that for the availability heuristic is an extreme earnings surprise. Though not justified by subsequent price performance, we uncover evidence that investors extrapolate past trends in earning performance. Specifically, following strings of consecutive positive earnings surprises, the amount of net buying after controlling for other regularities in trading activity is significantly greater than it is after an isolated positive surprise. This difference is increasing in the number of consecutive positive surprises in the string. Furthermore, subsequent to strings, purchasing activity is negatively correlated with returns throughout the remainder of the year. Despite the strong manifestation of representativeness, investors who trade according to an availability heuristic are less conspicuous.","PeriodicalId":411978,"journal":{"name":"EFA 2004 Maastricht Meetings (Archive)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2003-12-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129220728","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Debt and Entrenchment: Evidence from Thailand and Indonesia","authors":"Pramuan Bunkanwanicha, J. Gupta, R. Rokhim","doi":"10.2139/ssrn.478302","DOIUrl":"https://doi.org/10.2139/ssrn.478302","url":null,"abstract":"This paper examines the relation between debt and corporate governance in emerging market economies. We use firm-level panel data of listed companies from Thailand and Indonesia to analyze the firm's corporate financing behaviors in connection with its corporate governance arrangements. Our results show that the debt structure is linked to the corporate governance. We find that weaker corporate governance firms, in particular measured by the entrenchment effects, tend to have a higher debt level. The evidence is relatively stronger during the crisis period. Our results also shed light on the importance of the country-specific institutional settings that would affect the empirical results.","PeriodicalId":411978,"journal":{"name":"EFA 2004 Maastricht Meetings (Archive)","volume":"42 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2003-09-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133709177","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}