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Resources

A Catering Theory of Dividends

We propose that the decision to pay dividends is driven by prevailing investor demand for dividend payers. Managers cater to investors by paying dividends when investors put a stock price premium on payers, and by not paying when investors prefer nonpayers.

Resource Type: Article, Magazine
Bias: ;#Underestimation of Compound Interest;#
Recommended By: Hongjun Yan

A Century of Capital Structure: The Leveraging of Corporate America

Unregulated U.S. corporations dramatically increased their debt usage over the past century. Aggregate leverage - low and stable before 1945 - more than tripled between 1945 and 1970 from 11% to 35%, eventually reaching 47% by the early 1990s. The median firm in 1946 had no debt, but by 1970 had a leverage ratio of 31%. This increase occurred in all unregulated industries and affected firms of all sizes. Changing firm characteristics are unable to account for this increase.

Resource Type: Article, Magazine

A Comparative-Advantage Approach to Government Debt Maturity

Can the government do anything to discourage short-term borrowing by the private sector? HBS Professor Robin Greenwood, Harvard University and Harvard Business School PhD candidate Samuel Hanson, and Harvard University Professor Jeremy C. Stein have a suggestion

Resource Type: Article, Magazine
Bias: ;#Naïve Diversification;#Social Norms;#
Recommended By: Hongjun Yan

A Model of Investor Sentiment

Recent empirical research in finance has uncovered two families of pervasive regularities: underreaction of stock prices to news such as earnings announcements, and overreaction of stock prices to a series of good or bad news. In this paper, we present a parsimonious model of investor sentiment, or of how investors form beliefs, which is consistent with the empirical findings

Resource Type: Article, Magazine
Recommended By: Hongjun Yan

A Psychological Perspective on Economics

A search through some introductory textbooks in economics indicates that if there has been any change, it has not yet filtered down to that level: the same assumptions are still in place as the cornerstones of economic analysis.

Resource Type: Article, Magazine

A Survey of Behavioral Finance

The traditional finance paradigm, which underlies many of the other articles in this handbook, seeks to understand financial markets using models in which agents are “rational”

Resource Type: Book, Practitioner
Bias: ;#Extremes;#Regret Aversion;#
Recommended By: Hongjun Yan

A Whole New Mind: Why Right-Brainers Will Rule the Future

Drawing on research from around the advanced world, Daniel Pink outlines the six fundamentally human abilities that are essential for professional success and personal fulfillment—and reveals how to master them.

Resource Type: Book, Practitioner
Recommended By: Amazon Best-seller

Action Design Network

Action Design Network is a 501(c)3 non-profit organization founded in 2012 to promote the use of behavioral economics and psychology in policy and product design. The group has quickly grown to over 10,000 members with monthly events in cities across the US and Canada. Each month, speakers share research findings and practical lessons about how to help people voluntarily change daily routines and behavior to improve their lives.

Resource Type: Organizations

Action Design Radio

Action Design Radio explores a variety of topics through the lens of behavioral science and psychology. Hosts Erik Johnson and Zarak Khan interview experts and practitioners to learn about cutting edge behavioral research, and how to practically apply it to fields like public policy and consumer products.

Resource Type: Podcast

Adaptive Markets: Financial Evolution at the Speed of Thought

Drawing on psychology, evolutionary biology, neuroscience, artificial intelligence, and other fields, Adaptive Markets shows that the theory of market efficiency isn't wrong but merely incomplete. When markets are unstable, investors react instinctively, creating inefficiencies for others to exploit.

Resource Type: Audiobook
Recommended By: Amazon Best-seller
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