Investors are keenly interested in financial reports of earnings because earnings provide important information for … investment decisions. Thus, executives who are monitored by investors and directors face strong incentives to manage earnings. We …

Rational investors perceive correctly the value of financial information. Investment in information is therefore … rewarded with a higher Sharpe ratio. Overconfident investors overstate the quality of their own information, and thus attain a … know stocks well, arguably because these investors are more likely to be overconfident. We also show that investment in …

(such as the 1999/2000 market for Internet IPOs) to the presence of a class of investors who are ‘irrational’ in the sense … underwriters attempt to maximize profits from the sale of equity, at the expense of these exuberant investors. Underpricing serves … to compensate regular IPO investors for their role in restricting the supply of available shares and maintaining prices …

very long ones. We explore several applications, showing, for example, that investors may move assets too much in and out …