In this paper we address three main objections of behavioral finance to the theory of rational finance, considered as … “anomalies” the theory of rational finance cannot explain: (i) Predictability of asset returns; (ii) The Equity Premium; (iii … are the only possible explanations of the “anomalies”, but offer statistical models within the rational theory of finance …

The benefits of international diversification have been recognized for decades. In spite of this, most investors hold … domestic equity market to be several hundred basis points higher than returns in other markets. This lack of diversification …

This paper presents three definitions of time diversification and analyzes their implications for investment horizons …. Using decision quality criteria and methodology, we question standard advice. In analyzing time diversification with a … minimum of assumptions, we answer two main questions: how to rigorously define time diversification and what conditions favor …

This paper develops a structural model of firm diversification to study the role of organizational flexibility as a … diversification and refocusing in a two sector economy, where each sector is characterized by a different level of asset tangibility …. The estimated model is able to generate the average diversification discount as well as its substantial decrease during …