One of the most significant empirical findings of the behavioral finance literature is that investor sentiment affects asset prices. Baker and Wurgler (2006) finds that shares of certain firms — those that are difficult to value — are more affected by shifts in investor sentiment. We examine...

In a stock market dominated by passive investors, an interesting question arises as to how the equilibrium level of market efficiency will be maintained. This short article argues that the critical agents in this regard must be the companies that issue the shares, not active investment managers

One of most significant empirical findings in the behavioral finance literature is that investor sentiment affects asset prices. However, the mechanism by which sentiment affects asset prices is not well understood. Individuals are widely believed to be more influenced by sentiment than other...

This paper presents a detailed anatomy of the nearly sevenfold run-up in the price of Tesla stock between March 22, 2013 and February 26, 2014 with the goal of attempting to determine the role played by investor sentiment. Tesla offers a unique opportunity in this context because the run-up was...

In his 2008 letter to Berkshire shareholders, Warren Buffett presented a critique of the Black-Scholes option pricing model as a tool for valuing long-dated options, including options that Berkshire had written. Given Mr. Buffett's track record, it worth investigating precisely why he thinks...

"Sales handles: - CONTENT: Bradford Cornell has been a professor for over 3 decades, with a knack for making complex topics simple to understand. His writing style is detailed but highly accessible. The strength and clarity of Cornell's instruction is a value-add, making this book accessible to...

Chinese fund manager performance is interesting because in a market dominated by speculative retail trading, we expect professional fund managers to have persistent edge. Using data on the Chinese mutual fund industry, the authors compute a new skill measure to identify exceptional funds with...