We present a theory of entrepreneurial behavior that explores the relationship between overconfidence and successful firm outcomes, such as acquisition or IPO. In our model, increasing overconfidence produces two conflicting effects on the probability of a successful outcome: it not only induces...

Behavioural finance and behavioural corporate finance analyses the effects of psychological biases, heuristics, and emotions on investors' and managers' decision-making and performance. Taffler and Tuckett (2005) have introduced a major paradigm shift by introducing a new field of research,...

Emotional finance introduces the notion that financial markets may be driven by the co-existence of fully-rational and emotional investors, driven by phantasy. The analysis of emotional finance is informed with reference to a Freudian psychoanalytical framework. In this paper, we add to the...

This paper examines dividend changes in an emerging market: Thailand. We begin by considering the possible effects of the Thai corporate environment on dividend policy. We develop a theoretical model that considers the relationship between the strength of investor power and dividends in an...

Behavioral economists are increasingly debating the desirability of overconfidence for individual and social welfare. For example, in Gervais and Goldstein's (2003) model of teamwork, a two-player team consisting of one overconfident and one rational agent outperforms a team consisting of two...

This paper investigates, theoretically and empirically, the impact of corporate hedging activities on firm value/performance. In a perfect market, with self-less management, aiming to maximise shareholder wealth, it may be expected that hedging would improve firm performance and add value. Our...

I consider the effects of entrepreneurial inequity-aversion on financial contracting with a self-interested venture capitalist, in a single-sided and double-sided moral hazard setting. In the pure principal-agent model, as the proportion of self-interested entrepreneurs in the population...

We develop a game-theoretic analysis of an entrepreneur's choice between venture capital financing or crowdfunding in order to finance his new innovative start-up. If he chooses venture capital, the venture capitalist provides value-creating effort (in addition to the E's own effort). However,...

It has been recognised that a major contributory factor to the current financial crisis has been the excessive risk-taking behaviour of the banking sector. The UK Banking Commission Report proposes, as a remedy, that bankers who take excessive risks that lead their banks into bail-out situations...

Do prices and returns in the financial markets exhibit observable patterns, or are they truly ‘random walks’, as predicted by the efficient market hypothesis (EMH)? If there are patterns, the natural question becomes, why do we observe such extreme cycles of bubbles (massive over-valuations)...