Description
Behavioral finance is a new field in finance, which has been the subject of an increasing amount of research over the last few years. Over the entire history of finance research, it has been believed that markets are efficient and that prices reflect fundamental values.
Forschungsdatenbank der Universität Zürich Wirtschaftswissenschaftliche Fakultät > schweizerisches Bankwesen, Institut für > Prof. Dr. Thorsten Hens
Corporate Financial Reporting and Disclosure. A Behavioral Finance Perspective Summary / Zusammenfassung Managers' information disclosure to firm's outsiders plays an essential role for mitigating information asymmetry and agency problems. The main objective of this thesis is to analyze the managers' reporting incentives in a broader context, while considering the preferences of behavioural investors and the active role of financial analysts as target setters in particular. Further, this thesis aims to study the optimal disclosure policy of different firms in the form of guidance and to analyze its influence on the efficiency of analysts’ earnings forecasts. Overall, this thesis contributes to the broad research on behavioural corporate finance studying the determinants and consequences of managers' decisions when managers and (or) investors suffer cognitive biases and (or) have behavioural preferences. The analysis focuses on the investors' preferences as described in the prospect theory of Kahneman and Tversky (1979) and neglects any cognitive biases that might lead to irrational decisions. The contribution of this thesis is threefold. First, this thesis contributes to the empirical literature on the relevance of thresholds by showing that reported performance, particularly around the zero target, influences the market value of a firm and in particular the investors' perception of the value generated by intangibles such as R&D investments. Second, the thesis extends the theoretical literature on earnings manipulation by analyzing the managers' reporting incentives in an intertemporal strategic game with the analysts where the managers' payoff is determined by investors using the analysts' consensus forecast as a target when evaluating earnings reports. Finally, instead of adapting the view that agents suffer some cognitive limitations, this thesis contributes to the literature that seeks economic explanations for the analysts' underreaction by showing empirically that managerial guidance is capable to explain such inefficiencies in the analysts' forecasting behavior. Project Leadership and Contacts / Projektleitung und Kontakte Prof. Dr. Thorsten Hens (Project Leader) Kremena Bachmann (Project Leader) Funding Source(s) / Unterstützt durch SNF (Programm NFS/NCCR), Others [email protected] [email protected]
Duration of Project / Projektdauer May 2002 to Dec 2007
Project 10138
Seite 1
doc_287302212.pdf
Behavioral finance is a new field in finance, which has been the subject of an increasing amount of research over the last few years. Over the entire history of finance research, it has been believed that markets are efficient and that prices reflect fundamental values.
Forschungsdatenbank der Universität Zürich Wirtschaftswissenschaftliche Fakultät > schweizerisches Bankwesen, Institut für > Prof. Dr. Thorsten Hens
Corporate Financial Reporting and Disclosure. A Behavioral Finance Perspective Summary / Zusammenfassung Managers' information disclosure to firm's outsiders plays an essential role for mitigating information asymmetry and agency problems. The main objective of this thesis is to analyze the managers' reporting incentives in a broader context, while considering the preferences of behavioural investors and the active role of financial analysts as target setters in particular. Further, this thesis aims to study the optimal disclosure policy of different firms in the form of guidance and to analyze its influence on the efficiency of analysts’ earnings forecasts. Overall, this thesis contributes to the broad research on behavioural corporate finance studying the determinants and consequences of managers' decisions when managers and (or) investors suffer cognitive biases and (or) have behavioural preferences. The analysis focuses on the investors' preferences as described in the prospect theory of Kahneman and Tversky (1979) and neglects any cognitive biases that might lead to irrational decisions. The contribution of this thesis is threefold. First, this thesis contributes to the empirical literature on the relevance of thresholds by showing that reported performance, particularly around the zero target, influences the market value of a firm and in particular the investors' perception of the value generated by intangibles such as R&D investments. Second, the thesis extends the theoretical literature on earnings manipulation by analyzing the managers' reporting incentives in an intertemporal strategic game with the analysts where the managers' payoff is determined by investors using the analysts' consensus forecast as a target when evaluating earnings reports. Finally, instead of adapting the view that agents suffer some cognitive limitations, this thesis contributes to the literature that seeks economic explanations for the analysts' underreaction by showing empirically that managerial guidance is capable to explain such inefficiencies in the analysts' forecasting behavior. Project Leadership and Contacts / Projektleitung und Kontakte Prof. Dr. Thorsten Hens (Project Leader) Kremena Bachmann (Project Leader) Funding Source(s) / Unterstützt durch SNF (Programm NFS/NCCR), Others [email protected] [email protected]
Duration of Project / Projektdauer May 2002 to Dec 2007
Project 10138
Seite 1
doc_287302212.pdf