The business plan is one of the essential tools for companies to attract investors and raise venture capital. Getting a business plan "investor ready" in that context means that it has to be professionally prepared such that it answers all questions of potential investors. This, however, requires in-depth knowledge of a typical investor's expectations and viewpoints, a type of knowledge which i...

In this paper, we study how short-sale constraints affect asset price and market efficiency. We consider a fully rational expectations equilibrium model, in which investors trade for two reasons, to share risk and to speculate on private information, but they face short-sale constraints. Short-sale constraints limit both types of trades, and thus reduce the allocational and informational effici...

Individual and institutional investors can trade German initial public equity offerings (IPOs) on a when-issued basis before the start of secondary trading. Using a novel data set of preand post-IPO trades made by a sample of clients at a large German retail broker, the paper documents that retail investors are willing to overpay and end up overpaying for IPOs, especially following periods of h...

Purpose – Similar experiences, values and beliefs shared among people of a generational cohort determines the choices that they make. This explains why same have distinct perceptions tendencies towards investing. paper focuses on generation differences in personal finance decisions. Objectives- The objective is to group different variables into identifiable factors compare these across generati...

This paper shows how differences across countries of 1) inflation rates, 2) consumption baskets of investors, and 3) investment opportunity sets of investors matter when one applies capital asset pricing models in an international setting. In particular, the fact that countries differ is shown to affect the portfolio held by investors, the equilibrium expected returns of risky assets, and the f...

We investigate whether stock betas vary with the release of firm-specific news. Using daily firm-level betas estimated from intraday prices, we find that betas increase on earnings announcement days and revert to their average levels two to five days later. The increase in betas is greater for earnings announcements that have larger positive or negative surprises, convey more information about ...

This article presents a dynamic, rational expectations equilibrium model of asset prices where the drift of fundamentals (dividends) shifts between two unobservable states at random times. I show that in equilibrium, investors’ willingness to hedge against changes in their own “uncertainty” on the true state makes stock prices overreact to bad news in good times and underreact to good news in b...

This article analyzes the nonenvironmental welfare costs of an environmental tax reform using a numerical intertemporal general equilibrium model for the Norwegian economy. By exploiting existing tax wedges in the labor market and between consumption and saving, the total nonenvironmental welfare effect of the tax reform is positive. The article also analyzes how imperfect price expectations fo...