There are three parts of this broad agenda. The first relates to understanding how investors obtain and process information about firms. For a long time, the question of how investors receive information was either abstracted away from entirely (e.g. by assuming signals are received by all investors instantaneously), or modeled at a very high level (e.g. information diffuses slowly among invest...

Many investors seek income for its consistency and ability to dampen volatility. High-quality fixed income securities historically provided investors with a reasonable income stream, but since the 2008 financial crisis, global economic conditions and central bank policies have caused yields to fall to historic lows. To realize even modest income levels, investors may need to consider assuming m...

This paper studies how the investors’ attitude towards earnings surprises affects the managers’ incentives to manipulate earnings in an intertemporal context, where the consensus forecast of the analysts is not exogenously given but determined by the strategic interaction between the analysts and the managers. Our analysis shows that given the asymmetric investors’ reaction to earnings surprise...

The disposition effect is the observation that investors hold winning stocks too long and sell losing stocks too early. A standard explanation of the disposition effect refers to prospect theory and in particular to the asymmetric risk aversion according to which investors are risk averse when faced with gains and risk-seeking when faced with losses. We show that for reasonable parameter values...

The literature assumes that the order and timing of analysts’earnings forecasts are determined exogenously. Ignoring strategic timing decisions of analysts may lead to inconsistent estimates of investors’beliefs. The paper analyzes the equilibrium timing strategies for analysts, and derives the consistent estimates of investors’beliefs. I follow the literature in assuming that analysts care for...