Handbook of Corporate Finance Empirical Corporate Finance Volume 1

154 M. Baker et al. Ex post misvaluation. A second option is to use the information in future returns. The idea is that if stock ...

Ch. 4: Behavioral Corporate Finance 155 2.3. Investment policy Of paramount importance are the real consequences of market ineff ...

156 M. Baker et al. proxies are still just picking up fundamentals. To refute this, Polk and Sapienza, for example, consider the ...

Ch. 4: Behavioral Corporate Finance 157 volume and stock prices, e.g.,Golbe and White (1988).^6 The model also predicts that cas ...

158 M. Baker et al. 2.3.3. Diversification and focus Standard explanations for entering unrelated lines of business include agen ...

Ch. 4: Behavioral Corporate Finance 159 2.4.1. Equity issues Several lines of evidence suggest that overvaluation is a motive fo ...

160 M. Baker et al. weighted market index by 21% to 35%.^10 Thus, a rough summary of non-overlapping samples is that, on average ...

Ch. 4: Behavioral Corporate Finance 161 the variance in the number of security issues over time. Schultz assumes a nonstationary ...

162 M. Baker et al. negligible. For other firms that access the capital markets repeatedly through seasoned equity issues and st ...

Ch. 4: Behavioral Corporate Finance 163 37%. There is also a suggestion that the riskiest firms may be timing their idiosyncrati ...

164 M. Baker et al. then, it may help to explain the cross-section of capital structure. In particular, if mar- ket timing-motiv ...

Ch. 4: Behavioral Corporate Finance 165 2.5.1. Dividends The catering idea has been applied to dividend policy.Long (1978)provid ...

166 M. Baker et al. growth firms versus “safe” dividend payers, since it falls in growth stock bubbles and rises in crashes.Full ...

Ch. 4: Behavioral Corporate Finance 167 we group this study with other name changes, it actually involves an investment policy d ...

168 M. Baker et al. dynamic speculative market ofScheinkman and Xiong (2003), in which two groups of overconfident investors tra ...

Ch. 4: Behavioral Corporate Finance 169 that subjects tend to believe themselves to be more likely than average to experience po ...

170 M. Baker et al. in the firm and fiduciary duty. This leads to a similar setup to the market timing objec- tive in Section2.1 ...

Ch. 4: Behavioral Corporate Finance 171 In a more complex specification, these conclusions may change. One might have the manage ...

172 M. Baker et al. model is itself hard to distinguish from models of costly external finance built on asym- metric information ...

Ch. 4: Behavioral Corporate Finance 173 mism.^19 With this optimism proxy in hand for a large sample of US firms between 1980 an ...