IDEAS home Printed from https://ideas.repec.org/a/ora/journl/v1y2012i2p471-476.html
   My bibliography  Save this article

An Introduction To Behavioral Corporate Finance

Author

Listed:
  • Dedu Vasile

    () (Academia de Studii Economice, Bucuresti, FABBV)

  • Turcan Ciprian Sebastian

    () (Doctorand Academia de Studii Economice, FABBV Scoala doctorala)

  • Turcan Radu

    () (Universitatea din Oradea, Facultatea de Stiinte Socio-Umane)

Abstract

The purpose of this paper is to reflect the behavioral aspects that govern corporations. The paper briefly presents some of the main pillars of behavioral corporate finance: management, closed – end funds puzzle, dividends and the importance of aggregate earnings releases. The first pillar consists in a brief presentation of the behavioral factors related to the management of corporations, such as the fact that independent directors are not that independent as they should be, they do not have the prerequisite expertise for assessing complex financial risks, the importance of ethics and having a corporate culture that nurtures doing the right thing above anything else and the fact that CEO’s decisions reflect in good part, their personal style rather than a set of criteria determined by the company. In the second part of the paper, it is treated the puzzle why would investors buy a closed-end fund at its IPO price, knowing that it is likely to fall to a discount, when they could buy instead an open-end fund that is guaranteed always to trade at par and some mentions about the way that dividend policy may be influenced by managers “catering” to the demands of investors and also the effects of aggregate earnings announcements over the market returns.

Suggested Citation

  • Dedu Vasile & Turcan Ciprian Sebastian & Turcan Radu, 2012. "An Introduction To Behavioral Corporate Finance," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(2), pages 471-476, December.
  • Handle: RePEc:ora:journl:v:1:y:2012:i:2:p:471-476
    as

    Download full text from publisher

    File URL: http://anale.steconomiceuoradea.ro/volume/2012/n2/069.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Randall Morck, 2004. "Behavioral Finance in Corporate Governance - Independent Directors, Non-Executive Chairs, and the Importance of the Devil's Advocate," NBER Working Papers 10644, National Bureau of Economic Research, Inc.
    2. Malcolm Baker & Jeffrey Wurgler, 2002. "Market Timing and Capital Structure," Journal of Finance, American Finance Association, vol. 57(1), pages 1-32, February.
    3. Barberis, Nicholas & Thaler, Richard, 2003. "A survey of behavioral finance," Handbook of the Economics of Finance,in: G.M. Constantinides & M. Harris & R. M. Stulz (ed.), Handbook of the Economics of Finance, edition 1, volume 1, chapter 18, pages 1053-1128 Elsevier.
    4. Malcolm Baker & Jeffrey Wurgler, 2004. "A Catering Theory of Dividends," Journal of Finance, American Finance Association, vol. 59(3), pages 1125-1165, June.
    5. Kothari, S.P. & Lewellen, Jonathan & Warner, Jerold, 2003. "Stock Returns, Aggregate Earnings Surprises, And Behavioral Finance," Working papers 4284-03, Massachusetts Institute of Technology (MIT), Sloan School of Management.
    6. Itzhak Ben-David & John R. Graham & Campbell R. Harvey, 2007. "Managerial Overconfidence and Corporate Policies," NBER Working Papers 13711, National Bureau of Economic Research, Inc.
    7. David Hirshleifer & Sonya Seongyeon Lim & Siew Hong Teoh, 2009. "Driven to Distraction: Extraneous Events and Underreaction to Earnings News," Journal of Finance, American Finance Association, vol. 64(5), pages 2289-2325, October.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Behavioral finance; conflicts of interests; corporate finance; managers; dividends; closed-end fund puzzle; aggregate earnings;

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ora:journl:v:1:y:2012:i:2:p:471-476. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Catalin ZMOLE). General contact details of provider: http://edirc.repec.org/data/feoraro.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.