Posts categorized under Behavioral Finance

Narcissistic corporate managers do not share!

June 26, 2022
Stakeholder theory implies that firms’ economic and social purpose is to create value for all their stakeholders, without favoring any group. However, the distribution of the value created is a matter of choice for each firm and may reflect top managers’ values and characteristics. This paper examines whether the narcissistic characteristic of top managers impacts the distribution of value added. Using a sample of 489 top managers (368 males and 121 females) of Portuguese firms, this study shows that narcissism does not impact overall value added.

Education and avoidable costs in the stock market

April 27, 2022
This study investigates preventable financial mistakes by retail investors in the stock market and whether education helps reduce their likelihood. The paper examines the change in brokers’ commission schedules in the aftermath of the acquisition of Bolsa de Valores de Lisboa e Porto, the Portuguese stock market, by Euronext Group. The acquisition led to significant changes in the structure of brokers’ trading fee schedules penalizing small transactions, which were very common among retail investors prior to the acquisition.

Helping the government promote its policies

July 1, 2021
Governments around the world devote substantial resources to support small and medium sized firms struggling with the consequences of economic and financial crises. A key question is whether the firms that stand to benefit most from government programs—for example, smaller firms or those with limited access to traditional financing—face information frictions that hamper access to aid. This paper tests whether informational frictions prevent firms from accessing government support measures. The paper considers the impact of providing detailed information on two COVID-19 assistance measures—a layoff support program and a guaranteed credit line scheme—on firm take-up using a sample of over 170,000 Portuguese firms (see figure).

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