1,721,014 research outputs found
Do cultural differences affect the share price puzzle?
Full text linkWe examine the impact of cultural differences on nominal share prices across 63 countries from 2002 to 2018. Using institutional and catering theories, we assess how cultural dimensions—including World Governance Indicators (WGI), legal systems, religious influences, and GLOBE dimensions—affect the spatial heterogeneity of share price levels. Our findings indicate that share prices are higher in countries with common law systems and comprehensive information reporting, as these environments tend to attract institutional investors. Conversely, cultural traits emphasizing altruistic values correspond with lower share prices, reflecting the preferences of individual investors
The Geography of Investor Attention
Full text linkLocal companies attract significantly more attention from investors than nonlocal companies, especially at times of news releases and high volatility. This attention gap widens especially when news is firm-specific rather than aggregate, and in response to idiosyncratic rather than market risk. Attention is causally related to perceived proximity: after a firm is acquired by a nonlocal one, local investors, compared with nonlocal investors, are more likely to reallocate attention away from it; conversely, COVID-19 travel restrictions led investors to reallocate attention toward local companies and away from nonlocal ones, especially those difficult to reach. Finally, local attention predicts volatility, bid-ask spreads, and nonlocal attention, but not vice versa. Our findings suggest that the geography of attention matters and is shaped by local investors' information-processing advantage, not familiarity bias. (JEL D83, G11, G12, G14, L86, R32)Received: 2 January 2024; Editorial decision: 13 March 2024 Editor: Isil Erel Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online
Entrepreneurial Under-Diversification: Overoptimism And Overconfidence
No full textOur model wants to explain how overconfidence and over optimism lead entrepreneurs to overinvest in their companies, underestimating risks and overestimating expected returns. The entrepreneur has to choose which part of her wealth to invest in her private company and which one in the stock market. Overconfidence and over optimism are parameters in our model, and they bias the entrepreneur’s portfolio allocation. With a simulation analysis, we calculate overconfidence and over optimism levels implicit in the entrepreneurs’ observable portfolio, instead of using proxies or indirect measures. Our explicit measure of entrepreneurial under-diversification could be used in empirical analyses
Cognitive Biases and Entrepreneurial Under-Diversification
Full text linkCognitive biases lead entrepreneurs to overinvest in their own companies, over exposing themselves to idiosyncratic risk. Our novel theoretical model explains entrepreneurial under-diversification by measuring the amount of potential bias in entrepreneurs’ portfolio allocations brought about by overconfidence and over optimism. Simulation analyses based on our model allow us calculating the implicit levels of overconfidence and over optimism from observable portfolio choices. Finally, using a unique dataset including cross-regional data on Italian entrepreneurs and a structural equation modeling approach, we test the effect of overconfidence and over optimism on entrepreneurs’ portfolio allocations. Consistent with our theoretical predictions, we find a positive relationship between overconfidence and entrepreneur investments in their own companies. On the other hand, the role of over optimism seems to be negligible
‘‘Hit and Run’’ and ‘‘Revolving Doors’’: evidence from the Italian stock market
No full textIn recent years, a large number of companies on the Italian stock market
have been delisted. Several of these companies implemented a ‘‘Hit and Run’’
strategy, choosing to go private only a few years after their IPO. In this study, we
focus specifically on all Italian companies listed for less than 10 years between 1998
and 2010 and we calculate the return a potential investor realized by buying stocks
in the IPO and selling them during the tender offer. This return can assume either
positive or negative values. The cases of negative return are an interesting object of
analysis. In these cases, if the majority shareholder promoted both the IPO and the
tender offer, this negative return implies a loss for minority shareholders and a
specular gain for the majority shareholder, and this fact has clear ethical implications.
The Italdesign-Giugiaro case study is a remarkable example of this specific
situation, called ‘‘Revolving Doors’’ by practitioners. Using regression analyses, we
try to understand which features of the company and the tender offer influence the
calculated return—and consequently the likelihood of observing ‘‘Revolving
Doors’’. In our sample, we show that the return is lower, and, at times, even
negative, when the majority shareholder launches the tender offer, the first shareholder
owns a large stake in the company, and the company is venture-backed. Our
results suggest the need to develop new laws and governance mechanisms oriented
towards the protection of minority shareholders and provide an opportunity to discuss the ethical implications of ‘‘Revolving Doors’’ using a deontological and
teleological mode of analysis
The effectiveness of insider trading regulations: The case of the Italian tender offers
No full textThis study analyzes the effectiveness of the Market Abuse Directive (MAD) in reducing the possible profits of insider trading during voluntary tender offers with the purpose of delisting initiated by controlling shareholders in Italy. Our results suggest that the introduction of the MAD did not produce appreciable effects on the magnitude of abnormal returns and volumes noted in the period preceding the announcement of a tender offer. However, a regression analysis reveals that the MAD has changed the manner in which certain corporate characteristics influence the capacity of insiders to achieve profits. In particular, in the post-MAD period, the market reaction to tender offer announcements tends to be greater for bigger firms. On the other hand, the effect of ownership concentration has become virtually null. We interpret the results in light of the economic problem of the potential insider who chooses the optimal level of insider trading by considering the marginal costs and benefits of the illegal activity.This study analyzes the effectiveness of the Market Abuse Directive (MAD) in reducing the possible profits of insider trading during voluntary tender offers with the purpose of delisting initiated by controlling shareholders in Italy. Our results suggest that the introduction of the MAD did not produce appreciable effects on the magnitude of abnormal returns and volumes noted in the period preceding the announcement of a tender offer. However, a regression analysis reveals that the MAD has changed the manner in which certain corporate characteristics influence the capacity of insiders to achieve profits. In particular, in the post-MAD period, the market reaction to tender offer announcements tends to be greater for bigger firms. On the other hand, the effect of ownership concentration has become virtually null. We interpret the results in light of the economic problem of the potential insider who chooses the optimal level of insider trading by considering the marginal costs and benefits of the illegal activity
You can’t export that! Export ban for modern and contemporary Italian art
Full text linkSince 1939, an artwork in Italy can be subject to an “export veto” if it was created more than 50 years before the date of sale by an artist who is no longer living at the time of the sale. When the Italian bureau decides to exercise its right to veto exportation, these artworks cannot circulate outside the territory of Italy. Using original data from a hand-collected dataset covering all artworks made by non-living modern and contemporary Italian artists, auctioned at Christie’s and Sotheby’s in London and Milan between 2012 and 2016, we estimate a threshold model to consider the effect of the export veto law on price while controlling for the potential presence of a sample selection bias. We found that, while artwork prices are increasing in the time span between the year of creation and the date of sale, this effect reverses for artworks sold in Italy and created more than 50 years before the sale date. A similar pattern is also found in pre-sale estimates fixed by the auction houses, suggesting they exhibit rational behaviour in anticipating the export veto effect
Il mark-up delle gallerie d’arte moderna e contemporanea in Italia
No full textTaking advantage of the normative incoherence between the Italian VAT (IVA) regime that allows the galleries not to declare the VAT and the ARR regime that requires the galleries to calculate the ARR (DDS) on the price net of VAT, our work obtains private information on the mark-up of Italian art galleries. The determinants of mark-up, divided into gallery and artist specific determinants, reveal the main market strategies used by Italian galleries in the period considered
Evaluating Chef's Creativity and Restaurant Quality: An Empirical Analysis of the Role of Gastronomic Guides in the Italian Fine‐Dining Market
Full text linkThe quality of fine-dining restaurant food is complex and presents information issues in customers' quality evaluation, configuring this good as a luxury and cultural good. We investigate the role of experts in influencing customers' evaluation and other stakeholders' characteristics in such a sector by analyzing a dataset of top Italian chefs and restaurants from 2011 to 2019. To complement these data, we directly surveyed starred chefs to get their self-assessment. We use a structural equation model to measure cooking knowledge, culinary creativity, chefs' and restaurants' names, and experts' and customers' evaluations. We analyze the relationships between these constructs and variables like meal prices, seating capacity, tourist and resident numbers, and chef's age. Guides play a significant role in shaping customers' evaluations and influencing prices. Furthermore, fine dining experts focus more on evaluating the businesses themselves, the supply side, rather than the chefs' creation process, the “creative side”
The impact of COVID-19 on tourism expenditures: A Quasi-DiD analysis
Full text linkWe investigate the impact of COVID-19 on tourism expenditures by analyzing survey data collected from participants of one of the major amateur cycling races in Italy—the Nove Colli. We gathered information from different types of participants (tourists, residents, day-trippers) about their travel expenses, accommodation, food and beverage, and side goods such as sports equipment. The survey covers three race editions: pre-COVID-19 in 2016, post-lockdown in 2021, and post-COVID-19 in 2022, for a total of 2734 respondents. Using a quasi-difference-in-differences approach, we find a significant increase in total tourism expenditures due to COVID-19, primarily driven by a substantial increase in side goods expenses, which more than doubled the rise in food and beverage expenses. This result can be partly explained through revenge spending as a form of compensatory consumption behavior and inform policy-makers on how individuals’ spending patterns may change in the aftermath of an exogenous shock
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