We study equilibrium firm‐level stock returns in two economies: one in which investors are
loss averse over the fluctuations of their stock portfolio, and another in which they are loss …

When investors fixate on current earnings, they commit a cognitive error and fail to fully
value the information contained in accruals and cash flows. Extending the accrual anomaly …

I test whether investors' trading decisions are influenced by their preferences for framing
gains and losses. I find that investors are more likely to bundle sales of losers than sales of …

We investigate loss aversion in financial markets using a typical asset allocation problem.
Our theoretical and empirical results show that investors in financial markets are more loss …

This paper solves a model that links earnings quality to the equity risk premium in an infinite‐
horizon consumption capital asset pricing model (CAPM) economy. In the model, risk …

Well‐functioning financial markets are key to efficient resource allocation in a capitalist
economy. While many managers express reservations about the accuracy of stock prices …

We study asset prices in an economy where investors derive direct utility not only from
consumption but also from fluctuations in the value of their financial wealth. They are loss …

Mario L. Belotti Professor of Finance Santa Clara University Santa Clara, California
ehavioral finance can shed light on many areas of investing, including valuation. In this …

We propose a theory of securities market under‐and overreactions based on two well‐
known psychological biases: investor overconfidence about the precision of private …

This paper studies the role of fluctuations in the aggregate consumption–wealth ratio for
predicting stock returns. Using US quarterly stock market data, we find that these fluctuations …