Annual Conference

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Investment Finance

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May 2019

Rating on a Curve

Utpal BHATTACHARYA, Ariel Yu ZHANG, Janghoon SHON
We document that if an analyst is covering a strong pool, the best firm is rated less highly than it would be otherwise, and if the analyst is covering a weak pool, the worst firm is rated less badly than it would be otherwise. These relative ratings affect dispersion in recommendations. Blindly fol...
Keywords: analyst, recommendation, target price
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Annual Conference

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Investment Finance

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May 2019

Mispricing in the Global Market: A New Perspective

Hong ZHANG, Massimo MASSA, Yang (Gloria) YU
The determination of asset prices and the identification of related economic grounds are considerately more intricate in the global market due to the potential market segmentation and frictions. In this paper, we propose and test a novel intuition that cross-country mispricing can be identified when...
Keywords: Massimo MASSA, Yang Gloria YU, Hong ZHANG
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Annual Conference

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Investment Finance, Senior Fellows/Fellows

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May 2019

Hard to say goodbye to yesterday: war memories, patriotism, and individual investors’ investment preferences

Yupeng LIN, Bin KE, Weibiao XU, Hong TU
We examine whether memories of interstate wars that occurred long ago, transmitted across generations, affect the stock investment decisions of individuals who never experienced the wars themselves. Using the Second Sino-Japanese War over 1931-1945 as a setting, we find that war memories have a sign...
Keywords: Interstate war, stock investment, nonpecuniary preferences, intergenerational
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Annual Conference

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Investment Finance, Senior Fellows/Fellows

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May 2019

Molecular Genetics Risk Aversion Return Perceptions and Stock Market Participation

Laura STARKS, Richard SIAS, H. J. TURTLE
We show that molecular variation in DNA related to cognition, personality, health, and body shape, predicts an individual’s equity market participation and risk aversion. Moreover, the molecular genetic endowments predict individuals’ return perceptions, most of which we find to be strikingly bi...
Keywords: Molecular genetics, stock market participation, risk aversion, genetic endowments
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Annual Conference

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Investment Finance

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May 2019

Who Benefits from Robo-advising? Evidence from Machine Learning

Alberto G. ROSSI, Stephen UTKUS
We study the effects of a large U.S. hybrid robo-adviser on the portfolios of previously self- directed investors. Across all investors, robo-advising reduces investors’ holdings in money market mutual funds and increases bond holdings. It also reduces idiosyncratic risk by lowering the holdings o...
Keywords: FinTech, portfolio choice, Behavioral finance, Individual Investors, Financial Literacy, Technology Adoption, machine learning
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