Miracle-dz/UniFAR-FTUs huggingface dataset:
Does the Endowment Effect Prevail When Traders Act Strategically?

Trading is more than a personal valuation of own property. Traders try to anticipate the WTP potential buyers have for the good they want to sell. They do not focus on the value the entitlement has for them, their personal valuation is only a reservation price. The law analyzes the Endowment Effect because it wants to protect gains from trade; most economic and psychological Endowment Effect studies by contrast are concerned with a different question: They test theories of preference formation; unlike in trading behavior they focus the participants on their entitlement to demonstrate that valuation depends on ownership and expectations. We show in this study that an experimental design that focuses the subjects' attention on their good elevates the size of the Endowment Effect and can mislead the legal debate. Our experiment provides the subjects with incentives for strategic behavior. As typical for trading, the participants can earn more if they ask for a price that exceeds their personal valuation of the good they are endowed with. The incentives shift the attention of the subjects to the potential WTP of the buyer. The results we find show that the cognitively more complex trading task weakens the owners' occupation with their entitlement and significantly decreases their loss aversion. Our findings should apply to most business transactions, as strategic behavior is very common in professional relationships. The study suggests that the Endowment Effect is likely less prominent in real markets than often suggested and that private ordering may seldom need legal protection against it.
The Impacts of Foreign Exchange Reserves Intervention under the Case of Capital Control in China

This paper studies the impacts of foreign exchange reserves intervention under the economic structures of China that feature capital controls, managed floating exchange rate and partially sterilized intervention. The central bank transacts government bonds to sterilely intervene the foreign exchange market in order to maintain a managed float regime. The results show that under the managed float regime, compared with capital account liberalization, a higher degree of capital controls may increase output and consumption and stabilize exchange rate and foreign exchange reserves in the short term. But under the case of the fixed exchange regime and capital controls, the impacts of full sterilization intervention and non-sterilization intervention are almost the same. Relative to the full floating exchange rate regime, the implementation of a managed floating exchange rate for the China’s central bank may stabilize the fluctuation of the nominal exchange rate, but it may expand the economic fluctuations, fluctuations in the scale of foreign assets held by the central bank and the scale of government bonds held the private.
Climate Vulnerability and Corporate Innovation: International Evidence

Using firm-level R&D and patent data for 88 countries, we find that country climate vulnerability negatively affects firms’ R&D investment and innovation performance. This effect operates through the decreased responsiveness of R&D investment to investment opportunities (i.e., investment efficiency), reduced incentives to innovate, and lower private value of new innovations. The effect is more pronounced for firms with longer product development cycles and more attentive to climate change and exists in both developed and developing countries. The silver lining is that climate vulnerability increases the ratio of patents on climate change mitigation technologies (CCMTs) in innovations. Finally, we find similar results when using climate-related natural disasters as an identification strategy. Overall, our findings suggest that climate vulnerability hinders corporate innovation activities in general, but it also facilitates innovation in CCMTs.
A study of the effect of perturbations in spin ice systems: site dilution, weak exchange, quantum and finite-size effects

In this thesis we investigate a range of properties for spin ice under various perturbations theoretically. Diluted spin ices, Dy2−xYxTi2O7 and Ho2−xYxTi2O7, where the magnetic rare-earth ions Dy3+ and Ho3+ are replaced by the non-magnetic Y3+ ions, are modeled by the random-site diluted dipolar spin ice Hamiltonians. It is found that the Monte Carlo simulation results for the specific heat of the model Hamiltonians describe the experimental measurements accurately up to x = 1.7 for a large temperature range. The experimentally observed, and simulation-confirmed, non-monotonicities in the specific heat broad peak and residual entropy are then rationalized theoretically by a numerical linked cluster expansion to the first order, i.e., a single-tetrahedron approximation. The broad peak of the specific heat of spin ice is shown to be related to the thermal defect monopole density. For a nearestneighbour spin ice, the paramagnetic phase is shown to be stable for all dilution levels at finite temperatures through a random site-diluted Husimi tree Bethe-Peierls argument. The loss of the projective equivalence in the presence of dilution is commented for the problem. Thin film spin ices, are studied for a film surface normal to the [001] direction. Corrections to the Pauling’s residual entropy are derived for different surface states, and are confirmed by Monte Carlo study. An important geometrical object on the [001] surface, the orphan bond, is identified. By tuning the strength of the orphan bond, various surface states emerge in the simulations. Most notably, in the dipolar spin ice thin film with an antiferromagnetic orphan bond, a novel phenomenon of surface magnetic freezing is found in the simulations. The transition to long-range order for the surface freezing is found to be continuous. The mechanism for surface freezing is argued to be induced by a self-screening of the dipolar interactions due to the pyrochlore structure below the surface. The microscopic model of Dy2Ti2O7, is scrutinized for further neighbour exchange interactions. A dimensionality reduction [112] field experiment is considered, which allows for unambiguous determination for the constraints for the exchange interactions. With such constraints we attempt to fit the microscopic model of Dy2Ti2O7, to three sets of experiments. First is the specific heat measurement from the work of Pomaranski et al. [1], second is the specific heat measurement from the work of Ke et al. [2], and third is the neutron scattering measurement by Fennell et al. [3]. The second set of data is in quantitative agreement with the majority of specific heat measurements for Dy2Ti2O7, where a residual entropy plateau of Pauling’s value [4] is found. The first set of data,
Take Me with You! Economic Incentives, Nudging Interventions, and Reusable Shopping Bags: Evidence from a Randomized Controlled Trial

Little is known about the impact of policy interventions other than taxes and bans to reduce the demand for single use plastic bags. More specifically, the influence of environmental nudges and financial bonuses to curb the single use plastic bag purchase and consumption is largely understudied. To fill this gap, we run an RCT with loyalty card holders of one of the biggest supermarket chains in Yerevan (Armenia) to test and compare interventions based on environmental nudges and financial bonuses. We manipulate the type of the intervention – either a financial bonus or a nudge –, the presence of a reusable bag – either provided for free or not provided –, and the size of the bag – either small or big. Compared with the baseline setting with no intervention, both the financial bonus and the environmental nudge serve as effective policy instruments to reduce disposable plastic bag purchase. Moreover, reusable bags in combination with the environmental nudge or the financial bonus are more effective than the environmental nudge or the financial bonus alone. Finally, the financial bonus is substantially more effective than the environmental nudge, irrespective of the absence/presence of reusable bags.
Family Firms and Earnings Management: Empirical Evidence From India

This study investigates the earnings management among family firms in India after taking into account the moderating the effect of board independence. Discretionary accruals have been used to measure the magnitude of earning management, which has been estimated using the Modified Jones model (1995). The proportion of independent directors in the board and CEO duality have been used as proxies of board independence. Based on a sample of 2074 companies listed in Bombay Stock Exchange (BSE) of India, spanning over 13 years from 2005 to 2017, we find that family firms are less likely to be engaged in earning management in comparison to their non-family counterparts after controlling for firm-specific variables such as firm size, financial leverage, sales growth, and operating performance. Family firms’ lower engagement in earning manipulation consistent with the notion of alignment effect rather than the entrenchment effect; there is greater alignment of interest between majority and minority shareholders in family firms due to their long-term focus. The findings also suggest that corporate governance is ineffective in India to control the financial irregularities due to a domination of management in controlling in the board, which jeopardizes the capability of independent directors to fulfill their monitoring role, consistent with managerial hegemony theory (Abdullah, 2004). In family firms, the board members have implicit ties with the dominant family, which results in a lack of substantial independence. The positions of CEO and chairman in family firms are mostly held by the family members themselves; therefore, holding these positions by the same person or two different persons, do not impact the earning management significantly. In particular, we find that family ownership limits the earnings management, which in turn, could affect their quality of financial reporting.
Decomposing the Effects of Crowd-Wisdom Aggregators: The Bias-Information-Noise (BIN) Model

Aggregating predictions from multiple judges often yields more accurate predictions than relying on a single judge: the “wisdom-of-the-crowd” effect. This aggregation can be conducted by different methods, from simple averaging to complex techniques, like Bayesian estimators and prediction markets. This article applies a broad set of aggregation methods to subjective probability estimates from a series of geopolitical forecasting tournaments. It then uses the Bias-Information-Noise (BIN) model to disentangle three mechanisms by which each aggregation method improves accuracy: the tamping down of bias and noise and the extraction of valid information across forecasters. Averaging works almost entirely via noise reduction whereas more complex techniques, like prediction markets and Bayesian aggregators, work via all three BIN pathways: better signal extraction and noise and bias reduction.
Time-Varying Risk Aversion and Currency Excess Returns

Abstract This paper documents an economically significant risk premium associated with a currency’s sensitivity to time-varying risk aversion. Consequently, an investment strategy that takes a long (short) position in currencies with high (low) sensitivity to aggregate market risk aversion yields significantly positive excess returns. While advanced market currencies including the Euro, Yen and Swiss Francs dominate the short end of these portfolios with low sensitivity to risk aversion, emerging market currencies including the Brazilian Real, Mexican Peso and Turkish Lira are found to be the most sensitive currencies to risk aversion. The excess returns from the proposed strategy are significant even after controlling for systematic equity market risk factors as well as liquidity risk and cannot be explained by measures of economic conditions or uncertainty. Interestingly, the excess returns generated by the risk aversion-based strategy are found to have significant loadings on global momentum, suggesting possible commonality in the behavioral drivers of anomalies in the global equity and currency markets. The findings highlight the role of behavioral factors as predictor of currency excess returns with significant investment implications.
Comment Letters on Annual Reports: Evidence from an Emerging Market

This paper examines comment letters on firms’ annual reports in an emerging market. The literature primarily focuses on comment letters issued by the U.S. Securities and Exchange Commission (SEC), although many other market regulators also use SEC-style comment letters. Comment letters can potentially be very impactful in emerging markets due to weak institutions and low disclosure quality in these markets. Using comment letters in China from 2015 to 2019, I find that the market response to the receipt of comment letters is significantly negative and associated with the severity of the comment letters. The receipt (severity) of comment letters is associated with adverse regulatory consequences, CEO turnover, corrective actions to remedy financial reporting, and poor future financial performance in the propensity score matched sample (recipient sample). Overall disclosure quality in the post-review year does not increase, but some comment letter topics prompt topic-specific financial reporting changes.
Investigating the Effect of Value Added as an Intellectual Capital Index on the Performance of Corporation: Empirical Evidence from Companies Listed in Tehran Stock Exchange

The main propose of this research is the analyses of value added rule as an intellectual index on the financial, economical and stock market performance of corporations at this research the effect of value added (intellectual capital and used capital) on the financial, economical and stock market of corporation in Tehran exchange commission through the 2006 until 2012 with the method of regression has survived. Results show that the coefficient of intellectual capital value added is effective at corporation performance although among the coefficient of intellectual capital and financial and economical performance is meaningful relationship but there is not meaningful relation among used capital corporation performance that is arising from not being relation among value added coefficient and financial, economical and market performance of corporations. <br><br>So we can conclude that intellectual capital value added in comparison with used capital value added has more and important effect on corporation performance especially at financial and economical performance.
Investment Sensitivity to Inter-enterprises Payment Deadlines

This paper investigates the determinants of firms investment financing constraints. Using an endogenous switching regression model on French Provence- Alpes Côte d'Azur region firms data collected between 2005-2014, we provide a novel evidence of the role of inter-enterprises payment deadlines which are days of sales outstanding and suppliers payment terms, as factors determining firms investment financing constraints. We also show that there is a non-negligible number of firms switching each year either from constrained regime to unconstrained regime or unconstrained regime to constrained one. By developing a model, we highlight the factors determining firms regime change.
A Prospect Theory Model for Predicting Cryptocurrency Returns

This paper investigates the risk and return properties of a trading strategy for the cryptocurrency market. The main predictive power for portfolio formation comes from a simple prospect theory model that only uses price information readily available. The dataset consists of a large body of cryptocurrencies from 2014 to 2020. I find a strong outperformance over the market, even after controlling for known predictors. Factor regressions with a cryptocurrency three-factor model further reveal significant alphas. Robustness test emphasize the legitimacy of the strategy. On average, cryptocurrencies with a high (low) prospect theory value earn low (high) subsequent returns. Interestingly, traders in the cryptocurrency market seem to assess the attractiveness of cryptocurrency in a way described by prospect theory. Mechanical tests of the model show that probability weighting is a main driver behind this assessment. Cryptocurrencies with a high prospect theory value tend to be highly positively skewed. This skewness could be the reason why the cryptocurrency seems attractive to traders, similar to lottery-like gambles.
The Real Merger Gains: Correcting for Partial Anticipation

Assuming mergers are unpredictable, previous studies have found they create no value for acquirers, while targets generally gain a hefty bid premium. This paper proposes a new approach to account for partial anticipation, which allows the parameters of the asset pricing model to change in response to anticipation signals. I find that pre-offer alphas capture signals, and so should be part of merger gains. Using matched-control samples, I address endogeneity concerns that market wide movements and firms’ ability to time takeovers may drive these findings. Overall, the gains are larger than a traditional market model would indicate, and mergers create substantial value for both firms.
Institutional Quality, Trade Costs and Comparative Advantage

Earlier works derive empirical implications that institutional quality is very influential as a source of comparative advantage in industries requiring relationship-specific investment from the supplier. However, as earlier studies focus on investigating the impact of institution on the efficiency of the producer, only the exporter’s institution is considered. In contrast, we attempt to identify the impacts of the quality of institution, of both exporters and importers, on trade costs, that are different across country-pairs. To check the problem of measuring trade costs, we use two alternative measures of trade costs, i.e. CIF/FOB ratio and the relative measure of trade costs proposed by Novy (2013). Using the Eora global supply chain database covering 187 countries for 11 primary and manufacturing industries and four years, 2000, 2005, 2010 and 2015, we calculate a CIF/FOB ratio and the relative trade costs suggested by Novy (2013) which are used as a proxy variable for trade costs. At the country level, we find that the institutional quality of exporter and importer is negatively associated with trade costs and trade costs increase as disparity between two countries’ institutional quality increases. At the country-industry level, we find that a country-pair with better legal institution has lower trade costs in industries for which a hold-up problem is important. This result is robust to the alternative measure of trade costs suggested by Novy (2013). However, an analysis on the impact of institutional differences on trade costs yields mixed results. Therefore we do not conclude that the similarity of institutional quality between two countries is associated with lower bilateral trade costs.
Mind the Gap: The Portfolio Effects of 'Other' Holdings

"Other" holdings (OH), including cash, are commonly held in nearly all U.S. equity mutual fund portfolios. This paper investigates the portfolio effects of OH beyond their broad liquidity purposes. I document OH positions in mutual fund portfolios, discovering a surprising correlation between OH percentage allocations and measures of active manager skill. Although cash and bond holdings represent a substantial fraction of all OH investments, I find that as a fund's allocation to OH increases, a steadily increasing proportion of OH is invested in equity investments not included in the CRSP equity database. Although OH assets are not a significant source of abnormal returns in the average mutual fund, they are a source of abnormal return in some of the most skilled mutual funds. In addition, empirical tests suggest that the unobserved trading actions of fund managers reduce both the return gap and abnormal returns of U.S. equity mutual funds, consistent with the return effects of costly mutual fund trades. Persistent, abnormal return predictability appears only among the most skilled funds that invest significantly in OH assets.
Determining Business Intelligence Usage Success

Business intelligence systems are highly complex systems that senior executives use to process vast amounts of information when making decisions. Business intelligence systems are rarely used to their full potential due to a poor understanding of the factors that contribute to system success. Organizations using business intelligence systems frequently find that it is not easy to evaluate the effectiveness of these systems, and researchers have noted that there is limited scholarly and practical understanding of how quality factors affect information use within these systems. This quantitative post positivist research used the information system (IS) success model to analyze how information quality and system quality influence information use in business intelligence systems. This study was also designed to investigate the moderating effects of maturity constructs (i.e., data sources and analytical capabilities) on the relationships between quality factors and information use.
Contract Features and the Informativeness of Insider Trades

Economic theory predicts that insiders reveal private information when they trade equity in their firm. However, insider purchases to meet equity holding requirements or sales to satisfy liquidity needs do not reveal private information. We predict that contract terms stipulating CEO equity holdings and vesting conditions help market participants unravel the private information revealed by an insider trade. In support of our predictions, we document that the market reaction to a CEO equity trade is greater when the CEO holds a large portfolio of unconstrained equity in the firm. We also find that the one-year abnormal return following a CEO equity sale is significantly more negative when the CEO holds a large portfolio of unconstrained equity. Collectively, we show that publicly disclosed contract features provide context that help investors interpret the information revealed by insider trades and unravel private information.
Polarized Corporate Boards

We show that political polarization between directors and a CEO negatively impacts the effectiveness of corporate boards. At the director level, polarization increases directors’ incentive to monitor the CEO but creates a hostile board environment and discourages moderate directors’ board meeting attendance. This leads to compromised board capacity at the firm level and significantly reduces forced turnover-performance sensitivity. Our results are more pronounced in presidential election years and for firms with more monitoring and advising needs. Finally, we show that polarization in the boardroom lowers investment-Q sensitivity. Our findings highlight the real economic cost of political polarization.
A Note on the Profitability of African Banks: Islamic versus Conventional

This paper aims to examine and compare the profitability of Islamic and conventional banks located in 20 African countries over the period 2009-2018. Based on a sample of 21 Islamic banks and 297 conventional banks, this study shows that Islamic banks perform better than conventional banks in Africa. This result is driven by large banks.