Behavioral Corporate Finance: An Updated Survey

Malcolm Baker and Jeffrey Wurgler

No 17333, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We survey the theory and evidence of behavioral corporate finance, which generally takes one of two approaches. The market timing and catering approach views managerial financing and investment decisions as rational managerial responses to securities mispricing. The managerial biases approach studies the direct effects of managers' biases and nonstandard preferences on their decisions. We review relevant psychology, economic theory and predictions, empirical challenges, empirical evidence, new directions such as behavioral signaling, and open questions.

JEL-codes: G3 G30 G31 G32 G34 G35 (search for similar items in EconPapers)
Date: 2011-08
New Economics Papers: this item is included in nep-bec and nep-evo
Note: CF
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Citations: View citations in EconPapers (22)

Published as Baker, Malcolm, and Jeffrey Wurgler. "Behavioral Corporate Finance: A Current Survey." In Handbook of the Economics of Finance. Vol. 2, edited by George M. Constantinides, Milton Harris, and Rene M. Stulz. Handbooks in Economics. New York, NY: Elsevier, 2012.

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