Behavioral Biases in Firms' Growth Expectations
Maiko Koga and
Additional contact information
Maiko Koga: Bank of Japan
Haruko Kato: Bank of Japan
No 17-E-9, Bank of Japan Working Paper Series from Bank of Japan
This paper provides evidence that firms exhibit behavioral biases in their growth expectations. Using firm-level survey data, we document that optimism and pessimism biases are generated by the business cycle, financial market conditions, and firm-specific factors including firms' past experiences. We also demonstrate that biases affect the real business decisions of firms. Firms' fixed investment and R&D spending are raised by optimism and hampered by pessimism. The above findings imply that behavioral biases generated by the firms can be an alternative mechanism on how macroeconomic and financial conditions affect their investment behavior in addition to the traditional optimization mechanism.
Keywords: Behavioral bias; Expectation; Firm; Investment; Optimism bias; Pessimism bias; Survey data (search for similar items in EconPapers)
JEL-codes: D84 E03 E22 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac, nep-sbm and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:boj:bojwps:wp17e09
Access Statistics for this paper
More papers in Bank of Japan Working Paper Series from Bank of Japan Contact information at EDIRC.
Series data maintained by Bank of Japan ().