Due to the nature of short-termism as an agency problem under asymmetric information, this approach relies on assumptions about the unobservability of investment levels to investors or about distinct investor irrationalities. Previous empirical work on short-termist investment has analyzed investment levels and concluded that investment policies are short-termist in case of underinvestment. I utilize this method to analyze short-termist investment. It is based on the intuition that future short-term profits have high predictive power over current investments levels, if current investments are short-term oriented. This paper proposes an empirical approach that tries to capture investment horizons ex post. An Empirical Investigation of Short-Termist Investment: The Case of Corporate Investment Horizons Natural event evidence of agents’ maxmin utility optimisation behavior in Gilboa and The last recession from Jun 2009 to Nov 2016. News media have a bigger influence on asset prices than social media except during In this paper and in Brenner and Izhakian (2018). Proposed that explains salient points of ambiguity on asset pricing in empirical tests A binomial model based on smooth ambiguity preferences is then The ambiguity measurement is derivedįrom a mixture of distributions model that distinguishes from disagreement between Language Processing on social and financial media text to construct a naturalĮvent and Big Data ambiguity measurement. Source of financial information from the financial news and social media. Yet investors read textual news as the primary Misreporting increases notably from Q2 2017 onwards, and the increase is larger among low-income and low-credit-grade borrowers. Supporting the former, misreporting is more prevalent in areas with lower social capital, implying weaker social norms, and among borrowers whose professions are considered less honest, while borrowers with higher genuine income uncertainty are also more prone to misreport. I find evidence consistent with both intentional as well as innocent misreporting. A Misreporting Index constructed from these indicators has significant predictive power over the likelihood of default, and the additional default risk does not get compensated in the form of higher interest. I identify potential misreporting based on three behavior-based indicators: consistency of loan amount with outstanding credit balance, roundness of reported income, and roundness of chosen loan amount. I study the implications and determinants of borrower misreporting in peer-to-peer (P2P) loans for credit card debt repayment and consolidation. Imperial College London and University of Hong Kong
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