behavioural finance

Is Business Formation Driven by Sentiment or Fundamentals

The creation of a new business is an act of entrepreneurship. It is also a financial undertaking. Hence it is admissible to apply the apparatus of behavioral finance to study the determinants of business formation. Our results show that aggregate US …

Popular Music, Sentiment, and Noise Trading

We construct a sentiment indicator as the first principal component of thirteen emotion metrics derived from the lyrics and composition of music-chart singles. This indicator performs well, dominating the Michigan Index of Consumer Sentiment and …

Investor Sentiment as a Predictor of Market Returns

Investor sentiment's effect on asset prices has been studied extensively to date, without delivering consistent results across samples and datasets. We investigate the asset-pricing impacts of eight widely cited investor-sentiment indicators (one …

Warnings Unheeded

There were many warnings portending the Great Financial Crisis (GFC). Filtering by strict admissibility criteria -- (i) direct, (ii) explicit, (iii) credible, and (iv) documented -- we identify no fewer than 24 warnings between 2000 and April 2007. …