Finance Seminar with Adrien Matray, Princeton University

The Department of Finance is proud to announce the upcoming seminar with Adrien Matray, Princeton University.

Adrien Matray will present:

Ripple Effects of Noise on Corporate Investment

Authors:
Olivier Dessaint, University of Toronto
Thierry Foucault, HEC Paris
Laurent Frésard, University of Maryland
Adrien Matray, Princeton University

ABSTRACT
We show that firms significantly reduce their investment in response to non-fundamental drops in the stock price of their product-market peers. This spillover is consistent with the hypothesis that managers have limited ability to filter out the noise in stock prices when using these as a source of information. As predicted by this hypothesis, the influence of the noise in peers' stock prices on a firm's investment is stronger when peers' prices are more informative, and weaker when managers are better informed. Our findings suggest a new channel through which local non-fundamental shocks to stock prices have real effects.

Location:
Solbjerg Plads 3, 2000 Frederiksberg
Room: SPs13