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:
Olivier Dessaint, University of Toronto
Thierry Foucault, HEC Paris
Laurent Frésard, University of Maryland
Adrien Matray, Princeton University
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.
Solbjerg Plads 3, 2000 Frederiksberg