Finance Seminar with Markku Kaustia, Aalto University School of Business

On March 31, 2017 Markku Kaustia will present: "Optimism and Skill in the Finance Industry"

Friday, March 31, 2017 - 11:00 to 12:15

The Department of Finance is proud to announce the upcoming seminar with Markku Kaustia, Aalto University School of Business.

Markku Kaustia will present

PDF icon Optimism and Skill in the Finance Industry

We measure financial advisers’ sophistication using data from professional exam scores and other variables. We find that less sophisticated advisors have higher return expectations for the general stock market. The nature of this optimism seems dispositional, rather than strategic, or varying with recent market conditions. We hypothesize, and find evidence to support the idea, that unconscious overoptimism acts as a substitute for skill in the production function of advisor services. Over the long-term, skill dominates in advisor career performance, so the substitution effect mostly helps less capable advisers in the earlier stages of their careers, including finding employment.

The page was last edited by: Department of Finance // 04/04/2022