William Forbes

• PhD (Newcastle (1987)
• Lecturer and Hononary Professor in Dundee Schoool of Business at University of Dundee

forthcoming in International Review of Financial Analysis. Co-authored with Robert Hudson and Mona Soufian (Hull University Business School) and Len Skerratt (Brunel Business School)

We explore how insider trading returns, disparities in executive pay, and CEO turnover are interrelated. Our findings reveal both independent and interactive effects for insider trading returns, the CEO pay gap, and the likelihood of CEO turnover. First, an increase in abnormal returns from insider purchases lowers the probability of a CEO’s turnov...

Unconscious thoughts as a spur and halt on good financial decisioning making

This is a book review for Gerd Gigerenzer's 2022 book "How to stay smart in a smart world". As before this will be published in Qualitative Research in Financial Markets if the editors, Bruce Burton, allows/agrees.

This is a review of Cass Sunstein's book. It is provides some element of summary, for those unable to read the book. But I feel it is an important book and well worth reading. Partly because of what it tells us about the "Nudging" agenda when some will have felt shoved in the pandemic and post-pandemic world. The review is certainly favourable, but...

This paper examines the relationship between insider abnormal trading returns, executive pay disparity, and CEO turnover. Our study finds both independent and interaction effects of insider abnormal returns and CEO pay gap on the probability of CEO turnovers. First, an increase in insider purchase abnormal returns reduces the likelihood of CEO turn...

tries to build a consistent set of research practices for understanding the evolution of narratives. To understand an economic event, or value a company, we need to have a (valuation) story capable of being convincing and thus "going viral" amongst many investors. Such a story might explain how in the future consumers will demand "mobility services...

This is a review of Robert Shiller's book "Narrative Economics" book (2019). It it does so especially in light of rise of textual analysis applications in Finance.

Hi all, I am delighted to announce my paper with Shabnam Mousavi of the Max Planc Institute in Berlin on British Pension policy has now been published (in Italian) in a book edited by Professors Ricardo Viale and Laura Macchi. Many thanks to Shabnam and the Italian BIT team for their work on this. William.

A behavioural critique of UK pensions policy

We examines post-earnings announcement drift in the Greece, modelling it as a "selected event" in the spirit of Daniel, Hirshleifer, Subrahmanyam (1998).

A large literature now reports the evidence for the profitability of contrarian trading strategies. We investigate the stability of such contrarian trading strategies and their ability to generate large, potentially ruinous, losses for their users. Specifically, we ask are the annual profits earned by contrarian strategies sufficiently stable and l...

This paper revisits the presence of post-earnings-earnings-announcement drift in Greece. It confirms its presence in the Greek market and links it to the size of the firm and the liquidity of the stock, as captured by its bid-ask spread.

I am editing a Special Issue of the Journal of Risk and Financial Management. Details below: https://twitter.com/JRFM_MDPI/status/1320669228911841282?s=20… I hope some colleagues and graduate students can submit to encourage interest in/progress the corpus of work we are building.

A draft book review of "Radical Uncertainty" by Kay & King (2020). This may, or may not, eventually appear in Qualitative Research in Financial Markets. If Bruce Burton, the Editor, thinks it is worthy of this.

In response to an invitation from Shabnam Mousavi, of the Max Planck Institute in Berlin, my co-author on the Fast & Frugal Finance book, I have written a brief (4 page) note on Corona virus and behavioural management in the UK for the Journal Mind & Society. I am working towards getting it published now. So comments, corrections, suggestions welco...

Review of Robert Shiller's most recent book. Forthcoming in Qualitative Research in Financial Markets.

A Fast and Frugal Finance: Bridging Contemporary Behavioural Finance and Ecological Rationality adds psychological reality to classical financial reasoning. It shows how financial professionals can reach better and quicker decisions using the ‘fast and frugal’ framework for decision-making, adding dramatically to time and outcome efficiency, while...

A draft of a review of Cass Sunstein's "How change Happens", MIT Press, 2019, that may, or may not, later appear in Qualitative Research in Financial Markets, but maybe in shortened form then.

This paper examines the investment value of financial analysts' advice (earnings forecasts and stock recommendations) to shareholders around two recent bubble periods in the United Kingdom: the dot-com bubble period and the credit bubble period. We find that analysts' advice is valuable at the firm level, as reflected in their recommendations for h...

A review of Carreyou's book from a behavioural perspective.

This paper draws upon Hayek’s concept of a “Law of Liberty” which governs a financial order, which has grown and no single conscious authority has made to understand recent financial crises. I argue reforms responding to the crisis need to recognize the need to choose between a grown and made financial order.

This book advances the behavioral finance project by moving beyond the historic focus on pricing anomalies (under-reaction, overreaction, value premia, etc) to reach within the black box of the firm to examine the risk of getting stuff done, or operational risk, within a variety of institutions. The author is a true fronitiersman of the subject who...

Report to EU JUST on how proposed restrictions on market risk-takers' variable component pay may impact upon their taking appetite and the financial performance of the IN stations that employs them

This paper presents evidence regarding the post-earnings announcement drift (PEAD) anomaly for the Greek market in the years 2000-2006 (covering earnings announcements in the years 2001-2007). The impact of the introduction of International Financial Reporting Standards on the size and prevalence of the PEAD anomaly is examined. Unlike recent evide...

Thank you for invitation to re-submit our paper for consideration for publication in the Review of Pacific Basin Financial Markets and Policies (RPBFMP). Apologies for the the huge delay in getting back to this. We have now thoroughly revised the article in accordance with the referees comments as we outline below. But our primary focus has been to...

Purpose – The purpose of this cross-national study is to evaluate the communality and differences in experiences and policy responses in the run up to the 2007-2009 credit crisis and during its critical early stages in Germany, Ireland and the UK. The importance of shared cognitive illusions regarding the power and stability of financial markets is...

Recent experience from the global financial crisis suggests that the future of corporate governance will bring radical changes, surprises and challenges. Having said that, it should not be underestimated how much UK corporate governance has changed since the Cadbury Commission in 1992. In this book, William Forbes and Lynn Hodgkinson identify a nee...

This paper revisits the Madoff ponzi scheme scandal to illustrate two themes. The first the extent to which government action creates the malpractice it will later investigate and censure. Secondly, the extent to which the affinity between Madoff and his victims, who were often fellow Jews, indicates the role of trust and its breach in the growing...

This paper examines the predictive performance of two representative agent models of earnings momentum using the US S & P 500 sample frame in the years 1991-2006. For successive sequences of quarterly earnings outcomes over a three year horizon of quarterly increases/decreases, etc., we ask whether these models can capture the likelihood of reversi...

This paper revisits the Maddof ponzi scheme scandal to illustrate two themes. The first the extent to which government action creates the malpractice it will later investigate and censure. Secondly, the extent to which the affinity between Maddof and his victims, who were often fellow Jews, indicates the role of trust and its breach in the growing...

We study the unfolding of the credit crisis until 2008, and the diversity of policy responses in Germany, Ireland, and the UK. We show that although the channels through which these three European states manifested financial distress were different, the crisis evoked similar reactions by regulators and national governments. Our conclusion emphasise...

n this paper we examine the agency costs of seemingly excessive pay awards to CEO's within the FTSE 100 in the last decade. Are CEOs taking a large proportion of the total pot (a big "pay slice") more, or less, able to return value to shareholders by better management? In presenting this evidence we describe variations in whole distribution of exec...

This article has no abstract

Purpose – The paper draws on the key themes raised at a Round Table discussion on behavioural finance attended by academics and practitioners. The paper provides a background to the key aims of behavioural finance research and the development of the discipline over time. The purpose of this paper is to indicate some future research issues on behavi...

This paper outlines evolution of the policy response to conflicts of interest analysts face in offering investment advice to investors when the company they follow may also buy merchant banking services from their employer. Both in the US and the UK on a both statutory and common law basis the response has been one of disclose and let market partic...

This paper presents an analysis of the policy of the UK's Monopolies and Mergers Commission using stock market data. Stock price reactions to regula-tory intervention by the Monopolies and Mergers Commission might be expected to reflect two sorts of factors. Firstly, the impact of the intervention on the possibility of bidders extracting monopoly p...

This paper expands the set of non-financial indictors of internet stock value to include that attributable to the retention of the founding entrepreneur. The failure of traditional financial value metrics to adequately explain the Internet stock boom has already provoked much research on non-financial indicators of firms value. The current paper ad...

Purpose – This paper seeks to investigate the usefulness of analysts’ earnings forecast revisions in the allocation of funds to different industries and countries. In particular, it asks whether a post analyst revision announcement drift in prices can be exploited to guide an asset allocation strategy based on industry, or country, selection. Desig...

This paper presents evidence regarding the post-earnings announcement drift (PEAD) anomaly for the Greek market in the years 2000-2006 (covering earnings announcements in the years 2001-2007). The impact of the introduction of International Financial Reporting Standards on the size and prevalence of the PEAD anomaly is examined. Unlike recent evide...

Purpose – This paper seeks to investigate the usefulness of analysts’ earnings forecast revisions in the allocation of funds to different industries and countries. In particular, it asks whether a post analyst revision announcement drift in prices can be exploited to guide an asset allocation strategy based on industry, or country, selection. Desi...

This paper investigates the effects of takeovers on workers’ employment prospects and wages in the UK for the years 1987–1995. We address directly the idea that takeovers involve a ‘breach of trust’ with employees. Our results provide no support for the breach of trust hypothesis and rather suggest shareholders and workers in the post-acquisition j...

Rural development could be defined simply as economic development in rural areas. However, practitioners and researchers find rural development involves more than mere economic strategies. Many rural communities struggle with changes from resource extractive to service-based economies, along with cultural impacts of globalization (Harrington 1995;...

This paper revisits the claim by Keane and Runkle [J. Polit. Econ. 106 (1998) 768] that analyst forecasts of corporate profits may be rational, despite claims to the contrary by De Bondt and Thaler [Am. Econ. Rev. 80 (1990) 52] and others. We replicate the Keane and Runkle's [J. Polit. Econ. 106 (1998) 768] research method and test some of the unde...

We revisit the debate on the interpretation given to prior-year earnings changes in predicting analysts’ future forecast errors. We advance a new specification of this relation that distinguishes between earnings reversion and momentum. For a large UK dataset for the years 1990-1996, we find substantial underreaction, particularly in situations of...

We present an empirical analysis of herding behavior in analyst forecasts of earnings‐per‐share. Herding is defined as ‘excessive agreement’ among analyst predictions, i.e., a surprising degree of consensus relative to the predictability of corporate earnings. The data are for U.K. companies between 1986 and 1997. We examine the effects of forecast...

This paper recasts an old debate in accounting, that of the appropriate means of revaluing assets in place, within a new theoretical and empirical framework. The new theoretical framework is to regard the current movement of current cost accounting indices as reflecting inter-industry arbitrage of both assets in place and investment. This new persp...

This paper surveys, and suggests a possible synthesis of, two growing literatures concerning stock market anomalies. The first concentrates on identifying contrarian trading rules, capable of generating profits, when securities are segregated on the basis of past earnings, or share price performance. The other simply examines the time-series proper...

The paper examines consolidation episodes in the EU since 1970 with a view to shedding light on the factors that determine the success or failure of fiscal adjustment. Compared to the existing literature on successful fiscal consolidations we add a number of new dimensions. Two deserve particular attention. Firstly, we explore a broader set of pote...

This paper presents an analysis of the degree of integration in the security market for European banks' stock using daily data for the period 30th November, 1987-28th October, 1988. In particular we study eight banks located in four European states, Germany, the Netherlands, Switzerland and the United Kingdom. Some degree of integration might be ex...

This paper examines the UK system of corporate governance, the remuneration of senior executives and the Cadbury Committee's proposals for increasing managerial accountability to shareholders. We argue that the UK governance system does not provide shareholders with incentives to seek ‘voice’ solutions to problems of corporate governance and that t...

This paper presents an analysis of UK merger policy based upon the allocative effects of Monopoly and Mergers Commission (MMC) decisions. For some time now evidence has been available concerning the ineffectiveness of MMC decisions in reducing product market concentration (see Simpson and Shaw 1986, 1989). So, if the reduction of market concentrati...

This paper examines the predictive performance of two representative agent models of earnings momentum using the US S & P 500 sample frame in the years 1991-2006. For successive sequences of quarterly earnings outcomes, two, three, increases, etc. we ask whether the model can capture the likelihood of reversion and secondly the stock market respons...

We revisit the debate concerning the interpretation given to prior year’s earnings changes in predicting future earnings as discussed by Abarbanell & Bernard (1992), Francis & Philbrick (1993) and Easterwood and Nutt (1999). We advance a new specification of this relationship which distinguishes between earnings reversion and momentum. On a large U...