Oliver G. Spalt’s research while affiliated with University of Mannheim and other places

... Highintangible firms have a higher quadratic cost from biasing, j b , which likely reflects the heightened importance of non-GAAP disclosures for them. High-intangible firms also have a larger mean of the transitory shock, l p , which is consistent with their higher likelihood of transitory events such as intangible-specific impairment losses and litigation (Kempf and Spalt 2023). Finally, high-intangible firms have a lower weight on current stock prices, h, because the payoffs on intangible capital often take years to be realized, consistent with managers of these firms being less myopic (Edmans 2009). ...

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Non-GAAP Reporting and Investment

... Models with probability weighting are primarily applied to the cross-section of expected stock returns theoretically (Barberis and Huang, 2008;Barberis et al., 2021;Driessen et al., 2021) and empirically (Dierkes et al., 2022;Shi et al., 2023;Hu et al., 2023). Probability weighting models are also applied to option prices to explain the dynamics of the stochastic discount factor (Polkovnichenko and Zhao, 2013;Dierkes et al., 2023), and the pricing of call and put options (Baele et al., 2019). Recent work further links probability weighting to investor decisions at the household level to explain portfolio under-diversification (Dimmock et al., 2021) and stock market participation (Sun and Zhang, 2023). ...

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Probability weighting and equity premium prediction: Investing with optimism

... Frequencies in web searches have been widely used in the finance literature as a direct measure of attention (Mondria et al., 2010;Da et al., 2011;Tetlock, 2011;Vlastakis and Markellos, 2012;Vozlyublennaia, 2014;Andrei and Hasler, 2015;Ben-Rephael et al., 2017;Kempf et al., 2017). ...

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Google and China's Trade

... We focus on a specific emerging market in China that is characterized by weak formal institutions but rich cultural diversity in which gambling preference plays a crucial role in influencing capital market outcomes. The evidence suggests that the gambling preference is generated by the people of a country or region during a period of long-term social communication as a collective programming of morality, ethics, beliefs and norms that affects firms' behavior, such as corporate innovation (Adhikari & Agrawal, 2016;Chen et al., 2014;Zhao et al., 2024), mergers and acquisitions (Schneider & Spalt, 2017), financial misreporting (Christensen et al., 2018), tax avoidance (Alharbi et al., 2020;Lei et al., 2023), the stock price crash risk (Ji et al., 2021;Zuo et al., 2023), and corporate financialization (Zuo et al., 2024). An audit report provides effective assurance by the auditor to the management team regarding their business performance. ...

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Gambling Preference and Audit Decision-Making—From the Perspective of Key Audit Matters Disclosure

... The idea that, due to diminishing sensitivity, an asset's gain overhang should be positively related to its average return, is developed by Grinblatt and Han (2005) and Li and Yang (2013). And the idea that, due to probability weighting, an asset's return skewness should be negatively related to its average return, is studied by Barberis and Huang (2008a) and Baele et al. (2019), among others. ...

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Prospect Theory and Stock Market Anomalies

... While the literature has traditionally focused on the first two moments of the distribution-expected return and variance-higher-order moments have increasingly been studied from multiple perspectives. Skewness, which is usually measured with the third standardized moment, has been indeed associated with several phenomena, effects, and anomalies, such as the long-shot anomaly on the horse track (Golec and Tamarkin 1998) and in online lotteries (Garrett and Sobel 1999), the volatility smile (Barberis and Huang 2008;Boyer and Vorkink 2014), the preference for lottery-like stocks (Barberis 2013;Boyer et al. 2010), the underperformance of IPOs (Green and Hwang 2012), the underperformance of high-skewness stocks (Amaya et al. 2015), and the conglomerate discount (Schneider and Spalt 2016). The common denominator of all these phenomena is that some individuals who find the combination of low probabilities and large outcomes particularly attractive overpay for access to these investments/gambles, which, as a result, tend to yield lower returns. ...

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Skewness-seeking behavior and financial investments

... The idea that mutual fund investors are subject to behavioral biases is examined in Bailey et al. (2011). Furthermore, Kumar et al. (2015) find a negative impact of foreign-sounding names on mutual fund flows, consistent with xenophobia driving investor behavior. Our paper is, to our knowledge, the first to show that gender bias of investors can have an important impact on investment decisions, too. ...

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Sex Matters: Gender Bias in the Mutual Fund Industry

... (Fuller et al., 2002;Chen et al., 2019). It is generally accepted that announcement returns for acquiring large and public targets are normally negative, and conversely positive when acquiring small and private targets (Schneider and Spalt, 2017). We also expect the positive relationship between the private target and acquirer's return here. ...

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Control of Emerging-Market Target, Abnormal Stock Return: Evidence in Vietnam

... We also contribute to the asset pricing literature by showing that a stock characteristic, i.e., the price magnitude, has an impact on future returns. In the current state, the literature only incorporates price magnitude in asset pricing models as a component of lottery-like features of stocks (Kumar, Page, and Spalt 2016). Our findings permit to explain the following empirical observations: 1) small price stocks comove more together than they comove with large price stocks (Green and Hwang 2009) and, 2) the overvaluation of small price stocks Birru and Wang (2016). ...

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Price Magnitude, Trading Behavior and Mispricing: An Experiment

... On the holistic approach, religion has a significant sociological influence on financial markets, affecting he decisions taken by higher management in the organisation (Hilary & Hui, 2009), the economic fluctuations (Guiso et al., 2003), the porrfolio choices made by the investors (A. Kumar et al., 2011), employee compensations (Spalt, 2013), risk-taking (Shu et al., 2012), and disclosure made the organisations (Callen & Fang, 2015;McGuire et al., 2012). Religious influences can also affect the return on investment, and its effect depends on group behaviour and attitudes and indirect factors like gender and nationality (Akerlof & Kranton, 2000;Chen & Li, 2009;Sila et al., 2016). ...

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Market devotion: understanding the Ram Mandir event influence on the Indian stock market using event study method