ANN ARBOR — Can companies buying back their own stock time the market to get a better price? This was an unanswered question in corporate finance until now.
New research from University of Michigan finance professor Amy Dittmar indicates that some companies do time their repurchases to buy at a low price. It’s a way companies can make a shareholder-friendly move and a positive return on an investment. (more…)
The overuse of financial contracts known as derivatives – which were designed to help companies hedge against risk – was widely blamed for triggering the economic crisis of 2008. None other than Warren Buffet has attacked derivatives as “time bombs – both for the parties that deal in them and the economic system.”
But now, for the first time, researchers have found that hedging can increase firm value. (more…)
COLUMBUS, Ohio – If experts thought they knew anything about individual investors, it was this: their emotions lead them to sell winning stocks too soon and hold on to losers too long.
But new research casts doubt on this widely held theory that individual investors’ decisions are driven mainly by their feelings toward losses and gains. In an innovative study, researchers found evidence that individual investors’ decisions are primarily motivated by their beliefs about a stock’s future. (more…)
