BEHAVIORAL FINANCE
Année du cours : 1 année(s)
Etablissement : IÉSEG School of Management
Langue : English
Formation(s) dans laquelle/lesquelles le cours apparait :
Période : S1
Courses: Corporate Finance. Basic knowledge of Utility Theory and Probability
Theory.
Software: Knowledge of statistical analysis using Excel spreadsheet (or, Eviews,
Stata, R, …) will significantly reduce the estimated personal workload for this course.
The traditional finance paradigm is based on models in which agents (investors and
managers) are rational and that perfect arbitrage leads to optimal valuation of assets.
However, this pardigm is found to be insufficient in explaining « anomalies », such as
the compnay’s payout policy, Initial Public Oferring underpricing, short-term Mergers
& Acquisition synergies and stock price bubbles. In this course, we extend the
traditional financial-models with behavioral models to explain some well-known
stylized facts in finance. At the end of the course, the students will have learnt how to
empirically validate behavioral models.
1. Psychology (Prospect Theory) and Limites to Arbitrage
2. Initial Public Offerings (underpricing),
3. Mergers & Acquisitions (short-term synergies),
4. Capital Structure (catering to demand for dividends).
