TY  - JOUR
AU  - Baker,Malcolm
AU  - Ruback,Richard S.
AU  - Wurgler,Jeffrey
TI  - Behavioral Corporate Finance: A Survey
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10863
PY  - 2004
Y2  - November 2004
UR  - http://www.nber.org/papers/w10863
L1  - http://www.nber.org/papers/w10863.pdf
N1  - Author contact info:
Malcolm Baker
Baker Library 261
Harvard Business School
Soldiers Field
Boston, MA  02163
Tel: 617/495-6566
Fax: 617/496-5271
E-Mail: mbaker@hbs.edu

Richard S. Ruback
Morgan Hall 495
Graduate School of Business
Harvard University
Soldiers Field Road
Boston, MA  02163
Tel: 617/495-6422
E-Mail: rruback@hbs.edu

Jeffrey Wurgler
Stern School of Business, Suite 9-190
New York University
44 West 4th Street
New York, NY  10012
Tel: 212/998-0367
Fax: 212/995-4233
E-Mail: jwurgler@stern.nyu.edu
AB  - Research in behavioral corporate finance takes two distinct approaches. The first emphasizes that investors are less than fully rational. It views managerial financing and investment decisions as rational responses to securities market mispricing. The second approach emphasizes that managers are less than fully rational. It studies the effect of nonstandard preferences and judgmental biases on managerial decisions. This survey reviews the theory, empirical challenges, and current evidence pertaining to each approach. Overall, the behavioral approaches help to explain a number of important financing and investment patterns. The survey closes with a list of open questions.
ER  -