<p>Bachelor thesis within Business Administration</p><p>Title: Behavioral Finance – The Student Perspective</p><p>Authors: Kamran Sairafi, Karl Selleby, Thom Ståhl</p><p>Tutor: Urban Österlund</p><p>Date: 2008-05-30</p><p>Background: History is full of examples on how humans can create investment</p><p>bubbles through speculation; from the Dutch tulip mania to the</p><p>Dot Com bubble humans have proven to be capable of creating</p><p>economical chaos. Classical economical theories hold the assumption</p><p>that individuals act rationally regarding decisions of an</p><p>economical nature. Since the information on the stock market is</p><p>available to everyone who seeks it, the appearance of investment</p><p>bubbles should not be possible. Behavioral finance is an academic</p><p>branch which seeks to explore these phenomenons through the</p><p>psychological factors affecting humans in investment decisions.</p><p>Purpose: The purpose of the report is twofold. Firstly it is to examine the</p><p>characteristics of investment interested business students enrolled</p><p>at Jönköping International Business School. Secondly it looks into</p><p>the decision-making process and choices of the population</p><p>from the perspective of behavioral finance.</p><p>Method: This research holds an abductive approach and is based on qualitative</p><p>data. Data collection was done through an Internet-based</p><p>questionnaire containing several different questions on the areas</p><p>related to the inquiries. In some cases statistical analysis was conducted</p><p>to test for significant correlation between key characteristics.</p><p>Results: A statistically proven correlation could be discerned between</p><p>trading experience and frequency; for each additional year an individual</p><p>engaged in trading the frequency increased. Herd behavior</p><p>was detected in a majority of the sample. When faced with a</p><p>scenario in which their immediate surrounding opposed their own</p><p>analysis of a stock, the greater part of the sample would reconsider</p><p>their position. Two main sub-groups were detected. The first</p><p>was characterized by its high tolerance of risk; the second subgroup</p><p>was characterized by its inconsistency in behavior.</p><p>Conclusions: This paper found that the behavior of respondents in the chosen</p><p>population was best described as “student behavior”; a somehow</p><p>irrational behavior explained by the learning process in which</p><p>business students exist.</p>

Den finansiella utbildningen präglas av klassisk finansteori som förutsätter att den finansiella marknaden prissätts rationellt. Det finns dock ett gap mellan klassisk finansteori och verklighet. Syftet har därför varit att se hur en investerare genom ökad medvetenhet om dessa anomalier kan förbättra aktiemarknadsanalys och investeringsbeslut. Studien har genomförts med ett kvalitativt tillvägagångssätt och baserats på en litteraturstudie som kompletterats med intervjuer. Under studien har en bild av investeraren som begränsat rationell framträtt i linje med de teorier som har redovisats. Där flockbeteende vuxit fram som det mest påtagliga stödet för att den klassiska finansteorin inte är att likställa med marknadens dynamiska verklighet. I studien har teorierna inom behavioral finance tematiserats och redogjorts för mot bakgrund av det empiriska underlaget. Gemensamt är att investerare tenderar att vara begränsat rationella. Psykologin är ständigt närvarande i marknaden och påverkar investerare i deras beslutsfattande i större utsträckning än vad klassisk finansteori ger utrymme för. Detta är ett av de främsta skälen till varför behavioral finance och dess teorier borde bli ett komplement till den klassiska finansteorin. Slutsatsen är att det finns möjligheter för investerare att förbättra aktiemarknadsanalys och investeringsbeslut genom att ta teorierna inom behavioral finance i beaktning. / The financial education is characterized by classical financial theory that assumes that the fi-nancial market is priced rationally. However, there is a gap between classic finance theory and reality. The aim has been to see how an investor through increased awareness of these anomalies can improve stock market analysis and investment decisions. The study was conducted with a qualitative approach and was based on a literature review supplemented by interviews. During the study, proofs of semi-rational investors have emerged in line with the theories of behavioral finance. Herd behavior has emerged as the most tangible proof that the classical financial theory is not comparable to the dynamic reality of the market. In the study, theories of behavioral finance has been thematised and explained in the light of the empirical basis. In common for those theories is that investors tend to be semi-rational. The psychology is always present in the market and affects investors in their decision making to a greater extent than classic finance theories allow. It is one of the main reasons why it should be implemented as a complement to the traditional financial theories. The conclusion is that there is potential for investors to improve stock market analysis and investment decisions by taking theories of behavioral finance into consideration.

Problems: How would a decision model that takes into account more aspects and dimensions than just the financial aspect look for smaller service compa-nies? What aspects are important to consider in such a decision model? Purpose: The purpose of this master thesis is to develop a decision model based on previous research, to improve decision making in smaller service com-panies – by considering perspectives that traditional investment calcula-tions ignore. Method: The study was qualitative and was based on both primary and secondary data. As data collection method for the development of the model we used literature search on previous research. The study’s primary data consisted of responses from five smaller service companies. The model was evaluated empirically by five smaller service companies to explore the model’s practical relevance and applicability. Conclusions: The study confirmed the need for a comprehensive investment decision model, since it has been clearly shown that aspects other than the tradi-tional calculation methods could have big impact on an investment deci-sion. The key factors for small service companies has shown to be cus-tomer relationships, previous experience, competitors and corporate strategy. The developed model was based on these factors and was con-sidered as useful and interesting by the responded companies. / Problemformuleringar: Hur kan en beslutsmodell som tar hänsyn till fler aspekter och dimens-ioner än enbart det finansiella se ut för mindre tjänsteföretag? Vilka aspekter är viktiga beakta i en sådan beslutsmodell? Syfte: Syftet med denna magisteruppsats är att med utgångspunkt i tidigare forskning utveckla en modell för att förbättra beslutsfattandet i mindre tjänsteföretag, genom att beakta perspektiv som traditionella investe-ringskalkyler förbiser. Metod: Studien var av kvalitativ karaktär och baserades på såväl primärdata som sekundärdata. Som datainsamlingsmetod för framtagandet av investe-ringsmodellen användes till störst del litteratursökning om tidigare forskning. Studiens primärdata utgjordes av responsen från fem mindre tjänsteföretag, som utvärderade den framtagna modellens praktiska rele-vans och applicerbarhet. Slutsats: Studien bekräftade att ett behov av en heltäckande modell för investe-ringsbeslut finns eftersom det tydligt har visat sig att andra aspekter än de traditionella kalkylmetoderna kan ha minst lika stor inverkan på ett investeringsbeslut. De viktigaste faktorerna för mindre tjänsteföretag har utöver det finansiella visat sig vara företagets anställda, kundrelationer, tidigare erfarenheter, konkurrenter och företagets strategi. Den framtagna modellen som bygger på dessa faktorer ansågs av de responderade före-tagen som användbar och intressant.

Den beteendebaserade finansiella teorin framför vikten av att undersöka människan i desshelhet. Detta är något som de klassiska finansiella teorierna ignorerar då de anser attmänniskor handlar fullständigt rationellt. Då investerare på aktiemarknaden influeras av dess tidigare erfarenheter samt information är det av vikt att undersöka och förstå hur individen agerar på aktiemarknaden inför investeringsbeslut. För att kunna besvara denna fråga har en webbaserad enkätundersökning använts där urvalet består av medlemmar från Sveriges Aktiesparares riksförbund. De resultat som framkommit ur undersökningen tyder på att majoriteten av respondenterna på den svenska aktiemarknaden aktivt undviker att försätta sig i risksituationer där de står inför en förlust eller möjligheten att ångra ett beslut de fattat. De lägger ner mycket tid på informationssökning vilket tyder på att de vill fatta välinformerade beslut. Dessa beslut grundas främst på information från nyheter, företags årsredovisningar samt trender i aktiepriset. Undersökningen visar även att dessa tre används i största grad tillsammans vilket tyder på att respondenterna inte baserar sina val på endast en informationskälla. Att aktiesparare på den svenska aktiemarknaden även investerar mindre då det uppstår oro på marknaden tyder på att investerare undviker risk. Detta visas även då respondenterna väljer att avvakta och hålla sig till de investeringsbeslut de redan fattat än att följa flocken då de enbart har en informationskälla att gå efter. / Behavioral finance enhances the importance to see the human as an entity. This is something that the classical financial theories ignore because they view the human as a rational being. But because the investors on the equity market get influence from their previous experience and information it is of importance to understand how the individuals act on the stock market before investment decisions. To answer that question a web-based questionnaire has been made where the sample consists of members from the Sveriges Aktiesparares riksförbund. The results from this study indicate that the majority of the sample on the Swedish equity market actively avoids risky situations where they can lose or regret a decision they have made. They spend much time on gathering information which implies that investors want to make informed decisions. These decisions are mostly based on media, financial statements and share price trends. The study also shows that these three are mostly used together which infer that the respondents do not use only one information source before making an investment decision. The study also displays that stock investors on the Swedish equity market invest much less when there are fluctuations in the market to avoid risk. This also shows when respondents choose to bide and keep the investment decisions he already made instead of following the flock.

Tillage erosion is the dominant soil erosion process in hummocky landscapes. The topsoil lost from the convex upper slope positions (i.e., hilltops knolls, ridges) gradually makes its way to the concave lower slope positions (i.e., foot slopes, toe slopes/depressions), while reducing yield capability in the knolls. The accumulation of topsoil in the concave lower slope positions does not increase yield potential. Landscape restoration is a process by which organic-rich topsoil is removed from lower slope positions and is moved to the knoll positions where it is applied and incorporated as additional topsoil. Field studies on this matter have shown increases in crop yield productivity due to land restoration on the convex upper slope positions. Using a model developed in STELLA ®, this research examines the net monetary benefit of landscape restoration in specific landscape scenarios modeled after areas in Manitoba which are prone to tillage erosion. This study demonstrates that farming operations in hummocky landscapes, experiencing topsoil loss at knolls benefit from landscape restoration as it can lead to positive net returns. In this study, the research shows that landscape restoration, in the Rural Municipality of Lorne (South Western Manitoba), led to revenues greater than restoration costs for arable land used for agricultural purposes. Depending on soil conditions and tillage choices the payback period for landscape restoration ranged from 8 to 18 years.

Finansvärlden har drabbas av flertalet olika ekonomiska kriser de senaste åren och sedan dess råder det osäkerhet i världsekonomin. Osäkerheten gör att de traditionella investeringsbedömningsmetoder som grundar sig i diskonterade kassaflöden blivit allt mer kritiserade och anses som otillräckliga för att göra ett bra investeringsbeslut. Med hjälp av reala optioner kan osäkerheten minska och på längre sikt göra mer gynnsamma investeringar.  Allmännyttiga kommunala bostadsaktiebolag har den unika situationen att de har ramar och regler som gör att de måste göra långsiktiga investeringar och inte kan byta sitt geografiska läge, till skillnad från privata bostadsbolag. I denna unika situation måste det allmännyttiga kommunala bostadsaktiebolaget säkerställa att bolaget har möjligheten och flexibiliteten att göra investeringar som är lönsamma för bolaget. Därför kom vi fram till problemformuleringen: Hur kan reala optioner påverka investeringsbeslut i allmännyttiga kommunala bostadsbolag? Syftet med studien var att beskriva och analysera hur reala optioner kan påverka ett investeringsbeslut i allmännyttiga kommunala bostadsaktiebolag och förklara hur allmännyttiga kommunala bostadsaktiebolag använder sig av reala optioner.  Metoden för studien är en kvalitativ metod där vi intervjuade tre olika allmännyttiga kommunala bostadsaktiebolag i Halland och Nordvästra Skåne. Resultatet av studien blev att reala optioner påverkar investeringsbeslut i allmännyttiga kommunala bostadsaktiebolag. Samhällseffekter som investeringen tillför kan göra att kommunen på lång sikt får en befolkningstillväxt och ekonomisk tillväxt som väger upp förlusten i den enskilda investeringen. Flexibiliteten och möjligheten finns i investeringen som den bidrar med till samhället och kan därmed påverka ett investeringsbeslut på så sätt att även om kalkylen inte visar på ett positivt nettonuvärde genomförs den ändå.

Tillage erosion is the dominant soil erosion process in hummocky landscapes. The topsoil lost from the convex upper slope positions (i.e., hilltops knolls, ridges) gradually makes its way to the concave lower slope positions (i.e., foot slopes, toe slopes/depressions), while reducing yield capability in the knolls. The accumulation of topsoil in the concave lower slope positions does not increase yield potential. Landscape restoration is a process by which organic-rich topsoil is removed from lower slope positions and is moved to the knoll positions where it is applied and incorporated as additional topsoil. Field studies on this matter have shown increases in crop yield productivity due to land restoration on the convex upper slope positions. Using a model developed in STELLA ®, this research examines the net monetary benefit of landscape restoration in specific landscape scenarios modeled after areas in Manitoba which are prone to tillage erosion. This study demonstrates that farming operations in hummocky landscapes, experiencing topsoil loss at knolls benefit from landscape restoration as it can lead to positive net returns. In this study, the research shows that landscape restoration, in the Rural Municipality of Lorne (South Western Manitoba), led to revenues greater than restoration costs for arable land used for agricultural purposes. Depending on soil conditions and tillage choices the payback period for landscape restoration ranged from 8 to 18 years.

abstract: I show that firms' ability to adjust variable capital in response to productivity shocks has important implications for the interpretation of the widely documented investment-cash flow sensitivities. The variable capital adjustment is sufficient for firms to capture small variations in profitability, but when the revision in profitability is relatively large, limited substitutability between the factors of production may call for fixed capital investment. Hence, firms with lower substitutability are more likely to invest in both factors together and have larger sensitivities of fixed capital investment to cash flow. By building a frictionless capital markets model that allows firms to optimize over fixed capital and inventories as substitutable factors, I establish the significance of the substitutability channel in explaining cross-sectional differences in cash flow sensitivities. Moreover, incorporating variable capital into firms' investment decisions helps explain the sharp decrease in cash flow sensitivities over the past decades. Empirical evidence confirms the model's predictions. / Dissertation/Thesis / Ph.D. Business Administration 2013

Os organismos reguladores da Contabilidade ao optarem por um usuário-alvo da informação contábil, na atualidade, tem dado ênfase aos investidores. As normas contábeis visam, em teoria, a geração de informações que sejam úteis e relevantes no processo decisório desses usuários. Entretanto, além do conteúdo, o formato de apresentação das demonstrações contábeis pode afetar a maneira como seus usuários incorporam-na em seus processos decisórios. Considerando os investidores como agentes racionais limitados, supõe-se que esses agentes buscam otimizar suas escolhas e consideram o custo-benefício das informações disponíveis, em vista da sua limitada capacidade de processamento. Nesse contexto, a literatura vem destacando que o formato de apresentação das demonstrações contábeis é capaz de afetar a atratividade das decisões sobre investimentos, o que, por consequência, pode influenciar o modo como as entidades divulgam suas informações financeiras. As preferências pelo formato de apresentação das informações contábeis podem ser intensificadas quando as entidades direcionam esse formato, visando destacar as informações que transmitam uma melhor posição financeira das mesmas, segundo o argumento da miopia do mercado acionário. Neste sentido, este estudo teve como objetivo verificar o impacto do formato de apresentação do Resultado Abrangente e da realização dos Outros Resultados Abrangentes (ORA) na decisão de investimento no mercado de capitais. Para o desenvolvimento da pesquisa, foi realizado um experimento 2 X 2 entre sujeitos, com 171 estudantes de pósgraduação lato sensu (MBA), e duração média de vinte minutos. Para a análise dos dados coletados, foi utilizado a técnica estatística de análise de covariância (ANCOVA), visto que a variável dependente era quantitativa e foram utilizados fatores quantitativos e qualitativos para explicar o comportamento dessa variável. Os resultados encontrados indicam que para as variáveis de investimento em ações e investimento em ações ponderado pela atratividade, a influência do formato de apresentação das demonstrações financeiras, deu-se apenas na variável multiplicativa entre aversão ao risco e o fato de se trabalhar em empresa financeira, como também entre ter experiência em investimento e o fato de se trabalhar em empresa financeira. Porém, como não foi possível segregar o efeito entre elas nas variáveis dependentes, não foi possível afirmar que o formato de apresentação separado do Resultado Abrangente afeta a atratividade de investimento. A temporalidade, em nenhuma das variáveis dependentes, demonstrou impactar a atratividade de investimento. Ao analisar o efeito interativo do formato de apresentação e a temporalidade dos ORA, não foi possível afirmar se houve impacto na atratividade do investimento. Com base nos resultados encontrados, não foi possível afirmar que o formato de apresentação da Demonstração do Resultado Abrangente (DRA) e da realização dos ORA ao Lucro Líquido (LL) impactam na decisão de investimento no mercado de capitais. O estudo possui limitações, principalmente em relação à técnica aplicada, à utilização de estudantes como proxy de investidores não profissionais, variáveis não controladas pelo ambiente experimental e possível desconhecimento do que é o Resultado Abrangente por parte dos respondentes. / Choosing a accounting information target user, nowadays, the accounting regulator bodies have emphasized to investors. In theory, accounting rules aim to generate information which is useful and relevant at those users\' decision-making process. However, besides the content, the financial statements presentation format may affect the way the users incorporate them into their decision making processes. Considering the investors as limited rational agents, this study has assumed that those agents seek to optimize their choices and consider the costbenefit of information availability, because of their limited processing capacity. At this context, the literature has highlighted that the financial statements presentation format can affect the investment decisions attractiveness, which, consequently, can influence how the entities disclose their financial information. The preference for the financial information presentation format may be intensified when entities direct the format in order to highlight the information that convey a better financial position, according to the argument of stock market short-termism. Therefore, this study aimed to determine the Comprehensive Income (CI) presentation format impact and the Other Comprehensive Income (OCI) maturity at investment decisions at the capital market. To develop the research, an 2 X 2 between subjects experiment design was conducted, with 171 MBA students, and average duration of twenty minutes. For data analysis, this study used the statistical technique of analysis of covariance (ANCOVA), as the dependent variable was quantitative and quantitative and qualitative factors to explain the behavior of that variable were used. The results indicate that the variables for investment at shares and weighted attractiveness investment at shares, the influence of the financial statements presentation format has been only in the multiplicative variable between risk aversion and the fact of the participant works at a financial company, as well as having experience in capital market investment and the fact of the participant works at a financial company. However, as it was not possible to segregate the effect on the dependent variables between them, it was not possible to say that the CI presentation format separately affects the investment attractiveness. In all dependent variables, maturity did not demonstrate to impact the attractiveness of investment. By analyzing the interactive effect between presentation format and the OCI maturity, it was not possible to say whether there was an impact on the investment attractiveness. Based on these results, it was not possible to say that the Comprehensive Income Statement presentation format and the OCI realization to Net Income impact on investment decisions at the capital market. The study has limitations, especially related to the applied technique, the use of students as a proxy for investors, experimental environment variables which were not controlled and misconceptions of what is the Comprehensive Income for the respondents.

The concept of sustainable development has increased a lot in recent times and has spread throughout society. A group traditionally known for focusing on financial aspects is the investors, but because of the increased focus on sustainability from different stakeholders many of them also focus on including corporate social responsibility information in their investment decisions. Through a qualitative approach this study is meant to explore how investors, especially fund managers, implement sustainability data into their investment decisions, what motivates them to invest sustainably and how they perceive the configuration of the reports. To achieve this purpose, eleven respondents with considerable knowledge and experience of working with sustainability were interviewed. The results indicate that the respondents do use sustainability data in their investment decision and that they also use different kind of sources for obtaining this information. There are several different reasons why they work with sustainable investments including minimizing risks, profits, customer demand and personal interests. Lastly, there is a desire among the respondents for a standardized framework regarding the sustainability reports similar to the financial equivalent.