Syfte: Uppsatsen ska undersöka hur svenska icke professionella investerare använder årsredovisningen i sina val av kapitalplacering och vilken nytta årsredovisningen har i valet. Uppsatsen ska även undersöka om icke professionella investerare har några problem i tolkningen av årsredovisningar. Metod: Uppsatsen använder både kvantitativ och kvalitativ metod i form av intervjuer och enkät. Slutsats: 50 % av de icke professionella investerarna anser att de har nytta av årsredovisningar vid kapitalplaceringsbeslut. VD-ordet, förvaltningsberättelsen och revisionsberättelsen används mest. Det som upplevs svårast är värderingar i balansräkningen, kassflödesanalys och noter. Förslag till fortsatta studier: Genomföra en liknande undersökning med intervjuer av icke professionella investerare. Ta reda på vilken hänsyn det tas till investerare med lägre ekonomisk kunskap vid upprättandet av årsredovisningar. / Aim: The essay should examine how Swedish non-professional investors use annual reports in their choices of capital investment in securities and what benefits the annual report has in their choices. The essay should also examine if the non-professional investors have some problems in their interpretation of the annual reports. Method: The essay use both qualitative and quantitative methods in form of interviews and survey. Conclusion: 50% of the non-professional investors think that they have benefits from the annual report in their capital investment decisions. CEO:s statement in the annual report, management report and auditor's report is used the most. The most difficult parts are the values in the balance sheet, cash flow statement and notes. Suggestion for future research: Conducting a similar study with interviews with non professional investors. Find out which account is taken of investors with less financial knowledge in the preparation of annual reports.

A large body of literature has explored that investor sentiment and customer satisfaction have been viewed as important metrics to evaluate asset prices, little attention has been paid to whether investor sentiment influence the impact of customer satisfaction on stock returns. This paper examines whether customer-based portfolios can create abnormal returns by employing different risk-adjusted models in different sentiment states. This study finds that portfolio composed of firms with better customer satisfaction can continuously beat the benchmark index and create abnormal returns when adopting different risk-adjusted models. Furthermore, portfolio with better customer satisfaction can significantly outperform the market even in pessimistic and neutral investor sentiment state. This is because of higher CS firms can create stable business cash flows, alleviate customer complaints and strengthen customer loyalty, which will create insurance-like protection for firms in pessimistic investor state, which results in significant abnormal returns even in pessimistic investor state. These results suggest that customer-based metrics are valuable information that should be included in financial models.

Due to the rapid revolution in trading strategies, market environment is very different from the past, and the market intervention in national stock exchanges has been taken seriously again . However, very few studies discussed the rule-based trading suspension for individual stocks in the past, and most of them only focused on the impact of trading halt on market performance. For this reason, this study in addition to measures impact of market performance, another major analysis focuses on the differences between individual and institutional investors order behavior under different halt conditions. We try to understand whether the current halt mechanism achieves the purposes of reducing the information asymmetry and the abnormal volatility. The market performence empirical results show that transitory trading halt can reduce the overreaction of re-opening, but the halt of follow-up 5 minutes of the liquidity decreased, and volatility increased. Next, we find the individual investors order aggressive tend to be conservative in the period of suspension. In contrast, Institutional investor behavior will tend to be more positive with higher information asymmetry and will not be affected by the trading halt. Moreover, from follow-up 20 minutes individual-institutional transaction VWAP ratio, we find that the trading halt will improve the performance of individual investors transactions.

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In theory, all relevant information is incorporated in stock prices timely and completely and therefore prices respond related news quickly in efficient financial markets. In today's information age, technological advances provide investors with fast access to a vast number of information resources. One can argue that these advances can help market efficiency due to easy and quick access to relevant information. On the other hand, these technological advances not only facilitate availability of relevant information but also facilitate availability of all types of information--both relevant and irrelevant information signals. In essence, one can argue that there is (over)exposure to information which may come with a cost in the form of distraction and limited attention to relevant information. After considering these previous points, this study sheds more light on investor distraction and its impact on stock prices in two essays. My first essay introduces a new type of investor distraction, which arises from the discrepancy between investors' mood state and the content of the firm news. My second essay shows the importance of culture to explain investors' information processing .Moreover; the findings of my second essay are consistent with an investor distraction effect caused by cultural factors which are assumed as irrelevant factors in investors' information environment. In my first essay titled "Overexposure to Unrelated News and Investor Distraction: Earnings News and Big Sports Games", I use mood-generating events - proxied by big sports games -that contain no information on firm fundamentals but occur concurrently with earnings vi announcements to test the hypothesis that investors' attention shifts away from financial news that is incongruent with investors' mood states, thereby leading to underreaction. I empirically confirm the existence of mood-conflicting distraction. I find stronger post-earnings announcement drift and delayed response ratio, and weaker immediate volume reaction, when the earnings announcing firm's local investors' sports mood is inconsistent with the earnings news' content (good vs. bad). This effect strengthens with firm's proximity to the location of the mood source. In my secon essay titled "Post-Earnings Announcement and Religious Holidays", I show the role of culture, proxied by religion, in financial information processing and the impact of culture on financial outcomes through investor inattention. I examine whether and how the religious holiday calendar affects investors' information processing by investigating price reactions to U.S. firms' earnings announcements that occur during Easter week. I find different patterns for short-term and delayed responses to Easter week earnings surprises. Moreover, there is a stronger immediate (delayed) reaction to good (bad) news, primarily found in less religious, predominantly Protestant areas. The results are consistent with a religion-induced investor distraction effect. The findings also show the role of religious characteristics in firms' information environment and the locality of stock prices.

Range disclosures of estimates, whether in an expanded auditor’s report or by managers, would be intended to communicate measurement uncertainty to investors. Knowing this information should enhance investors’ ability to identify aggressive reporting, thereby possibly increasing investor actions taken against managers. In a laboratory experiment, I find that students in a managerial reporting role (hereafter, managers) report less aggressive estimates of an asset’s value when ranges of possible estimates accompany their point estimates reported to students in an investor role (hereafter, investors), such that investor actions against managers do not increase when ranges are disclosed. However, this decline in aggressiveness is concentrated in managers with a greater degree of association with one or more of the following personalities: psychopathy, narcissism, and Machiavellianism (collectively deemed the “Dark Triad” in psychology). Notably, this result occurs because, in a regime of no range disclosure, these managers report relatively aggressive estimates to investors, irrespective of their private information about the asset’s true value, while managers exhibiting low association with any of these personalities report estimates that more accurately reflect their private information. Range disclosure disciplines the former group of managers, which suggests that requiring range disclosure would discipline the reporting of the managers who are the most prone to take advantage of investors absent the communication of this information. / text

This dissertation consists of three essays on the role of social values in financial markets. Chapter 1 uses geographic variation in religious concentration to identify the effect of people's gambling behavior in financial market settings. We argue that religious background predicts people's gambling propensity, and that gambling propensity carries over into their behavior in financial markets. We test this conjecture in various financial market settings and find that the predominant local religion predicts variation in investors' propensity to hold stocks with lottery features, in the prevalence of broad-based employee stock option plans, in first-day returns to initial public offerings, and in the magnitude of the negative lottery-stock return premium. Collectively, our findings indicate that religious beliefs regarding the acceptability of gambling impact investors' portfolio choices, corporate decisions, and stock returns. In Chapter 2 I examine the impact of social norms against holding certain types of stocks (e.g. "sin stocks", or stocks with lottery features) on trading decisions and portfolio performance. I argue that trades which deviate from social norms are likely to reflect stronger information. Consistent with this hypothesis, I find that the most gambling-averse institutions earn high abnormal returns on their holdings of lottery stocks, outperforming the holdings of the most gambling-tolerant institutions. An analysis of institutions' sin stock holdings provides complementary evidence using another dimension of social norms, supporting the hypothesis that trades which deviate from norms reflect stronger information. In the third essay, we conjecture that people feel more optimistic about the economy and stock market when their own political party is in power. We find supporting evidence from Gallup survey data and analyze brokerage account data to confirm the impact of time-varying optimism on investors' portfolio choices. When the political climate is aligned with their political preferences, investors maintain higher systematic risk exposure while trading less frequently. When the opposite party is in power, investors exhibit stronger behavioral biases and make worse investment decisions. Investors improve their raw portfolio performance when their own party is in power, but the risk-adjusted improvement is economically small. / text

Credit derivative market has experienced an exponential growth during the last 10 years with credit default swap (CDS) as an undoubted leader within this group. CDS contract is a bilateral agreement where the seller of the financial instrument provides the buyer the right to get reimbursed in case of the default in exchange for a continuous payment expressed as a CDS spread multiplied by the notional amount of the underlying debt. Originally invented to transfer the credit risk from the risk-averse investor to that one who is more prone to take on an additional risk, recently the instrument has been actively employed by the speculators betting on the financial health of the underlying obligation. It is believed that CDS contributed to the recent turmoil on financial markets and served as a weapon of mass destruction exaggerating the systematic risk. However, the latest attempts to curb the destructive force of the credit derivative for the market by means of enhancing the regulation over the instrument, bringing it on the stock-exchange and solving the transparency issue might approve CDS in the face of investor who seeks to diminish the risk of his financial portfolio. In our thesis we provide empirical evidence of CDS ability to fulfil the diversification function in the portfolio of such credit sensitive claims as bonds and stocks. Our data for the empirical analysis consist of 12 European companies whose debt underlies the most frequently traded single-name CDS with the maturity of 5 years. Through multivariate vector autoregressive models we have tested the intertemporal relation between stock returns, CDS and bond spreads changes as well as the magnitude of this relation depending on the stock market state.   The results we have achieved for our sample are the following: 1) stock returns are mainly negatively related to the CDS and bond spread changes; 2) stock returns are the least affected by both credit spread changes, whereas changes in bond spreads are the best explained by the stock and CDS market movements; 3) the strength of the relation between three variables differs over the time: the relationship between stock returns and CDS spreads is the most dominant during the pre and post-crisis periods, while during the financial crisis time the relation between stock returns and bond spread changes as well as that of between both credit spreads comes to the foreground.   The above described relations between the three markets serve as a proof of the possibility to work out diversification strategies employing CDS. During the time of turbulence on the markets the investor may exert bigger diversification gains with the help of CDS. Thus, in spite of all the recent blame of the instrument from the investor perspective it is still remains one of the sources of profit.

This dissertation investigates why a substantial number of common stocks is held by companies in many countries, especially in Japan. Chapter 1 gives an overview of historical and legal issues regarding corporate shareholding in Japan. Chapter 2 reviews how researchers have, theoretically and empirically, approached corporate shareholding issues. Chapter 3 elaborates on a corporate shareholding model which incorporates a standard principal-agent model with Aoki's managerial risk sharing argument (Aoki, 1988). The model finds that a risk-averse manager of a firm invests in other firms if managerial reward is linked with the value of the firm she manages, and if the operating profits of investing and invested firms are negatively correlated. Corporate stock investment is larger if the invested (and/or investing) company's operating profit is less volatile and/or if the covariance in the operating profits of the companies is more strongly negative. Although a stronger link between corporate performance and managerial reward increases managers' incentive to exert efforts, it also increases the risk that managers must bear. If the risk is too high, managers would leave their companies. Corporate stock investment reduces the risk, and enables shareholders to offer a higher incentive to the managers and to earn a higher (expected) income. Chapter 4 examines three major arguments concerning the rationale behind the practice of corporate shareholding: the competitive-effect, risk-sharing, and control-rights arguments. Predictions drawn from those arguments are tested using panel data of 186 Japanese corporate group firms from 1980 to 1988. The main findings of this study are as follows. (1) The competitive-effect argument is clearly supported by the data. Firms in the same industry do tend to invest more in one another. (2) The evidence in favor of the risksharing argument is weaker — although firms with less risky operating profits tend to attract more investment, the relationship between investment and the covariance in the firms' operating profits is ambiguous. (3) The strongest empirical support is given to the control-rights argument. Indeed, the evidence confirms that a firm is more likely to invest in other firms that hold more of its own shares. Chapter 5 concludes this dissertation.

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.