Online equity crowdfunding is a way for entrepreneurs to raise capital that has exploded in popularity in recent years. Information asymmetry and poor investor protection are threats for the long-term legitimacy of equity crowdfunding. In this study we examine the quality of the financial information shared on the crowdfunding platforms, since it is what investors have to rely on when making investment decisions. We evaluate the financial information both quantitatively and qualitatively to assess the quality in terms of accuracy and adequacy. More specifically we examine the financial forecasts primarily with quantitative methods and valuation primarily with qualitative. In total, we examine 22 companies on the Swedish equity crowdfunding platform FundedByMe. The financial forecasts are compared with the outcome from the income statements to find out if they are systematically biased. The results show that the financial forecasts are systematically overestimated. Based on previous research we have suggested two explanations for the overestimations; either overconfidence bias and/or strategic behavior. We also find the information regarding assumptions and methods used in the valuation to be inadequate. We perceive that investors needs higher quality financial information in terms of accuracy and adequacy to make well-formed investment decisions. Our recommendations are therefore to regulate equity crowdfunding further and impose higher demands on information quality. Otherwise equity crowdfunding will possibly end up as a market of “lemons”.

Face au constat d'une vision assez négative de la surconfiance managériale dans les travaux académiques en économie et gestion (analysée dans le premier chapitre de cette thèse) nous présentons des implications plus positives de ce biais sur la performance des entreprises. Ainsi, dans le Chapitre 2 nous réalisons une étude empirique qui tient compte de l'endogénéité de la surconfiance managériale et de sa contingence aux facteurs contextuels tels que la gouvernancede l'entreprise et la rémunération du dirigeant. Nous montrons que lorsque nous corrigeons le biais d'endogenéité dans les données (via la méthode de double différence) nous observons une relation positive entre la surconfiance managériale et la performance. Puis, dans le Chapitre 3 nous proposons un modèle théorique qui vise à présenter un médiateur potentiel de cette relation. Notre modèle prédit qu'un dirigeant surconfiant introduirait des tournois incitatifsau sein de l'équipe managériale plus souvent qu'un dirigeant rationnel. Ces tournois auraient pour effet d'accroitre le niveau d'effort total fourni par les membres de l'équipe managériale et d'améliorer ainsi la performance de l'entreprise. Enfin, dans le Chapitre 4 nous démontrons via une étude sur des entrepreneurs naissants que deux types de confiance différents, la confiance en ses propres compétences et la confiance en la réussite de l'opportunité entrepreneuriale, ontdes effets opposés sur la probabilité de réussite du processus entrepreneurial. Le premier type a un effet positif alors que le second a un effet négatif sur la probabilité de créer une entreprise opérationnelle. / In light of the observation of a globally negative vision of managerial overconfidence in the economics and management literature (analyzed in the first chapter of this PhD Thesis) we present some positive implications of the overconfidence bias on firm performance. In Chapter 2 we perform an empirical study that accounts for the endogeneity of managerial overconfidence and its contingence upon contextual factors such as corporate governance and managerial compensation. We show that when we control for the endogeneity biais in the data (through the difference-in-differences method) we observe a positive relationship between managerial overconfidence and firm performance. Then, in Chapter 3 we propose a theoretical model that presents one potential mediator of this positive relationship. Our model predicts that an overconfident CEO would implement incentivizing tournaments between the top management team membersmore often than a rational CEO. These tournaments would lead to an increase in the total effort supply of top executives and hence improve the performance of the firm. At last, in Chapter 4 we show, through a study of nascent entrepreneurs, that two different types of confidence, confidence in one's own abilities and confidence in opportunity outcomes have opposed effects on the likelihood of a successful start-up process. The first type has a positive effect whereas the second one has a negative effect on the probability to create an operating business.

Behavioural economics has established that cognitive biases such as the overconfidence bias impact managerial decision-making. Literature has also shown that different levels of management require different skills, values and decision-making processes and styles. It would likely follow that cognitive biases would impact different levels of management in varying ways. This research seeks to expand on current literature in drawing on principles of behavioural economics to further investigate the overconfidence bias and its relationship with different levels of management. This research also seeks to explore whether cognitive ability or reflection can further explain any relationship between overconfidence and level of management. A sample of managers at professional services firms was surveyed using various assessments of overconfidence. Utilising statistical techniques, it was found that in fact there were differences in overconfidence between levels of management. Specifically, middle management appeared to display different overconfidence tendencies than upper and lower management levels. The relationship between cognitive ability, level of management and the overconfidence bias also appeared to be significant enough to warrant further investigation. The results also showed insight into problems with the current definitions of overconfidence. Based on the findings, this study concludes by providing several business and academic recommendations. / Dissertation (MBA)--University of Pretoria, 2012. / Gordon Institute of Business Science (GIBS) / unrestricted

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Syfte: Syftet med studien är att förstå vilka orsaker som kan förklara svenska aktieinvesterares irrationalitet med hänsyn till deras informationsbearbetning.  Metod: Undersökningen är genomförd av en kvantitativ forskningsmetod med inslag av kvalitativa aspekter i form av webbaserade enkäter. Enkäten är prestrukturerad då de flesta undersökningsfrågor är stängda men består även av öppna svarsalternativ. Enkäten publicerades på olika aktieforum samt sociala nätverk där studiens urval består av de medlemmar som valde att delta i undersökningen.   Teori: Behavioral Finance ställs mot den effektiva marknadshypotesen och ligger till grund för undersökningen. Overconfidence, Herd Behavior och Egocentricity är de tre psykologiska faktorerna som studeras inom Behavioral Finance.  Slutsats: Slutsatsen för Overconfidence är att män har mer övertro än kvinnor och anledningen till detta förklaras av deras bakgrund. Studien visar att orsakerna till förekomsten av Herd Behavior är bland annat att investerare säljer sina aktier när deras omgivning gör det, till följd av rädslan att deras omgivning vet något de inte vet samt att de inte vill hamna i en sämre sits om aktien går ner. Anledningen till att Egocentricity uppstår hos aktieinvesterare förklaras av att aktien de äger får ett högre värde hos deras sinnen, vilket gör att priset på aktien sällan känns tillfredsställande. Investerare agerar dessutom annorlunda beroende på vilka informationskällor de använder samt hur mycket tid de lägger ner på information. / Purpose: The purpose of this study is to understand the reasons that can explain Swedish stock investors irrationality with consideration to their information processing.  Method: The survey was conducted using a quantitative research method with elements of qualitative aspects in form of web-based questionnaire. The survey was prestructured with closed survey questions, but also consists of open answers. The questionnaire was published on various websites for stock investors and social networks where the study sample consists of the members who chose to participate in the survey.   Theory: Behavioral Finance contradicts The Efficient Market Hypothesis and sets the basis for this survey. Overconfidence, Herd Behavior and Egocentricity are the three psychological factors studied in Behavioral Finance.  Conclusion: The conclusion of Overconfidence is that men are more overconfident than women, and the reason for this is explained by their backgrounds. The study shows that the causes for the occurrence of Herd Behavior include that investors sell their stocks when their surroundings do it, because of the fear that their surroundings knows something they don’t and they do not want to end up in a worse seat if the stock goes down. The reasons that Egocentricity occurs is explained by the stock they own gets a higher value in their minds, making the price of the stock rarely feeling satisfying. Investors also acts differently depending on which sources of information they use and how much time they devote to information.

Purpose: The purpose of the study is to examine how psychological factors affect shareholders and investors, and see which gender differences there are in their investment decisions. Method: The survey was based on a quantitative method with elements of qualitative aspects in form of a questionnaire. The questionnaire were answered by investors and shareholders at various websites for stock investor. The survey consisted of a total of 13 questions with both open and closed answers. Theory: The survey focused on four elements within behavioral finance. These factors are overconfidence, herd behavior, anchoring and familiarity bias. The efficient market hypothesis suggests full rationality which is the opposite of what behavioral finance advocates. Conclusion: Psychological factors affect investors and shareholders in their investment decisions. More men than women considered themselves to be better than average which indicates that they have a stronger overconfidence. In terms of herd behavior the respondents did not show that they follow the group when they have their own information, however, the opposite appeared when they had imperfect information. Women were affected by herd behavior more than men were. Women were affected more than men regarding familiarity bias. Anchoring also proved that the factor had an influence on the respondents but it was not a major difference between men and women.

Lean Startup Teori (LST) har kommit att växa i popularitet inom entreprenörskap världen över. LST är en teori som för startup- företag skall minska kostnader och tid samt för entreprenörer skapa en arbetsprocess som underlättar beslutsfattande. I denna studie har länkar mellan problematik inom beslutsfattande (overconfidence, prospektteori, gloriaeffekten samt escalation of commitment) och LST undersökts genom semistrukturerade intervjuer med entreprenörer i Sverige. Vidare har generella lärdomar från de olika fallen  undersökts för att belysa fördelar och svagheter inom LST. Då pionjärer inom LST hävdat att teorin lämpar sig inom alla  sektorer och branscher har även detta  påstående granskats. Studien fann att LST- processer motverkar de negativa effekterna associerade med overconfidence och  gloriaeffekten men kan inte hantera de  problem som introduceras i samband med prospektteori samt escalation of commitment. Vidare når studien slutsatsen att LST kräver en fit med varje enskilt startup - företag och fungerar bäst inom branscher och industrier som har låga inträdesbarriärer form av kapitalkrav. / Lean Startup theory (LST) has been growing in popularity in entrepreneurship worldwide. LST is a theory for startup companies to reduce costs and time, and for entrepreneurs to create a process that eases decision-making. In this study, links betweenproblems of decision making (overconfidence, prospect theory, the halo effect and escalation of commitment) and LST has been examined through semi-structured interviews with  entrepreneurs in Sweden. Furthermore, general lessons from the cases has been studied to illustrate advantages and  weaknesses of LST. As pioneers of LST argue that the theory is suitable for all  sectors and industries, this claim has also been examined. The study found that LST processes counteract the negative effects associated with overconfidence and the halo effect, but cannot handle the problems that areintroduced in conjunction with the  prospect theory and escalation of  commitment. Furthermore, the study reaches the conclusion that LST requires a fit with each startup company, and functions best in sectors and industries where the entry barrier of capital requirement is low.

Die vorliegende Arbeit widmet sich der Darstellung des Kunstmarktgeschehens und der Entscheidungsfindung von Galeristen. Ziel ist es aufzuzeigen, welche Auswirkungen Erfahrung und Expertise sowie ein begrenzter Informationszugang auf die angewandte Entscheidungslogik und das Entscheidungsverhalten von Galeristen haben. Sie behandelt die Thematik der kausalen und effektualen Entscheidungslogik und der unterschiedlichen Entscheidungsansätze von Novizen und Experten. Gemäß Sarasvathy (2001) tendieren Novizen zu kausaler und Experten zur effektualer Logik. Sie unterscheiden sich durch ihren Grad an Expertise, welche auf Deliberate Practice, Erfahrung und kontinuierlich erbrachter überragender Leistungserbringung basiert (Ericsson 2006; Mitchell et al. 2005:3, Dew et al. 2009: 289). Gegenstand der Untersuchung war die Beantwortung der Fragen, ob sich die Berufserfahrung, das Geschlecht und der akademische Werdegang des Galeristen auf die angewandte Entscheidungslogik auswirken. Die Ergebnisse belegen, dass die Berufserfahrung einen signifikanten Einfluss auf die angewandte Entscheidungslogik der Galeristen hat: Novizen-Galeristen präferieren die kausale Entscheidungslogik, Experten-Galeristen die effektuale. In Bezug auf das Geschlecht ist nachweisbar, dass Galeristinnen am häufigsten die kausale Entscheidungslogik anwenden. Dasselbe Bild stellt sich bei Galeristen – ungeachtet ihres Geschlechts – ohne akademische Ausbildung ein. Die Arbeit setzt zudem ihren Fokus auf die experimentelle Untersuchung des Preisbildungsverfahrens durch Galeristen, wobei insbesondere der etwaige Einfluss der Overconfidence im Mittelpunkt steht. Die Studienergebnisse lassen darauf schließen, dass ein signifikantes Maß an Overconfidence dazu führt, dass die Preise für Kunstwerke niedriger gesetzt werden. Zudem konnte ein Wissenseffekt festgestellt werden: Je versierter ein Galerist im Kunstmarkt ist, desto höher setzt er den Preis für ein als „ausstellungswürdig" deklariertes Kunstwerk. / The objective of this dissertation is to shed more light on the primary art market and the decision-making processes of its protagonists, the gallery owners. The doctoral thesis focuses on the potential impact of experience and expertise on the gallerists‘ applied decision-making logic and the consequences of limited access to information for the gallery owners‘ decision-making behaviour. In particular, the distinction between novices and experts and their decision-making is addressed. According to Sarasvathy (2001), novices tend to use a predictive decision-making logic (causation), whereas experts apply a non-predictive logic (effectuation). They differ in their level of expertise, which is based on deliberate practice, experience and continuous outstanding and superior performance in a particular domain (Ericsson 2006; Mitchell et al. 2005:3, Dew et al. 2009: 289). The studies conducted examined whether the professional experience, gender and academic career of the gallery owner affects the applied decision-making logic. The results show that professional experience has a significant influence on the applied decision-making logic of the gallery owner: novice-gallerists prefer the causal approach, expert gallery owners favour the effectual decision-making logic. With regard to gender and the academic career, it can be proven that female gallery owners and gallerists without academic training most often apply the causal decision-making logic. This dissertation also focuses on the experimental analysis of the influence and impact of overconfidence on the price setting processes of gallery owners. The results indicate that a significant level of overconfidence leads to lower prices for works of art. In addition, a knowledge effect could be observed: the more sophisticated the gallery owners are, the higher will be the price they set for an art work they consider to be suitable for an exhibition.

Bakgrund: Värdestrategier har historiskt sett ofta genererat överavkastning relativt index. Huruvida en värdestrategi lyckas eller ej återspeglas i dess förmåga att identifiera och utnyttja felprissättningar på aktiemarknaden. Å andra sidan menar den effektiva marknadshypotesen att investeringsstrategier inte kan överavkasta marknaden via strategin i sig, utan att eventuell överavkastning beror på slumpen. Av dessa anledningar blir det intressant att analysera huruvida Greenblatts (2010) The Magic Formula kan generera överavkastning gentemot marknaden. Dessutom blir det intressant att testa om en modifierad strategi har en högre sannolikhet att lyckas med detta.  Syfte: Syftet med denna studie är att analysera huruvida The Magic Formula-strategin, och en modifierad The Magic Formula-strategi kan överavkasta den svenska aktiemarknaden över tid.  Metod: Studien har en kvantitativ strategi med en deduktiv ansats och en longitudinell design. Historiska aktiekurser har hämtats för att testa strategierna, där två fiktiva portföljer har skapats. Resultatet av dessa portföljers prestation har sedan analyserats samt testats statistiskt.  Slutsats: Resultatet visade att The Magic Formula mellan 2011–2022 inte lyckades överavkasta index. En modifierad variant av The Magic Formula lyckades dock överavkasta index avsevärt. Skillnaderna i medelavkastning gick dock inte att säkerställa statistiskt, vilket betyder att den genererade över- och underavkastningen mycket möjligt kan ha varit slumpmässig.  Nyckelord: The Magic Formula, EMH, Aktiv portföljförvaltning, Värdeinvestering, Overconfidence, Riskuppfattning, Flockbeteende / Background: Value investing has historically often generated excess returns relative to index. Whether a value strategy succeeds is reflected in its ability to identify and exploit mispricings in the stock market. On the other hand, the effective market hypothesis indicates that investment strategies cannot overperform the market via the strategy by itself, but that any excess return is random. For these reasons, it would be interesting to analyze whether Greenblatt's (2010) The Magic Formula can generate excess returns relative to the market. In addition, it would be interesting to test whether a modified strategy has a higher probability of succeeding.  Purpose: The purpose of this study is to analyze whether The Magic Formula strategy, and a modified The Magic Formula strategy can outperform the Swedish stock market over time.  Method: The study has a quantitative strategy with a deductive approach and a longitudinal design. Historical stock quotes have been obtained to test the strategies, where two fictitious portfolios have been created. The result of these portfolios' performance has then been analyzed and statistically tested.  Conclusion: The results showed that The Magic Formula between 2011–2022 failed in overperforming the market. However, a modified version of The Magic Formula managed to outperform the index considerably. Though, the differences in average returns could not be ensured statistically, which means that the generated over- and underperformance may very well have been random.  Keywords: The Magic Formula, EMH, Active portfolio management, Value investing, Overconfidence, Risk perception, Herd behaviour

Mycket forskning har gjorts på konformitet och dess negativa konsekvenser. Denna experimentella studie var en delvis replikering av M. Rosander och O. Erikssons (2012) studie om konformitet på internet men med fokus på hur konformitet kan ge förbättrade resultat. Det övergripande syftet var att undersöka om det lönade sig att göra som andra, relationen mellan konformitet och säkerhet samt förekomsten av överkonfidens. Två enkätstudier i form av kunskapstest genomfördes med 38 respektive 92 studenter. Deltagarna delades upp i en konformitetsgrupp som fick information om tidigare deltagares svar och en kontrollgrupp som inte fick denna information. Resultatet visade att konformitet ledde till fler rätta svar samt att det förekom ett positivt samband mellan säkerhet och antal rätta svar. Ingen överkonfidens kunde bevisas men däremot förekom en underskattning av antal rätta svar. Studiens slutsats var att det mest lönade sig att göra som andra vid medelsvåra uppgifter. Vid mycket svåra uppgifter fanns det ingen fördel i att följa strömmen.