Financial markets and investment decision making




This project investigates issues involving financial markets and investment decision making (both individual and corporate decision making). The project also focuses on the application of finance and financial markets to development economics.


Within the field of financial economics, most basic theoretical models that describe investment decision making are predicated on two primary assumptions: i) there are no market frictions and ii) all agents are rational. However, when we consider how these models describe and are applied in the real world, we know that these fundamental assumptions do not necessarily hold. Numerous market frictions (e.g. transaction costs) can affect investment behavior, and agents do not always behave rationally (e.g. exhibit confirmation bias). Thus, my research focuses on the impact of various market frictions and/or behavioral biases that affect investment decision making. The core of my research addresses questions relating to investment decision making (corporate and individual) and household portfolio allocation with the goal of shedding light on how to better explain observed behavior.

My work in the area of finance applied to economic development primarily deals with microfinance institutions (MFIs) in developing countries. Whereas much of the existing literature dealing with MFIs focuses on ways to "intervene in credit markets" to enable the poor around the world to have access to capital, this research examines ways to harness the international capital markets for the mutual benefit of MFIs and investors.


I have made a good deal of progress on my research. My paper "Stock Market Participation and the Internet" was published in the Journal of Financial and Quantitative Analysis. My paper "Bubbles or Convenience Yields? A Theoretical Explanation with Evidence from Technology Company Equity Carve-Outs" was published in the International Review of Economics and Finance. My paper "What Drives Investment Decision Making? Don't Seek, Don't Find, Don't Change Your Mind" (joint with D. Just) was published in the Journal of Economic Behavior and Organization. My work "Harry M. Markowitz and Modern Portfolio Theory" was published in the International Encyclopedia of the Social Sciences, 2nd edition. My paper "Culture and Entrepreneurship? African American and Immigrant Self-Employment in the United States" (joint with W. Darity) was published in the Journal of Socio-Economics.

During 2011, I had several papers accepted for publication. My paper "Are Firms on the Right page with Chapter 11? An Analysis of Firm Choices that Contribute to Post-Bankruptcy Survival" (joint work with an undergraduate student, C. Sandler) was accepted for publication in Applied Economics Letters. My paper "Immigrant Household Investment Behavior and Country of Origin: A Study of Immigrants to the United States" (joint work with an undergraduate student, S. Seto) was accepted for publication in the International Journal of Finance and Economics. Also, my single-authored paper "Capital Structure and Sustainability: An Empirical Study of Microfinance Institutions" was accepted for publication in The Review of Economics and Statistics.

In addition to my published work, I have made progress on other projects and research papers. Specifically, I would like to highlight a few of my working papers involving investment-decision-making-related research. I presented my research analyzing the affect of mental health on household investment decisions at the Whitman School of Management at Syracuse University. Additionally, I presented my work on team gender diversity and investment decision making behavior at the Iowa State University Economics department. (I previously was awarded a Cornell ISS grant in support of this research.) My work (joint with D. Just & B. Wansink) investigating how traumatic experiences affect investment behavior was written up on The Wall Street Journal's personal finance blog.

In 2011, I was asked to do both a radio interview (WHCU 870 AM News Talk Radio) and a newspaper interview (The Daily) discussing household finance during uncertain economic times.

I also have made progress on my research relating to finance and economic development. My work "The Securitization of Microloans" was published in February 2011 in the book Financial Inclusion, Innovation, and Investments: Biotechnology and Capital Markets Working for the Poor. I also continued working on my paper (joint with G. Salazar and C. Turvey) "The Elasticity of Demand for Microcredit".


I believe that my work sheds light on some previously unexplored and open questions in the finance literature. Since much of my work deals with household financial decision making, I believe that insights from my research are useful to families making financial decisions, particularly during difficult economic times.

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Researchers involved: 

International focus: 

  • United States of America