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Opportunism, overconfidence and irrationality: a puzzling triad

Altanlar, Ali, Amini, Shima, Holmes, Phil and Eshraghi, Arman ORCID: 2023. Opportunism, overconfidence and irrationality: a puzzling triad. International Review of Financial Analysis 88 , 102643. 10.1016/j.irfa.2023.102643
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We empirically investigate managerial decision-making in a corporate context with combinations of rational/irrational managers and investors. There are noticeable differences in insider trading among these groups, particularly when exposed to market-wide and firm-level sentiment. We find that investor sentiment in the presence of managerial overconfidence has a significant impact on insider trading. We also show that managers behave opportunistically when timing stock splits and undertaking insider trading. Our finding linking splits to insider trading is robust under various specifications. In cases where irrational managers coexist with irrational investors, our study demonstrates important implications for the firms involved.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Subjects: H Social Sciences > HG Finance
Publisher: Elsevier
ISSN: 1057-5219
Date of First Compliant Deposit: 31 March 2023
Date of Acceptance: 31 March 2023
Last Modified: 07 Nov 2023 12:11

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