– The purpose of this second of two companion papers is to further review the insights provided by experimental studies examining financial decisions and market behavior.
Abstract
Purpose
The purpose of this second of two companion papers is to further review the insights provided by experimental studies examining financial decisions and market behavior.
Design/methodology/approach
Focus is directed on those studies examining explicitly, or with direct implications for, the most robustly identified phenomena or stylized facts observed in behavioral finance. The themes for this second paper are biases, moods and emotions.
Findings
Experiments complement the findings from empirical studies in behavioral finance by avoiding some of the limitations or assumptions implicit in such studies.
Originality/value
The author synthesizes the valuable contribution made by experimental studies in extending the knowledge of how biases, moods and emotions influence the financial behavior of individuals, highlighting the role of experimental studies in policy design and intervention.
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Keywords
– The purpose of this paper, and a companion paper (Duxbury, 2015), is to review the insights provided by experimental studies examining financial decisions and market behavior.
Abstract
Purpose
The purpose of this paper, and a companion paper (Duxbury, 2015), is to review the insights provided by experimental studies examining financial decisions and market behavior.
Design/methodology/approach
Focus is directed on those studies examining explicitly, or with direct implications for, the most robustly identified phenomena or stylized facts observed in behavioral finance. The themes for this first paper are theory and financial markets.
Findings
Experiments complement the findings from empirical studies in behavioral finance by avoiding some of the limitations or assumptions implicit in such studies.
Originality/value
The authors synthesize the valuable contribution made by experimental studies in extending the knowledge of the functioning of financial markets and the financial behavior of individuals.
Details
Keywords
Barbara Summers, Christine Ironfield-Smith, Darren Duxbury, Robert Hudson and Kevin Keasey
Abstract
Details
Keywords
Christine Ironfield‐Smith, Kevin Keasey, Barbara Summers, Darren Duxbury and Robert Hudson
Some sections of society have expressed concerns that consumer debt has risen to a dangerous level. However, there is little evidence regarding how consumers themselves feel about…
Abstract
Some sections of society have expressed concerns that consumer debt has risen to a dangerous level. However, there is little evidence regarding how consumers themselves feel about debt. This paper reports up‐to‐date findings from the International Institute of Banking and Financial Services’ Financial Well‐being Survey about consumers’ attitudes towards debt in general and their current levels of borrowing. The implications for the financial services industry and its regulation are discussed.
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Darren Duxbury, Peter Moizer and Wan Azmimi Wan‐Mohamed
This paper seeks to investigate the effect of the PricewaterhouseCoopers (PwC) merger on the market for audit services in the UK. To this end a “what if” analysis is conducted…
Abstract
Purpose
This paper seeks to investigate the effect of the PricewaterhouseCoopers (PwC) merger on the market for audit services in the UK. To this end a “what if” analysis is conducted comparing estimated outcomes prior to the merger with those expected under post‐merger conditions. Particular attention is given to the effect of the merger on the relative performance of the top tier and non‐top tier audit firms.
Design/methodology/approach
The paper employs a Markov chain model to estimate the long‐term market shares of audit firms' pre‐merger and post‐merger. Concurrently, an optimisation model is employed to generate parameters reflecting the relative attractiveness of audit firms and the probability that a client company continues with the current audit firm.
Findings
Prior to the PwC merger, this model would predict a large reduction in the share of the non‐Big Six from 17 per cent to a long run 7 per cent. However, the effect of the PwC merger appears to be that the position of the non‐Big Five has been improved and the model predicts a slight increase in long‐term market share to 18 per cent.
Research limitations/implications
The Markov model employed makes a number of assumptions that may restrict the generality of the implications that can be drawn from the analysis.
Practical implications
The results show that, contrary to the worries of the competition authorities, the long‐term impact of the PwC merger, ceteris paribus, would be to improve the position of the non‐top tier of auditing firms.
Originality/value
Auditor concentrations studies have been mostly descriptive. This paper reports an analytical study of the potential effect of audit mergers on market concentration.