The next Brown Bag Seminar is scheduled for Thursday, March 30th, 2017, 13.00-14.00 in seminar room D4.0.019.

Our speaker will be Doron Avramov (The Jerusalem School f Business Administration).

He will give a talk on "

Bonds, Stocks, and Sources of Mispricing

”.

Abstract: This paper shows that investor sentiment and financial distress jointly drive bond and equity overpricing underlying market anomalies. In particular, the intersection of high sentiment and rating downgrades of distressed  firms characterizes episodes of inflated bond and stock prices to the extent that assets are correctly priced beyond such episodes. Overpricing among bonds and stocks emerges when sentiment-driven investors consistently underestimate the implications of  financial distress for high credit risk firms.