David Hirshleifer

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David Hirshleifer
Born California
Nationality United States
Institution Paul Merage School of Business at UC Irvine
Field Financial economics, Behavioral economics, including corporate finance, investments, and social influence
Alma mater University of Chicago
University of California, Los Angeles
Contributions information cascades theory; theory of investor under- and over-reactions
Awards Smith Breeden Award, 1999 for outstanding paper in the Journal of Finance
Information at IDEAS/RePEc

David Hirshleifer is an American economist. He is a professor of finance and currently holds the Merage chair in Business Growth at the University of California at Irvine. He was previously a professor at the University of Michigan, The Ohio State University, and UCLA. He researched behavioral finance and informational cascades. In 2007, he was ranked as the 73rd most cited economist by web of science's Most-Cited Scientists in Economics & Business .[citation needed]

Background[edit]

David is the son of Jack Hirshleifer, a deceased UCLA economics professor. He is married to Siew Hong Teoh, Dean's Professor of accounting at the University of California at Irvine. He has served in editorial positions in finance journals such as the Journal of Finance, the Review of Financial Studies, and the Review of Financial Studies.

Research[edit]

Hirshleifer's research areas include the modeling of social influence, theoretical and empirical asset pricing, and corporate finance. He is best known[according to whom?] for his work on information cascades and on investor psychology and its effects on security market underreactions and overreactions. His scholarly work on cascades has also had an impact[according to whom?] on popular economics, with references in mainstream business and economics media.[1][2] He is a contributor to the fields of behavioral economics and behavioral finance.

Much of his work on investor psychology has focused on the effects of biased self-attribution, overconfidence, and limited attention. He and his co-authors were awarded the 1999 Smith Breeden Award for research showing how investor overconfidence, in combination with biased self-attribution, can explain the short-run momentum (finance) and long-run reversal patterns found the returns of many stock markets.[3] More recent work has shown how investor overconfidence may also help explain the forward premium puzzle in foreign exchange markets .[4] In his work on limited attention, he has shown that both distracting events[5] and lack of attention to relevant information[6] can help explain important accounting anomalies such as post earnings announcement drift

Hirshleifer's research has taken several approaches to show that stock returns are not exclusively based on relevant financial information, but also incorporate factors such as investors' mood and superstitions. His paper "Good Day Sunshine: Stock Returns and the Weather," found abnormally high returns in the New York Stock Exchange composite on days that it was abnormally sunny in the New York city area.[7][8] His research on the Chinese initial public offering market has provided evidence that Chinese companies which contain listing code numbers considered lucky in Chinese culture are initially priced much higher than financially similar Chinese firms debuting with unlucky numbers in their listing codes.[9]

In addition to investor psychology, Hirshleifer's research has also argued that regulator psychology plays an important role in financial markets.[10] This research has garnered attention as the recent financial crisis has led to greater a scrutiny about the process of setting financial regulation.[11]

Books[edit]

Together with his father, Jack Hirshleifer, and the economist Amihai Glazer, Hirshleifer is the coauthor of the microeconomics textbook Price Theory and Applications: Decisions, Information, and Markets.

Selected publications[edit]

  • Hirshleifer, Jack., Glazer, Amihai, and Hirshleifer, David, Price theory and applications: Decisions, markets, and information. Cambridge University Press, 7th Edition: 2005.
  • Sushil Bikhchandani, David Hirshleifer, and Ivo Welch. "A Theory of Fads, Fashion, Custom, and Cultural Change as Informational cascades." Journal of Political Economy, Vol. 100, No.5, pp. 992–1026, 1992.
  • Daniel, K.; Hirshleifer, D.; Subrahmanyam, A. (1998). "Investor Psychology and Security Market Under- and Overreactions". Journal of Finance 53 (6): 1839–1885. doi:10.1111/0022-1082.00077. 

References[edit]

  1. ^ “Real leaders do not swim with the shoal,” Michael Skapinker, October 5, 2009
  2. ^ “How the Low-Fat, Low-Fact Cascade Just Keeps Rolling Along,” John Tierney, www.nytimes.com, October 9, 2007
  3. ^ Daniel, K.; Hirshleifer, D.; Subrahmanyam, A. (1998). "Investor Psychology and Security Market Under- and Overreactions". Journal of Finance 53 (6): 1839–1885. doi:10.1111/0022-1082.00077. 
  4. ^ “Investor Overconfidence and the Forward Premium Puzzle,” Craig Burnside, Bing Han, David Hirshleifer and Tracy Yue Wang, forthcoming, Review of Economic Studies
  5. ^ “Driven to Distraction: Extraneous Events and Underreaction to Earnings News,” David Hirshleifer, Sonya Lim, and Siew Hong Teoh, Journal of Finance, 63(5), October (2009):2287-2323 Hirshleifer, D.; Lim, S. S.; Teoh, S. H. (2009). "Driven to Distraction: Extraneous Events and Underreaction to Earnings News". The Journal of Finance 64 (5): 2289. doi:10.1111/j.1540-6261.2009.01501.x.  edit
  6. ^ “Limited Attention, Information Disclosure, and Financial Reporting, David Hirshleifer and Siew Hong Teoh, Journal of Accounting and Economics, 36(1–3), December, (2003), 337–386.Hirshleifer, D.; Teoh, S. H. (2003). "Limited attention, information disclosure, and financial reporting". Journal of Accounting and Economics 36: 337–335. doi:10.1016/j.jacceco.2003.10.002.  edit
  7. ^ “Good Day Sunshine: Stock Returns and the Weather,” David Hirshleifer and Tyler Shumway, Journal of Finance, 58(3), June, (2003):1009–1032. www.jstor.org/stable/3094570
  8. ^ This work is also referenced in the Forbes Magazine article “Blinded by the Light: Sunshine and stocks,” by Brett Nelson, July 21, 2003
  9. ^ Nanyang Business School media coverage
  10. ^ “Psychological Bias as a Driver of Financial Regulation,” European Financial Management, November 2008, 14(5) pp. 856–874. Hirshleifer, David (2008). "Psychological Bias as a Driver of Financial Regulation". European Financial Management 14 (5): 856–874. doi:10.1111/j.1468-036X.2007.00437.x.  edit
  11. ^ "Does Financial Regulation Protect Investors?" John Nofsinger, September 5, 2008, www.psychologytoday.com

External links[edit]

  • [1] David Hirshleifer's website.
  • [2] Most-Cited Scientists in Economics & Business.
  • Sushil Bikhchandani, David Hirshleifer, and Ivo Welch. "A Theory of Fads, Fashion, Custom, and Cultural Change as Informational cascades." Journal of Political Economy, Vol. 100, No.5, pp. 992–1026, 1992.