shefrin行为公司金融课件Chap04.pptVIP

Chapter 4 PERCEPTIONS ABOUT RISK AND RETURN Behavioral Corporate Finance by Hersh Shefrin RepresentativenessRisk and Return In practice, managers appear to rely on representativeness when forming judgments about risk and return. They are prone to view the stocks of good companies as representative of good stocks. As a result, they come to judge that risk and return are negatively related. Unisys and Intel Comparative Data Unisys just reported a decline in sales, year-over-year. Analysts were predicting that Intel sales would grow by 10%. Rate Intel and Unisys Quality of company Financial soundness Long-term investment value Expected return over next 12 months Perceived risk Risk and Return Managers who rely on representativeness judge Intel stock to be a better stock than Unisys stock. Managers who rely on representativeness view the stocks of financially sound companies as safe stocks, and the stocks of companies that are not financially sound as risky stocks. Managers who rely on representativeness view Intel as a safer stock than Unisys. Perceived Relationship Between Risk and Return Traditional finance teaches that risk and return are positively related, that higher expected returns are associated with higher risk. Representativeness induces managers to view the relationship as going the other way. Affect Heuristic Reinforces Representativeness People assign affective labels or tags to images, objects, and concepts. Imagery is important, e.g. adding “” to name of firm in second half of 1990s. The affect heuristic is a mental shortcut that people use to search for benefits and avoid risks. Benefits are associated with positive affect, whereas risks are associated with negative affect. Perceived Risk and Firm Characteristics Executives associate low book-to-market equity and high market capitalization to both good stocks and good companies. Executives view stocks associated with low betas, large market capitalization, and low book-to-market equity