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A Cautionary Note on Niu and Zeng (2018)

Author

Listed:
  • Ji Cao
  • Marc Oliver Rieger

Abstract

We revisit the article by Niu and Zeng (FRL, 2018) on “Corporatefinancing with loss aversion and disagreement”. We find two problem-atic points in the mathematical derivation of their fundamental resultsand suggest ways to remedy these problems.

Suggested Citation

  • Ji Cao & Marc Oliver Rieger, 2019. "A Cautionary Note on Niu and Zeng (2018)," Working Paper Series 2019-03, University of Trier, Research Group Quantitative Finance and Risk Analysis.
    • Handle: RePEc:trr:qfrawp:201903
    as

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    File URL: https://www.uni-trier.de/fileadmin/fb4/prof/BWL/FIN/QFRA_Working_Papers/QFRA_19-03.pdf
    File Function: First version, 2019
    Download Restriction: no
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    References listed on IDEAS

    as
    1. Niu, Weining & Zeng, Qingduo, 2018. "Corporate financing with loss aversion and disagreement," Finance Research Letters, Elsevier, vol. 27(C), pages 80-90.
    2. Tversky, Amos & Kahneman, Daniel, 1992. "Advances in Prospect Theory: Cumulative Representation of Uncertainty," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 297-323, October.
    3. Ulrike Malmendier & Geoffrey Tate & Jon Yan, 2011. "Overconfidence and Early‐Life Experiences: The Effect of Managerial Traits on Corporate Financial Policies," Journal of Finance, American Finance Association, vol. 66(5), pages 1687-1733, October.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Wolfgang Breuer & Ji Cao & Marc Oliver Rieger & K. Can Soypak, 2019. "Capital Structure Decisions, Loss Aversion, and Equity Premium," Working Paper Series 2019-04, University of Trier, Research Group Quantitative Finance and Risk Analysis.

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    More about this item

    Keywords

    Corporate Finance; Capital Structure; Loss Aversion; ProspectTheory;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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