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The purpose of this paper is to investigate whether the special items (SI) mispricing reported in Burgstahler et al. is distinct from the accruals (ACC) mispricing documented in Sloan.

This paper employs the control hedge‐portfolio test, non‐overlap hedge‐portfolio test, and regression analysis to determine whether the SI anomaly is distinct from the ACC anomaly. In addition, the Mishkin test is used to examine the impact of SI on the ACC anomaly.

This paper has four main findings. First, one‐year‐ahead abnormal returns to the special‐items‐based hedge portfolio are much diminished when holding ACC constant, whereas those to the ACC‐based hedge portfolio remain significantly positive when holding SI constant. Second, the special‐items‐based hedge portfolio loses much of its ability to earn future abnormal returns without the help of extreme ACC, whereas the ACC‐based hedge portfolio remains profitable without the help of extreme SI. Third, SI are no longer negatively associated with future abnormal returns after controlling for ACC, whereas ACC remain negatively associated with future abnormal returns after controlling for SI. Finally, SI affect the extent to which the market overprices ACC, with negative (positive) SI aggravating (alleviating) ACC overpricing.

This is the first paper to show that the SI anomaly is dependent on the ACC anomaly.

In this study, we investigate what drives the MAX effect in the South Korean stock market. We find that the MAX effect is significant only for overpriced stocks categorized by the composite mispricing index. Our results suggest that investors' demand for the lottery and the arbitrage risk effect of MAX may overlap and negate each other. Furthermore, MAX itself has independent information apart from idiosyncratic volatility (IVOL), which assures that the high positive correlation between IVOL and MAX does not directly cause our empirical findings. Finally, by analyzing the direct trading behavior of investors, our results suggest that investors' buying pressure for lottery-like stocks is concentrated among overpriced stocks.

This study focuses on an emerging market, China, and investigates the effects of corporate research and development (R&D) spending and subsidies on stock market reactions to seasoned equity offering (SEO) announcements.

The study uses a sample of SEOs announced over the period of 2003–2018 in the Chinese A-share market. The cumulative abnormal stock returns (CARs) are adopted to measure the stock market response to SEOs. The R&D spending-to-sales ratio (R&D subsidies) in 2 years before SEO announcements is used to measure the pre-SEO R&D spending (R&D subsidies). The instrumental variable (IV) regression method is applied to address the endogeneity problem in the robustness test.

This study demonstrates that firms with high R&D spending suffer stock overpricing and experience a negative market reaction when they announce SEOs, but R&D subsidies alleviate stock overpricing and mitigate the negative relationship between R&D spending and SEO market reactions.

Although the prior studies have demonstrated that information asymmetry, which causes stock overpricing, explains negative stock market reactions to SEOs, it is unclear if a certain factor that causes information asymmetry affects SEO market reactions. This study fills this gap and focuses on R&D spending, demonstrating that R&D spending is negatively related to SEO performance.

The purpose of this paper is to empirically analyze the impacts of short prohibitions on stock prices.

The authors adopt event study in this paper. First, the authors match each shortable stocks with one unshortable stocks by the propensity score matching method. Second, the authors check the performance difference between treatment group and control group after the event date. Third, the authors check the performance difference among sub-groups sorted by other factors associated with stock returns.

The authors find that stocks do not decline necessarily after removal of short prohibitions; only those heavily overpriced stocks, such as small stocks, lower B/M or P/E stocks and higher turnover stocks, decline significantly.

The media falsely stated that short selling lead to market crash; otherwise, short selling is beneficial for improving market efficiency as it is helpful for keeping overpriced stocks in line with the fundamental value.

This is the first paper showing that removal of short prohibitions only impacts heavily overpriced stocks significantly, which is valuable for policy making.

The paper aims to deal with the analysis of the factor leading to the repeated selection of the specific supplier and the effect of this recurrent selection on overpricing of public contracts.

A mix of quantitative and qualitative methods is used to achieve this goal. To analyze the chances of obtaining repeated contracts, the logistic regression method is used. To analyze the factor of overpriced contracts, the classic ordinary least squares regression model is used. The focus group method is then used to explain the factors acting on the part of the contracting authorities.

The results show that the prior procurement of a given contracting authority, or work for the public sector in general, has a statistically significant effect on the conclusion of contracts. The use of less-transparent forms of input has a strong impact. The non-transparent selection of suppliers rather than repetition of contracts generally results in the over-pricing of contracts. The IT sector is an exception.

This research is also essential for real public policy. Given the amount of GDP allocated to the public procurement market, it makes sense to continually seek room for improvement. Here is an attempt to find this by examining the contracting authorities’ behavior when awarding repeated contracts.

This research is original because it looks at the problem of the contracting authority in the wider context and optics of the path dependency theory, which has not yet been applied to the public procurement environment. The focus is also on IT procurement, which according to this study has not been empirically investigated in this way, is also innovative.

The purpose of the study is to investigate the possible role of annual report readability in accrual anomaly, shedding light on why investors fail to incorporate accruals information in a timely and unbiased manner beyond the original naive investor fixation explanation.

Using five proxies of annual report readability and available data over 1993–2017, we investigate whether accrual overpricing is more severe when annual reports are less readable.

We find little (substantive) evidence of accrual overpricing among high (low) readability firms. The readability effects are contingent on the level of business complexity and earnings management.

This study extends the original naive investor fixation explanation and documents annual report complexity as a market friction in explaining the accrual anomaly, contributing to the mispricing vs risk debate and supporting the efficient market hypothesis.

Low readability of annual reports is a red flag to investors.

This study provides support for regulatory initiatives aimed at enhancing readability of corporate disclosures to address market frictions and improve market efficiency.

Accrual anomaly has posed a challenge to the efficient market hypothesis. This study draws on and adds to the line of research indicating that annual report complexity is a friction erecting a barrier to transparency, hindering market efficiency. This study contributes to our understanding of the enigmatic accrual anomaly.

Much of the author’s understanding of experimental asset market bubbles is based on the Smith, Suchanek and Williams (SSW) design. The purpose of this paper is to find alternative bubble-producing designs, which is a promising path for new insights.

The Smith et al. (1988) experimental design has been widely used to study bubbles. This paper introduces a novel modification, where the asset has a binary liquidation value and no dividends. Dividends are replaced by the events affecting the liquidation value probability distribution.

Overpricing is common and consistent with subject optimism concerning the random liquidation value. Bubbles are also observed, as the degree of overpricing often rises and then fall during the experiments. However, crashes where the asset price drops below fundamental values are not observed.

Subject over optimism, speculation and/or subject confusion are possible bubble ingredients. More research is needed to determine how much the factors responsible for these bubbles differ from the factors responsible for the SSW design. However, it seems likely that there are at least some common factors given the structural similarities between the two designs.

The present design is novel and may provide a means to better generalize results from previous experiments based on the SSW design.

This paper aims to investigate whether the homes in the Norwegian capital, Oslo, are overpriced. While house prices in many countries dropped after the financial crisis, those in Norway have continued to increase. Over the past 20 years, real house prices in Oslo have increased by around 7 per cent yearly.

The authors use a vector error correction model to estimate the equilibrium between house prices, rents, construction costs and wages to examine whether house prices in Oslo are overpriced.

Long-term relationships between house prices, rents, construction costs and wages are found and used to estimate equilibrium house prices in Oslo. The overpricing in Oslo compared to estimated equilibrium prices is around 35 per cent.

Price–rent, price–construction cost and price–income ratios are often used, by practitioners to say something about over- or underpricing in the housing market. We test and find that house prices, rents and construction costs move toward constant ratios in the long run, while wages are found to be weakly exogenous in the system.

Our estimate of overpricing gives households, investors and policy-makers a better understanding of the risk associated with owning dwellings.

The primary purpose of this paper is to test the prediction that overpricing drives merger waves.

The authors supplement proxies of overpricing from the existing literature such as subsequent under‐performance, the form of consideration/financing and low Book‐to‐Market ratios with an approach based on analysts' earnings forecasts. The authors maintain that over‐pricing is associated with relatively optimistically biased forecasts and use a metric based on subsequent earnings disappointments to represent mispricing.

It is reported that acquirers in hot markets are overpriced relative to acquirers in cold markets on almost all measures of over‐pricing thus supporting the behavioural theory. However, having controlled for optimistically biased expectations the long‐run BHARs to acquisitions in hot markets exceed those of acquisitions made in cold markets. These results therefore support the neoclassical theory's contention that post‐acquisition returns in merger waves are better than the unobserved alternative without the acquisition. The authors infer that neither the neoclassical nor behavioural theory on its own can provide a complete description of merger waves.

The authors exploit earnings forecasts to establish evidence of overpricing in a manner that is novel to the M&A literature. It is found that financing/consideration is significant in explaining subsequent under‐performance only in hot markets. This result is unaffected by controls for mispricing. The authors infer that the use of equity financing is driven by both behavioural timing and also by a desire to share any shortfall due to the increased potential for overpayment in hot markets.

The purpose of this study is to investigate how the degree of overpricing (DOP) and other variables are associated with the time on the market (TOM) and the final selling price (SP) for residential properties in the Paphos urban area.

The hedonic pricing model was used to examine the association of TOM and SP with various factors. The association of the independent variable of DOP and other independent variables with the two dependent variables of TOM and SP were investigated via ordinary least squares (OLS) regression models. In the first set of models the dependent variable was TOM and in the second set of models the dependent variable was SP. A sample of N = 538 completed transactions from Q1 2008 to Q2 2019 was used to estimate the optimum DOP that a seller must apply on the current market value of a property in order to achieve highest SP price in the shortest TOM.

The results of this study also suggest that the degree of overpricing in thin and less transparent markets is higher than that in transparent markets with high property transaction volumes. In mature markets like the USA and the UK where the actual sold prices are published, the DOP is around 1.5% which is much lower than the 11% DOP identified in this study.

It was found that buyers are willing to pay more for the same house in a bigger plot than a bigger house in the same plot. The outcome is that smaller houses sell faster at a higher price per square meter than larger houses. Smaller houses are more affordable than larger houses.

There is a large pool of buyers for smaller houses than bigger houses. Higher demand for smaller houses results in a higher price per square meter for smaller houses than the price per square meter for bigger houses. Respectively the TOM for smaller houses is shorter than the TOM for bigger houses.

The database used is unique, from an estate agent located in Paphos that managed to sell more than 27,000 properties in 20 years. This data set is the most accurate information for Cyprus' property transactions.