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Río Solano, María Cristina del

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https://academica-e.unavarra.es/handle/2454/49855

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Río Solano

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María Cristina del

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Gestión de Empresas

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INARBE. Institute for Advanced Research in Business and Economics

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0000-0002-0901-122X

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228

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Has files: true × Subject: Market myopia ×

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Now showing 1 - 2 of 2
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    PublicationOpen Access
    Do sustainability disclosure mechanisms reduce market myopia? Evidence from European sustainability companies
    (Elsevier, 2023) Río Solano, María Cristina del; López Arceiz, Francisco José; Muga Caperos, Luis Fernando; Institute for Advanced Research in Business and Economics - INARBE; Universidad Pública de Navarra / Nafarroako Unibertsitate Publikoa
    Market myopia is a behavioural bias that causes investors to overvalue short-term earnings and undervalue long-term profits. This anomaly should not be compatible with sustainability disclosure mechanisms, the set of tools which firms use for reporting on their sustainable practices, and which contribute towards long-term performance improvements. Our aim is to study whether market myopia, as a symptom of market inefficiency, decreases with the implementation of sustainability disclosure mechanisms. We test for the presence of market myopia in a sample of firms listed on the S&P Europe 350 Index. For this purpose, we propose to use an adaptation of the valuation model for residual income under linear information dynamics developed by Felthan and Ohlson. Using the rating provided by RobecoSAM Sustainability Yearbook, we find market myopia to be less prevalent in companies classified as high sustainability reporters. An association is also found between persistent enforcement of sustainability disclosure mechanisms and a reduction of the market myopia effect.
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    PublicationOpen Access
    Stock characteristics, investor type and market myopia
    (Taylor & Francis, 2016) Río Solano, María Cristina del; Santamaría Aquilué, Rafael; Gestión de Empresas; Enpresen Kudeaketa
    This paper investigates the role of stock characteristics and investor type in market myopia. Using the Generalized Method of Moments (GMM) to control for endogeneity, we obtain evidence indicating that market myopia is greater among stocks that are relatively hard-to-value and hard-to-arbitrage, and find this conclusion to be robust to the choice of proxy for these characteristics. We also obtain a significantly negative relationship between institutional ownership and market myopia, due to the former acting as informed traders who exploit mispricing created by individual traders. It is important to note that the impact of their role becomes significant only when they have a sizeable share in firm ownership, as is the case of UK mutual funds and pension funds and Spanish banks.