The Household Savings Paradox, with Tobias Meyll and Andreas Walter.
2018: Eastern Finance Association Annual Meeting, Philadelphia   |    SGF, Zürich   |    VHB, Magdeburg   |   EFMA, Milan

Abstract - This study investigates why many households rely solely on deposits and avoid investments in both the stock market and in contractual savings and retirement products. These households forgo the equity risk-premium and state subsidies associated with virtually risk-free products developed for old-age provision. Furthermore, as these households earn negligible, and recently, even negative inflation-adjusted returns, we call this phenomenon the ‘household savings paradox’. Our results show that financial literacy and financial advice strongly decrease the likelihood to save paradoxically. Unlike financial literacy and financial advice, we find that other common factors of stock market non-participation, including participation costs, liquidity needs, life-cycle motives, and negative experiences made during the financial crisis, fail to explain why households rely solely on deposits. Our results therefore emphasize the relevance of financial literacy and financial advice for sound financial decision-making.

CEO speeches and stock returns, with Christina Bannier and Andreas Walter.
2017: Verein für Socialpolitik, Vienna   |   DAFC, Lugano   |   VHB, Luzern 
2016: DGF PhD Workshop, Bonn

Abstract - We analyze the market reaction to the sentiment of the CEO speech at the Annual General Meeting (AGM). As the AGM is typically preceded by several information disclosures, the CEO speech may be expected to contribute only marginally to investors’ decision-making. Surprisingly, however, we observe from the transcripts of 338 CEO speeches of German corporates between 2008 and 2016 that their sentiment is significantly related to abnormal stock returns and trading volumes following the AGM. Using a novel business-specific German dictionary based on Loughran and McDonald (2011), we find a negative association of the post-AGM returns with the speeches’ negativity and a positive association with the speeches’ relative positivity (i.e. positivity relative to negativity). Relative positivity moreover corresponds with a lower trading volume in a short time window surrounding the AGM. Investors hence seem to perceive the sentiment of CEO speeches at AGMs as a valuable indicator of future firm performance.

Trust and the supply side of financial advice, with Oscar Stolper and Andreas Walter. 
2016: World Finance Conference, New York 
2015: Deutsche Gesellschaft für Finanzwirtschaft (DGF) PhD Workshop, Leipzig

Abstract - In this study, we investigate how two key dimensions of trust formation, i.e. interpersonal trust in the advisor (narrow-scope trust) and broader trust in the business context in which the advisor operates (broad-scope trust), impact households’ overall trust in financial advice. To capture the potential influence of broad-scope trust, we make use of novel survey data obtained from the Panel on Household Finances (PHF) and contrast households’ propensity to trust financial advice provided by advisors employed at community banks versus large banks, which have been shown to feature fundamentally different trust profiles. We document that financial advice provided by large-bank advisors is significantly less likely to be trusted, thus rejecting the notion that trust in financial advice is essentially equivalent to trusting one’s financial advisor. Instead, we provide strong evidence in support of an integrated conceptualization of clients’ trust in financial advice, which highlights the importance of establishing broad-scope trust.