Behavioral Corporate Finance

1 Behavioral Foundations
2 Introduction to Behavioral Analysis
3 Valuation
4 Capital Budgeting
5 Inefficient Markets and Corporate Decisions
6 Perceptions about Risk and Return
7 Capital Structure
8 Dividend Policy
9 Agency Conflicts and Corporate Governance
10 Mergers and Acquisitions
11 Financial Management and Group Process

Behavioral Corporate Finance provides instructors with a comprehensive pedagogical approach for teaching students how behavioral concepts apply to corporate finance. The primary goal is to identify the key psychological obstacles to value maximizing behavior, along with steps that managers can take to mitigate the effects of these obstacles.

New Chapter 1 (Behavioral Foundations)- this chapter introduces the psychological foundations in depth. As a result, instructors no longer need to rely on online Additional Resources for this material.

New Chapter 13 (Investments) - This chapter extends the discussion from the application of behavioral concepts to corporate finance alone to their application to investments. As a result, the book can be used to teach dedicated courses in behavioral finance, not just corporate finance.

The second edition contains a completely new set of minicases. However, almost all of the minicases used in the first edition are still available in the Additional Resources (available online) that accompany each chapter.

Chapters follow a set format. Behavioral objectives for learning introduce each chapter. Most chapters have a section that provides a brief overview of the traditional approach to the topic at hand. The remainder of the chapter then focuses on developing the behavioral concepts and applications.

Strong pedagogy: Throughout each chapter, Concept Preview Questions help students focus on the underlying psychological issues of the topics covered in the chapters and reflect on how their own minds approach information and decision tasks pertaining to the upcoming subject matter.

Each chapter includes a Minicase to allow students the opportunity to develop the skills of recognizing psychological phenomena within the context of real world events. Case analysis questions are asked after each minicase to help students further apply the illustrated concepts.

The rich pedagogy continues with two boxed features: Corporate Nudges, which provide hints for mitigating bias and error, and Behavioral Pitfalls, which provide brief illustrations of business situations that feature the psychological phenomena being discussed.

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