2018 Hillcrest Behavioral Finance Award Winners

PLANO, Texas–(BUSINESS WIRE)–Hillcrest Asset Management is pleased to announce that Samuel Hartzmark
from the University of Chicago and David Solomon from Boston College
have won the 2018 Hillcrest Behavioral Finance Award for their
paper “Reconsidering Returns.”

The paper shows that investors have a biased perception of performance
because the relevant measure, returns, is rarely displayed in brokerage
statements, finance websites, newspapers or market indices. Major
indices are price indices and ignore dividends, leading to predictable
declines on ex-dividend days. Financial newspaper articles are more
negative on index ex-dividend days when the indices mechanically
understate performance. The paper demonstrates that the wrong choice of
default display can influence prices and capital allocation in financial
markets. The authors suggest an information display focusing on returns
to ameliorate these issues.

“This is a wonderful behavioral paper showing an example of the framing
bias. Since returns are rarely displayed in brokerage statements and
financial websites and some major indices are price only indices that
ignore dividends, investors have a biased perception of performance,”
commented Brian Bruce, CEO of Hillcrest Asset Management and Editor of The
Journal of Behavioral Finance

This 2018 Hillcrest Behavioral Finance Award contest received
over 40 submissions representing 88 authors, 72 academic institutions
and 17 countries. As a result of the strong field of submissions
received for this year’s contest, 4 finalists were identified.

The four finalist papers awarded an Honorable Mention are:

  1. “Analyst Bias and Mispricing,” by Mark Grinblatt of UCLA Anderson
    School of Management, Gergana Jostova of George Washington University,
    and Alexander Philipov of George Mason University.
  2. “’Stiff Business Headwinds and Unchartered Economic Waters’: The Use
    of Euphemisms in Earnings Conference Calls,” by Kate Suslava of
    Bucknell University.
  3. “Bragging Rights: Does Corporate Boasting Imply Value Creation?” by
    Don Chance of Louisiana State University, Stephen Ferris and Pratik
    Kothari of the University of Missouri.
  4. “Valuation Bias and Limits to Nudges,” by Hersh Shefrin of Santa Clara

The Hillcrest Behavioral Finance Award seeks to annually
recognize excellence in research through the selection of a current
non-published paper from academics on the subject of behavioral finance.

The previous winners of the Hillcrest Behavioral Finance Award are:

2014: “The Use of Word Lists in Textual Analysis,” by Tim
Loughran and Bill McDonald from the Mendoza College of Business at the
University of Notre Dame

2015: “Being Surprised by the Unsurprising: Earnings Seasonality
and Stock Returns,” by Tom Chang and David Solomon from University of
Southern California, Samuel Hartzmark from University of Chicago, and
Eugene Soltes from Harvard Business School

2016: “Lazy Prices,” by Lauren Cohen and Christopher Malloy from
Harvard Business School and Quoc Nguyen from University of Illinois at

2017: “Short and Long Horizon Behavioral Factor,” by Kent Daniel
from Columbia Business School and NBER, David Hirshleifer from UC Irvine
and NBER and Lin Sun from Florida State University

Hillcrest Asset Management is an institutional investment management
firm and a recognized leader in the field of Behavioral Finance
investing. Our investment philosophy and process are guided by a
fundamental belief that stocks deviate from their fair value due to
investor behavioral biases. Hillcrest’s experienced investment team
believes that stocks follow the behavioral cycle of stock movements. We
combine model-driven behavioral analysis with traditional fundamental
research to build on the strengths of both approaches.

Hillcrest was founded in October 2007 and has offices in Dallas and


Melinda Estelle
Asset Management, LLC
(O) 469-666-6466
(M) 978-660-6084

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