I am a financial economist with research interests in the fields of behavioral and experimental finance, experimental economics and scientific methodology.
I am currently associate professor of finance and head of the Institute of Banking and Finance at the University of Graz as well as lecturer at the University of Innsbruck and at Management Center Innsbruck. I am also editor-in-chief of the Journal of Behavioral and Experimental Finance (IF 8.222), managing director of the Society for Experimental Finance, coordinator of the Finance Research Platform Graz, and scientific director of the Max Jung Lab Graz.
Institute of Banking and FinanceUniversity of GrazUniversitaetsstrasse 15/F28010 GrazAustria
E: stefan.palan@uni-graz.atT: +43(316)380-7306Born @ 333.40ppm CO2
Talking about sustainability at financial planner congress
2023-05-08I recently gave a talk at the Financial Planner Forum 2023, held at Merriott Hotel, Vienna. Speaking in front of around 300 financial professionals, I was able to present my joint research with Marcel Seifert, Florian Spitzer, Simone Haeckl, Alexia Gaudeul, Erich Kirchler and Katharina Gangl studying ways to promote sustainable investments in the wake of the EU's Green Deal Action Plan on Sustainable Finance. I was glad my remarks were so well-received and a number of participants reached out to me following my talk. Many thanks to Prof. Otto Lucius for inviting me to speak at this 10th anniversary of the Financial Planner Forum.
Earnings autocorrelation promotes post-earnings-announcement drift
2023-04-26A paper recently accepted in the Journal of Financial and Quantitative Analysis studies the post-earnings-announcement drift. Together with my co-authors, Josef Fink and Erik Theissen, we are the first to use experiments to study this well-documented market anomaly. Specifically, we focus on the question of whether post-earnings-announcement drift is driven by investors insufficiently accounting for autocorrelation in companies' earnings announcements.
The paper first documents that post-earnings-announcement drift can be observed in the controlled environment of the experimental lab, opening the door to future experiments studying this and other mispricing anomalies. In our second and main result, we then show that, while prices drift even in the absence of earnings autocorrelation, the drift is considerably more pronounced in the presence of earnings autocorrelation. The specific price patterns observed suggest that the phenomenon is indeed driven by underreaction to autocorrelation. Finally, we report that - at least in our lab setting - the observed drift can be exploited to earn excess profits.
The study is part of a larger research project funded by the Austrian Science Fund (FWF) that has so far generated two published papers, two that are under review, and two that we are planning to submit to a journal soon.
"Non-standard errors" forthcoming in Journal of Finance
2023-02-14Together with my colleagues in Graz, Andrea Schertler and Erik Theissen, and another 340 authors around the globe, I recently participated in a large (obviously), cooperative, international research project to study "non-standard errors". As a member of one of more than 160 one- or two-researcher teams, I analyzed the same dataset of financial market transactions with the aim of answering the same six questions. Our research shows that there is large variation in the results (i.e., the answers on the six research questions). The "non-standard errors" are similar in magnitude as the (mean) standard error and even looking only at a sub-sample of “highest quality results” does not change the picture much.
In other words, we find that if you ask different expert researchers to study a question using the same data, you may still get different answers. Furthermore, the researchers themselves underestimate the variation in the answers that different researchers or research teams provide. Read more about this somewhat depressing but nevertheless exciting (at least to me) and definitely relevant research under the following links:
Link to the project website | Link to the working paper
Oh, and if you want a more humorous take on the issue, watch the below interview with Albert Menkveld, one of the lead authors on the paper.
Prominent researchers’ work gets published more easily
2022-10-04In a new study in the Proceedings of the National Academy of Sciences, my co-authors and I document bias in the peer review process that precedes the publication of research articles in scientific journals. Even if they are of equal quality, articles authored by prominent researchers get better ratings than articles authored by less well-known researchers.
Implementing an idea by Jürgen Huber (University of Innsbruck), leader of our research team, we conducted a simple experiment: Vernon Smith (Professor at Chapman University and Nobel Memorial Prize Laureate in Economics 2002) and Sabiou Inoua (junior post-doc researcher at Chapman University), who were both members of the research team, jointly authored a research article and submitted it to the Journal of Behavioral and Experimental Finance for review. In my role as the editor of this journal and also a member of the research team, I sent invitations to review the article to a total of 3300 experts in the field. A total of 534 accepted the invitation to review and submitted a review report. While all reviewers received the same article for their evaluation, they received different information about who had authored the article. One group was informed that Nobel prize laureate Vernon Smith was one of the authors. Another group was informed that junior researcher Sabiou Inoua was one of the authors. A third group did not receive any information about the authors.
Reviewers with different types of information about the article’s authors evaluated the quality of the research article markedly differently. Of the reviewers who had received no information about the article’s authors ("AA" in the figure below), 48.2% recommended against publishing the article. This proportion was even higher among the reviewers who had been informed that one of the authors was the relatively unknown junior researcher ("AL"); here 65.3% recommended against publication. Yet of the reviewers who had been informed that one of the authors was Nobel prize laureate Vernon Smith ("AH"), only 22.5% recommended against publication.
Rudolf Kerschbamer (University of Innsbruck), another member of our research team, traces the source of the different evaluations to the “halo-effect”. This term from social psychology describes the phenomenon that we tend to evaluate the actions and work of someone more favorably when we are favorably disposed towards this person. Christian König genannt Kersting (University of Innsbruck), also a member of our research team, considers the results to constitute an important trigger to start rethinking the scientific review process: “As researchers, we are constantly working on improving our methods and processes. Our results have met great interest from the academic community and many editors of scientific journals are already testing new methods for evaluating and ensuring the quality of research findings.”
Talk about the Matthew Effect in peer-review
2022-08-12I recently gave an online talk in the METRICS International Forum seminar at Stanford University, presenting "Testing the Matthew Effect in peer-review". You can watch the recording using the link below. My thanks to Mario Malički and Robert Thibault for inviting me and to the audience for the fruitful discussion!
Journal impact factor
2022-07-13The Journal of Behavioral and Experimental Finance (JBEF), which I have been co-editing since 2018 together with my co-editor Michael Dowling, received its first impact factor of 8.222 at the end of July. This places the journal at rank 5 out of 111 finance journals and rank 13 out of 379 economics journals. In addition to the CiteScore of 6.1 (rank 28/299 in Finance) and ABDC-list ranking of "A", this is a huge recognition for a journal that was only founded in 2014.
I wish to thank all associate editors, editorial board members, reviewers and authors who have made this amazing result possible!
