Format:
1 Online-Ressource (26 p)
Content:
This study examines the effects of uncertainty on market prices. Specifically, we use the National Basketball Association betting market to examine whether uncertainty resulting from mid-season coaching changes affects the ability of bettors to accurately set betting lines. Examining the effects of coaching changes on betting markets allows us to make inferences about the effects of CEO changes on financial markets. The most significant advantage of using betting markets over financial markets is the ability to compare terminal values (actual game outcomes) to market prices (betting lines), an ability unavailable in financial markets. We find that uncertainty amid mid-season coaching changes results in less accurate pricing, as evidenced by higher volatility and greater overall inaccuracy in betting lines. We also find that uncertainty regarding the ability of the replacement coach and/or his strategies results in less accurate pricing, again evidenced by higher volatility and greater overall inaccuracy in betting lines. Finally, we find that betting lines are consistently understated towards the replacement coach's team when there is greater uncertainty regarding the ability and/or strategies of the replacement coach. Our results suggest that 1) when a firm experiences a CEO change, the market price of a firm's stock is more volatile and less accurate and 2) when there is more uncertainty regarding the new CEO's abilities and/or strategies, the market price of the firm's stock is underestimated
Note:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments September 2004 erstellt
Language:
Undetermined
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