This week, a prominent American Economist famed for his work in Behavioral Finance, Richard Thaler, took home the Nobel prize in Economic Sciences. As I found myself reading these headlines in the news I found some pride in being able to say I was already familiar with his work and the work of his contemporaries.
In fact, I recently made an effort to start reading more scholarly articles on finance.
Some of the papers I read include:
- A paper that claims most research findings in financial economics are false due to data mining.
- A counter paper which argues that fundamental signals predict cross-sectional stock returns even after accounting for data mining AND that abnormal returns cannot be attributed to random chance and are better explained by mispricing.
- Lastly, a paper that states GAAP Earnings have significantly lost their value in predicting abnormal returns since the 1980s (which I posted a discussion on here).
After reading these papers and seeing some of the comments made on my discussion post, I wonder if anyone working in the industry even pays attention to what is written in academic research papers. Or, perhaps I'm wasting my time and should pursue other areas of knowledge more valued by practitioners.
So, my questions to you...
Do you ever read academic research on finance and apply it to your work? If so, is there anything you would recommend?