Unit information: Behavioural Finance and Accounting in 2019/20

Unit name	Behavioural Finance and Accounting
Unit code	EFIM30048
Credit points	10
Level of study	H/6
Teaching block(s)	Teaching Block 1 (weeks 1 - 12)
Unit director	Mrs. Willis
Open unit status	Not open
Pre-requisites	EFIM20006 Corporate Finance
Co-requisites	None Students cannot take this unit if they are taking EFIM30027 Behavioural Economics
School/department	School of Economics, Finance and Management
Faculty	Faculty of Social Sciences and Law

Description including Unit Aims

The unit is aimed at students who want to enhance their understanding of the effects of human psychology and emotions on investor and managerial financial decision-making, and to develop strategies for overcoming biased decision-making.

Behavioural finance, behavioural corporate finance and behavioural accounting examine the impact on financial decision-making of making the ‘real-world’ assumption that investors and managers are not fully-rational, are not completely self-interested, and exhibit psychological biases and emotions.

Content includes:

• Human psychological biases and heuristics
• Psychological explanations for financial market anomalies such as stock market bubbles
• The effect of managerial and investor biases on corporate finance decisions such as investments, dividends, capital structure and M&A.

Intended Learning Outcomes

At the end of the unit students will be expected to be able to:

1. Understand, and discuss human psychological biases and heuristics used in decision making
2. Analyse the effects of investor biases on financial markets
3. Analyse the effects of investor and managerial biases on corporate finance decisions, such as investment appraisal, capital structure, dividend policy, mergers and acquisitions

Teaching Information

10 hours of lectures, 5 hours of classes

Formative assessment

• In class electronic quizzes
• Students will be given material to prepare for small group classes, some of which will be collected and marked with feedback provided
• Students will prepare plans for coursework, which will be reviewed through peer review

Assessment Information

Summative assessment

Coursework – Design and carry out a survey to test for one or more of the psychological biases that we cover in the course. Reflect on how the results confirm or conflict with theories studied and how this impacts on financial decision making and managing decision makers.

This will account for 100% of the mark and will assess all learning outcomes.

Reading and References

There is no one textbook that covers everything we do in the course, but we will reference the following, amongst others.

Ackert, L., and Deaves, R. Behavioral Finance: Psychology, Decision-Making and Markets. South-Western Cengage Learning.

Shefrin, H. Behavioral Corporate Finance: Decisions that Create Value. McGraw-Hill International Edition 2007.

Daniel Kahneman (2012) Thinking, Fast and Slow, Penguin