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Release: Dec. 10, 2002

Dodonova, Carroll win awards for finance, accounting research

Two Tippie College of Business faculty members were recently honored for their research, receiving best-paper awards at two prestigious conferences.

Anna Dodonova, a visiting assistant professor of finance, received the Best Ph.D. Paper Award at the Northern Finance Association's annual meeting Sept. 27-29 in Banff, Alberta. And Tom Carroll, a lecturer in the Tippie College of Business, won the prize for the best paper at the 2002 Journal of Accounting, Auditing, and Finance/KPMG Conference earlier this year.

The Northern Finance Association's annual meeting provided a forum where finance academics, professionals and students from throughout North America and the world heard and presented the latest research in finance. Dodonova received $1,000 for the Best Ph.D. Paper Award, which was sponsored by Pearson Education Canada.

Dodonova authored the winning paper, "Applications of Regret Theory to Asset Pricing," while at the University of Michigan. The paper presents a theoretical model of asset pricing that analyzes how the behavior of stock returns is affected by the presence of regret averse- investors on the market. The model predicts that the market will overreact on good or bad news, resulting in an excess volatility of stock returns. It also helps to analyze how an improvement of stock market accessibility for non-professional traders affects the predictability of stock returns.

Carroll's award-winning paper "The Reliability of Fair Value vs. Historical Cost Information: Evidence from Closed-end Mutual funds," was co-authored with Tom Linsmeier and Kathy Petroni of Michigan State University.

The research examines the value and relevance of fair value accounting, which considers the market value of financial instruments as opposed to historical cost accounting. Based on a sample of 143 closed-end mutual funds during 1982-1997, Carroll and his colleagues found a significant association between stock prices and the fair value of investment securities as well as between stock returns and fair value securities gains and losses, even after controlling for historical costs.

To examine whether differences in the perceived reliability of the investment securities fair values affects investors' assessments of the usefulness of the information, the researchers examined the association between stock metrics and fair values across different fund types. Carroll and his co-authors found that in all cases there is a significant association between the stock metrics and fair values.

To view the paper, see