University of Southern California

‘Surprised by the Unsurprising’
February 24, 2016 • by News at Marshall

Assistant Professors Tom Chang and David Solomon in the USC Marshall School of Business department of Finance and Business Economics have been honored with the 2015 Hillcrest Behavioral Finance Award for their paper, “Being Surprised by the Unsurprising: Earnings Seasonality and Stock Returns.”

Chang and Solomon share this accolade with their co-authors, Samuel Hartzmark from the University of Chicago Booth School of Business (who earned his Ph.D. at Marshall in 2014) and Eugene Soltes from Harvard Business School.

“We are very proud of Tom and David’s achievements,” said Gareth James, vice dean for faculty and academic affairs, holder of the E. Morgan Stanley Chair in Business Administration and a professor of data sciences and operations. “This award demonstrates that their work is valued not only in the academic community but also in the wider society.

“It is further evidence of the tremendous research success that Marshall faculty have been having in their respective fields,” he continued.

Presented by Hillcrest Asset Management, an independent institutional equity investment management firm based in Dallas, the award recognizes excellence in research through the selection of a current non-published academic paper on the subject of behavioral finance.

“We’re very grateful to Hillcrest for the award, and it's an honor to be recognized for the contributions of our research,” said Solomon. “As academics, it’s great to be at a place like USC where this kind of work is valued.” Solomon, a financial economist who studies asset pricing, the role of media, behavioral finance and prediction markets, has had his research featured in The Wall Street Journal and The Financial Times.

Popular Press

Chang added: “It is especially gratifying to get an award like the Hillcrest as it indicates that our work is being read and appreciated not just by other academics but also by the wider finance community.”

Chang’s research, focusing on understanding individual decision-making and its implications for firm behavior, has been covered by the Associated Press and NPR and featured in The Los Angeles Times and The Washington Post.

The paper presents evidence that investors fail to properly price in seasonal earnings patterns. This effect is due to behavioral biases that result in mistaken estimates of future earnings. The paper can be read on the Social Science Research Network:

“This study is on the cutting edge of behavioral finance research and is a deserving winner of the Hillcrest Behavioral Finance Award,” Brian Bruce, CEO of Hillcrest Asset Management and editor of The Journal of Behavioral Finance, said in a release.

About the USC Marshall School of Business
Consistently ranked among the nation's premier schools, USC Marshall is internationally recognized for its emphasis on entrepreneurship and innovation, social responsibility and path-breaking research. Located in the heart of Los Angeles, one of the world's leading business centers and the U.S. gateway to the Pacific Rim, Marshall offers its 5,700-plus undergraduate and graduate students a unique world view and impressive global experiential opportunities. With an alumni community spanning 123 countries, USC Marshall students join a worldwide community of thought leaders who are redefining the way business works.