PhD Defence Nishad Matawlie
In his dissertation 'Through Mind and Behaviour to Financial Decisions’, Nishad Matawlie described three theoretical essays on the impact of behavioural traits on financial decisions. Every essay presented a theory based on mathematical and financial foundations that combines rational theory with behavioural elements. Nishad Matawlie defended his dissertation on Thursday, 10 December 2020 at 15:30h. His supervisors were Prof. Han Smit (ESE) and Prof. Patrick Verwijmeren (ESE). Other members of the Doctoral Committee were Prof. Vicky Henderson (University of Warwick), Prof. Sebastian Gryglewicz (ESE), Prof. Peter Wakker (ESE), Prof. Enrico Pennings (ESE), Prof. Kuno Huisman (Tilburg University).
Nishad Matawlie was born on April 4th, 1993 in The Hague, The Netherlands. After finishing the Gymnasium, cum laude, at Hofstad Lyceum in the Hague, he obtained his Bachelor's degree in Econometrics and Operations Research, cum laude, from the Erasmus University Rotterdam in 2014. In 2015, Nishad obtained his Master's degree in Econometrics and Management Science, with a specialisation in Quantitative Finance, cum laude, from the Erasmus University as well. During study, Nishad was a teaching assistant for several mathematics and statistics courses, participated in the ESE Research Traineeship, and did a full-time summer internship at Barclays Investment Bank in London. For his Master's thesis, Nishad received the Best Econometric Thesis Award from the Econometric Institute and Veneficus. Nishad started his PhD in Finance in September 2015 at the Erasmus School of Economics and Erasmus Research Institute of Management. His research interests lie at the intersection of dynamic corporate finance, real options and behavioural decision theory. Nishad has presented his work on several international conferences, including the Real Options Conference 2017 in Boston, USA, where he received the Best PhD Paper Award for his working paper. At the Erasmus University, Nishad lectured many tutorial groups and supervised multiple master's theses. He is an instructor and co-developer of the massive online open course (MOOC) Advanced Valuation and Strategy - M&A, Private Equity, and Venture Capital, which has over 40.000 learners at the moment. Moreover he helped to intensify and digitize the Master's course Advanced Corporate Finance and Strategy, for which he received together with the team, the Educational Innovation Award of 2018 by the Erasmus School of Economics.
This thesis contains three (mainly) theoretical essays on the impact of behavioural traits on (corporate) financial decisions. Every essay presents a theory based on mathematical and financial foundations that combines rational theory with behavioural elements. The first study investigates whether CEO overconfidence affects the choice of an acquisition strategy. I develop a continuous time real options model and show that an overconfident CEO is more likely to prefer a direct control acquisition over a toehold strategy; moreover I find empirical support for the theoretical claims. The second study investigates how behavioural theory can explain why sellers choose a particular selling mechanism. I model the choice between a direct auction and a sequential selling mechanism from both a rational and behavioural perspective using auction theory integrated with prospect theory. I find that where rational theory cannot explain the choice for a sequential mechanism and the effect of auction costs, prospect theory can. Furthermore I show theoretically, and confirm empirically, that the expected pay-offs from a direct auction are higher than from an auction after a failed negotiation. The final essay integrates real option theory with prospect theory for discrete investment contexts, where the investment pay-offs are not replicable by traded assets. I find that behavioural traits as optimism or high reference points clearly affect the value of investments and investment decisions, such as timing of exit, within the (compound) real options context. These findings contribute to our understanding of decision processes, and have relevant implications for all corporate financial decision-making individuals.
Photos: Chris Gorzeman / Capital Images