About

Justin Birru is a professor of finance at Fisher College of Business at The Ohio State University. He teaches Behavioral Finance in both the undergraduate and MBA programs at Fisher. His research interests include behavioral finance and empirical asset pricing. Justin Birru has published in prominent academic journals such as the Journal of Finance, Journal of Financial Economics, Review of Financial Studies, Journal of Accounting and Economics, Review of Finance, and Management Science. He received his B.S. in Finance from the University of Pittsburgh and his Ph.D. in finance from NYU Stern School of Business.

Research topics

• Economics
• Computer Science
• Econometrics
• Business
• Statistics
• Mathematics
• Financial economics

Selected publications

• Systematic Mispricing of Speculative Stocks and the Cross-Sectional Risk-Return Trade-off

  Management Science · 2025-11-03

  article1st authorCorresponding

  We examine the cross-section of returns from the perspective of a benchmark model that only includes systematic mispricing factors. In contrast to conclusions from standard benchmark models, we recover robust positive risk-return relations for many cross-sectional risk, distress, and friction proxies. Our findings are consistent with systematic mispricing that primarily affects speculative stocks and predominantly results in overpricing, predicting lower returns. Hence, failing to control for exposure to systematic mispricing can bias tests of risk-return trade-offs for anomalies with one speculative leg (e.g., risky, distressed, or high-friction stocks) and one nonspeculative leg. Overall, our study offers novel economic insight for this subset of anomalies, indicating that a positive risk-return trade-off can be resurrected after purging out the systematic mispricing component. The evidence suggests that a small shift in perspective generates a substantially different interpretation of the same data. This paper was accepted by Lukas Schmid, finance. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2024.08815 .

  PublisherDOI

• Quants and market anomalies

  Journal of Accounting and Economics · 2024-03-21 · 7 citations

  articleOpen access1st authorCorresponding

  Sell-side quantitative equity research analysts (Quants) conduct econometric analyses of stock returns to uncover market anomalies and assist equity analysts and institutional clients with stock selection. We present novel evidence that establishes their role in helping analysts and mutual fund clients discover market anomalies and capital markets evolve toward greater pricing efficiency. Specifically, we find that analysts and mutual fund clients with greater access to Quants make recommendations and trades that reveal greater knowledge of anomalous cross-sectional return predictability. More importantly, cross-sectional return predictability is weaker in stocks that have higher coverage (ownership) by analysts (mutual fund clients) with access to Quants, and strengthens when quasi-exogenous brokerage house closures reduce the availability of Quants.

  PublisherDOI

• Attention and Biases: Evidence from Tax-Inattentive Investors

  Management Science · 2023-12-07 · 10 citations

  article1st authorCorresponding

  We first provide evidence of investor inattention to a very simple and well-known capital gains tax exemption in the Brazilian stock market. We then show that inattentive investors exhibit worse trading performance and stronger trading biases even after controlling for several investor-level variables, such as past trading experience. The evidence is consistent with inattention being one of the explanations for the prevalence of behavioral biases. This paper was accepted by David Sraer, finance. Funding: F. Chague and B. Giovannetti gratefully acknowledge financial support from Conselho Nacional de Desenvolvimento Científico e Tecnológico. Supplemental Material: The internet appendix and data are available at https://doi.org/10.1287/mnsc.2021.02516 .

  PublisherDOI

• The Real Effects of Sentiment and Uncertainty

  SSRN Electronic Journal · 2023-01-01 · 4 citations

  articleOpen access1st authorCorresponding
  PublisherDOI

• Replication code and pseudo data for "Are Analyst “Top Picks” Informative?" by Birru, Gokkaya, Liu, and Stulz

  Harvard Dataverse · 2023-12-15

  datasetOpen access1st authorCorresponding

  This file contains the SAS programs that generate all tables in "Are Analyst “Top Picks” Informative?". Pseudo-data are provided to illustrate the format of the data.

  PublisherDOI

• The Role of Domestic and Foreign Sentiment for Cross-Border Portfolio Flows

  SSRN Electronic Journal · 2023-01-01 · 1 citations

  articleOpen access1st authorCorresponding
  PublisherDOI

• Are Analyst “Top Picks” Informative?

  Review of Financial Studies · 2023-12-23 · 11 citations

  article1st author

  Abstract Following the Global Settlement, analysts extensively use a top pick designation allowing for greater granularity of information among buy recommended stocks, but conflicts of interest can potentially influence this designation. Examining a novel sample of top picks, we find that a calendar-time portfolio of top picks generates an abnormal performance of 17.6% per year. Top picks have greater investment value than do buy recommendations and alternative analyst investment strategies. Both institutional and retail investors trade in response to top picks. However, only institutional investors appear to identify top picks that have greater investment value when they are announced.

  PublisherDOI

• Sentiment and uncertainty

  Journal of Financial Economics · 2022 · 103 citations

  1st authorCorresponding
  • Computer Science
  • Econometrics
  • Economics
  PublisherDOI

• Are Analyst Short‐Term Trade Ideas Valuable?

  The Journal of Finance · 2022 · 24 citations

  1st authorCorresponding
  • Economics
  • Financial economics
  • Business

  ABSTRACT Short‐term trade ideas are a component of analyst research highly valued by institutional investors. Using a novel and comprehensive database, we find that trade ideas have a stock price impact at least as large as recommendation and target price changes. Trade ideas based on expectations of future events are more informative than those identifying incomplete incorporation of past information in stock prices. Analysts with better access to a firm's management produce better trade ideas. Institutional investors trade in the direction of trade ideas. Investors following trade ideas can earn significant abnormal returns, consistent with analysts possessing valuable short‐term stock‐picking skills.

  PublisherDOI

• Attention and biases: evidence from tax-inattentive investors

  LA Referencia (Red Federada de Repositorios Institucionales de Publicaciones Científicas) · 2020-01-01

  articleOpen access1st authorCorresponding

  Using bunching induced by a policy notch for identfication, wefirst provide evidence of investor inattention to a very simple and well-known capital-gains tax exemption in the Brazilian stock market. We then show that tax-inattentive investors exhibit stronger behavioral biases and worse trading performance, even after controlling for several investor-level variables such as trading experience, observed performance, financial sophistication, age, and occupation. This is consistent with inattention being a common source of behavioral biases.

  PublisherOA PDF

Frequent coauthors

• Itzhak Ben‐David

  96 shared

• Andrea Rossi

  University of Arizona

  71 shared

• Sinan Gokkaya

  Ohio University

  37 shared

• Xi Liu

  28 shared

• René Stulz

  National Bureau of Economic Research

  25 shared

• Viktor Prokopenya

  Capital University

  20 shared

• René M. Stulz

  12 shared

• Xi Liu

  Miami University

  6 shared