Trust and risk-taking in a pension investment setting

2014 ◽  
Vol 32 (5) ◽  
pp. 408-428 ◽  
Author(s):  
Jeanette Carlsson Hauff
Keyword(s):  
Risk Taking ◽  
Financial Risk ◽  
Pension System ◽  
The Body ◽  
Financial Knowledge ◽  
Risk Level ◽  
Financial Industry ◽  
Content Type ◽  
Influential Variable ◽  
The Individual

Purpose – The purpose of this paper is to examine the effect of trust on financial risk-taking in a pension investment setting. Further: to delineate the effects of varying levels of individuals’ financial knowledge and involvement on risk-taking, and on the trust-risk-taking relation. Design/methodology/approach – Questionnaire to a subsample of Swedish bank customers, thereafter statistical analysis using multiple moderated regression. Findings – Support the notion of trust being an influential variable in explaining risk-taking, and show that highly knowledgeable and highly involved individuals take on more risk. That individuals defined by knowledge and involvement have a different trust-risk-taking relation, however, not verified. Research limitations/implications – Adds to the body of research emphasising the importance of “soft”, emotionally tilted input to consumers’ decision making, even concerning financial tasks such as risk-taking. Narrowly defined pension system environment may hamper generalisations since many constructs tested are situation specific. Practical implications – From a practical perspective, individual investment behaviour is of increasing importance for the individual as retirement saver and for the financial industry in its attempt to tailor-make financial products to its customers. From a legislators’ perspective, the dimensions of knowledge and involvement describe the type of consumer supposedly most vulnerable: the uninterested individual with low levels of financial knowledge. Originality/value – Tests the importance of trust on choice of risk level in a pension setting and is able to expand previous results into the area of consumer behaviour regarding pensions. The paper further manages to assess the specificities as regards the relation between trust and risk-taking for individuals with varying levels of knowledge and involvement.

Public service motivation and willingness to collaborate

2014 ◽  
Vol 2 (1) ◽  
pp. 80-95 ◽  
Author(s):  
Heather Getha-Taylor ◽  
Alexa Haddock-Bigwarfe
Keyword(s):  
Homeland Security ◽  
Public Service ◽  
Public Service Motivation ◽  
The Body ◽  
Organizational Level ◽  
Cross Sectional ◽  
Content Type ◽  
Individual Level ◽  
Original Survey ◽  
The Individual

Purpose – The purpose of this paper is to examine public service motivation (PSM) and the connection with collaborative attitudes among a sample of homeland security actors representing the public, private, and nonprofit sectors. Design/methodology/approach – This study examines relationships between measures of PSM and collaboration using original survey data and hierarchical multiple regression. Findings – Findings reveal strong positive relationships between PSM measures and attitudes toward collaboration at the individual and organizational level. Research limitations/implications – Survey results are cross-sectional and are from respondents participating in a single state's homeland security summit. Practical implications – It is expected that results can be used to enhance collaboration at the individual and organizational levels. At the organizational level, results can be used for matching individuals with collaborative opportunities. At the individual level, results can be used for enhanced self-reflection and effectiveness purposes. Originality/value – This study provides insights on the relationship between PSM measures and collaborative attitudes. The research contributes to the body of scholarly work connecting PSM and correlates of interest.

Adoption of students' loan schemes: the contingent role of financial knowledge

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Gloria Ocran ◽  
Livingstone Divine Caesar
Keyword(s):  
Critical Role ◽  
Financial Education ◽  
The Body ◽  
Financial Knowledge ◽  
Relative Advantage ◽  
Research Approach ◽  
Content Type ◽  
Four Dimensions ◽  
Behavioural Factors

PurposeDespite the introduction of structural reforms to the students' loan scheme (SLS) in Ghana's higher education sector, patronage is still low. This paper aims to examine the complexity of technological and behavioural factors underpinning the low rate of students' loan adoption in Ghana. It further contributes to the body of knowledge by exploring the moderating role of financial knowledge in the hypothesized relationships.Design/methodology/approachUsing a positivistic research approach, a sample of 700 tertiary students with experience in accessing SLSs were surveyed. An 88% response rate was realized and the data analysed using descriptive statistics, exploratory and confirmatory factor analysis.FindingsFour dimensions of technological factors (relative advantage, trialability, observability and compatibility) and two of behavioural factors (attitude and control behaviour) were positively related to adoption of the SLS. Financial knowledge only moderated the relationship between compatibility, attitude, behavioural control and students' loan adoption.Practical implicationsFinancial knowledge plays a critical role in influencing the investment decisions of people. Management of SLSs needs to offer financial education to targeted parents/students to clear misconceptions. It is also imperative that all other technical challenges are addressed to enhance adoption rates for the SLS. Review of guarantor requirements is needed also.Originality/valueThis paper introduces financial knowledge as a moderating variable to investigate the hypothesized relationships. It offers a developing country insight into how technological/behavioural factors and financial knowledge might be impacting adoption of SLSs.

Risk-taking and risk aversion in the period of before and after the 2008 crisis: evaluation with bibliometric analysis

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Selim Aren ◽  
Hatice Nayman Hamamci
Keyword(s):  
Risk Aversion ◽  
Bibliometric Analysis ◽  
Risk Taking ◽  
Financial Risk ◽  
Investor Sentiment ◽  
The Other ◽  
Content Type ◽  
Risk Appetite ◽  
Java Program ◽  
Before And After

PurposeThis study aims to quantitatively classify the articles with risk-taking and risk aversion keywords and to investigate whether there is a similar emphasis in articles as parallel to the change in risk appetite in the market in the period before the crisis (bubble period) and after the crisis.Design/methodology/approachIn this study, a bibliometric analysis of the articles in which the keywords risk-taking and risk aversion are mentioned together with the word finance in the journals scanned in the Web of Science between 2004 and 2012 was performed. In this context, 936 articles were specified. Analyses were made using the CiteSpace Java program.FindingsThe three journals with the most articles with these characteristics are Journal of Banking and Finance, Journal of Financial Economics and Strategic Management Journal. Along with these two main keywords, the other two most used keywords were “model” and “performance”. In addition, the keywords “attitude”, “corporate governance”, “choice” and “determinant” were used more in the post-crisis period. On the other hand, concepts such as investor sentiment or emotions were not amongst the 10 most frequently used keywords during the nine years. This can be considered as an indicator that risk is being modelled, but emotions are relatively neglected. As a result, the findings of this study show that academic papers do not develop in connection with the mood and excitement in the market.Originality/valueThis study is one of the first studies to examine the reflection of risk appetite in the market on academic papers on financial risk-taking and aversion and to investigate whether the situation in the market and the development in publications are related.

Antecedents to responsible financial management behavior among young adults: moderating role of financial risk tolerance

2020 ◽  
Vol 38 (5) ◽  
pp. 1177-1194 ◽  
Author(s):  
Dhananjay Bapat
Keyword(s):  
Young Adults ◽  
Financial Management ◽  
Financial Risk ◽  
Risk Tolerance ◽  
Financial Knowledge ◽  
Financial Behavior ◽  
Management Behavior ◽  
Content Type ◽  
Financial Risk Tolerance

PurposeThe study examines the antecedents of responsible financial management behavior among young adults in India and explores the role of financial risk tolerance as a moderating variable.Design/methodology/approachThe sample includes young adults in the age group of 18–35. The analysis uses a two-step approach via standard partial least squares structural modeling (PLS-SEM) and ordinary least square (OLS) regression.FindingsStructural modeling results show that financial attitude fully mediates the relationship between financial knowledge and responsible financial management behavior, and locus of control influences responsible financial management behavior. Financial risk tolerance moderates the relationship. Among demographic factors, age and occupation influence responsible financial management behavior.Research limitations/implicationsThe financial knowledge used in the survey are based on self-reported responses. The future study can include participants from both developed and emerging countries to assess similarities and differences.Practical implicationsDespite the growing focus on improving financial literacy, there are growing concerns regarding responsible financial behavior. Since financial services is related to fiduciary responsibility, managers and policymakers need to ensure that financial knowledge results in improving financial attitude, which further leads to responsible financial behavior.Originality/valueThe present study from an emerging country will add value to the literature.

Financial risk-taking related to individual risk preference, social comparison and competition

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Tommy Gärling ◽  
Dawei Fang ◽  
Martin Holmen ◽  
Patrik Michaelsen
Keyword(s):  
Social Comparison ◽  
Risk Taking ◽  
Financial Risk ◽  
Risk Preference ◽  
The Other ◽  
Individual Risk ◽  
Additional Increase ◽  
Content Type ◽  
Market Experiments ◽  
Increases In Risk

PurposeThe purpose of this paper is to investigate how social comparison and motivation to compete account for elevated risk-taking in fund management corroborated by asset market experiments when performance depends on rank-based incentives.Design/methodology/approachIn two laboratory experiments, university students (n1 = 240/n2 = 120) make choices between risky and certain outcomes of hypothetical sums of money. Both experiments investigate in which direction risky choices in an individual condition (individual risk preference) are shifted when participants compare their performance to another participant's performance (social comparison), being instructed or not to outperform the other (incentive to compete).FindingsIn the absence of incentives to compete, participants tend to minimize the differences between expected outcomes to themselves and to the other, but when provided with incentives to compete, they tend to maximize these differences. An independent additional increase in risk-taking is observed when participants are provided with incentives to compete.Originality/valueOriginal findings include that social comparison does not evoke motivation to compete unless incentives are offered and that increases in risk-taking depend both on what the other chooses and the incentives.

Role of gender and corporate risk taking

2020 ◽  
Vol 20 (3) ◽  
pp. 383-399 ◽  
Author(s):  
Dene Hurley ◽  
Amod Choudhary
Keyword(s):  
Panel Data ◽  
Risk Taking ◽  
Financial Risk ◽  
Chief Financial Officers ◽  
Board Members ◽  
Content Type ◽  
Equity Ratio ◽  
Glass Cliff ◽  
The Impact

Purpose The purpose of this study is to examine the role of chief financial officers’ (CFOs’) gender in financial risk taking of 58 US companies along with the impact of having women board members. Design/methodology/approach Using a panel data of 58 selected S&P 500 companies during the period 2012-2016, this paper determines whether the gender of CFOs and having women board members play a role in risk-taking behavior of firms. Findings Firms led by female CFOs are smaller in size with lower net income and net revenue. The panel data analysis shows that the impact of female CFOs on firms’ financial risk is mixed, depending on risk measures used, whereas increasing female board members reduces that risk. Research limitations/implications The data used is limited to 58 S&P 500 companies, and two of the three risk-taking measures used in the study, specifically investment in property, plant and equipment (PPE) and debt/equity ratio, may not be applicable to some industries. Practical implications The findings provide mixed evidence of risk aversion by females in executive and leadership positions, depending on the measures used and the management responsibilities they undertake (CFO versus board member) with support for the glass cliff phenomenon in which females may be leading financially precarious organizations. Social implications Female CFOs are found to be leading relatively smaller and financially poor-performing firms compared with the male CFO-led firms, thereby giving support to the glass cliff arguments. Originality/value The paper examines the role of CFOs’ gender and board diversity in risk taking as measured by the investment in PPE, debt/equity ratio and stock return volatility.

A survey of capital budgeting practices used by firms in Barbados

2018 ◽  
Vol 16 (4) ◽  
pp. 564-584
Author(s):  
Philmore Alleyne ◽  
Shantelle Armstrong ◽  
Marissa Chandler
Keyword(s):  
Net Present Value ◽  
Cultural Practices ◽  
Contingency Theory ◽  
Capital Budgeting ◽  
The Body ◽  
Capital Projects ◽  
Content Type ◽  
The Individual ◽  
Self Administered Questionnaire

PurposeThis paper aims to examine the capital budgeting practices used by firms in Barbados using contingency theory.Design/methodology/approachThe study involves the use of a self-administered questionnaire sent to the individual responsible for capital budgeting decisions (either the accountant, financial controller or senior manager) in each of the firms selected. In total, 41 completed questionnaires are received; 12 follow-up interviews are conducted with respondents to indicate the reasons for use and non-use of capital budgeting practices.FindingsCapital budgeting practices are not widely used by firms in Barbados. The payback method (PBM) is determined to be the preferred method of choice because of its simplicity, agility and cultural practices. Based on contingency theory, organisations in Barbados believe that the PBM is a better fit for them. Top management drives the capital budgeting process with crude and non-traditional methods for the acceptance of capital projects. While there are no statistically significant differences in the capital budgeting practices used in different sectors, professional accountants are more likely to use net present value and sensitivity analysis than non-professional accountants.Research limitations/implicationsThe sample is small, and consequently, findings may not be generalisable to the population.Originality/valueThis study makes a significant contribution to the body of literature in emerging countries such as Barbados on the usage of capital budgeting practices and factors that may influence their usage. It further contributes to policymakers, practitioners, organisations and stakeholders of organisations.

Are banks misled by leverage misestimate of Chinese listed companies?

2020 ◽  
Vol 11 (4) ◽  
pp. 507-535
Author(s):  
Zhenjie Wang ◽  
Zhuquan Wang ◽  
Xinhui Su
Keyword(s):  
Financial Risk ◽  
Negative Impact ◽  
Listed Companies ◽  
Risk Indicators ◽  
Risk Level ◽  
Short Term ◽  
Content Type ◽  
The Real ◽  
Market Shares ◽  
Traditional Research

Purpose The authors point out that the existing research confuses the operational liabilities formed based on the “transaction” relationship with the financial liabilities formed based on the “investment” relationship, which not only exaggerates the value of leverage but also underestimates the level of protection that companies provide for creditors alone. That is, the confusion of concepts not only triggers the problem of leverage misestimate but also triggers the short-term financial risk misestimate. The performance of “nominal leverage” and “nominal short-term solvency” based on total assets calculation cannot reflect the real leverage level and the real short-term financial risk of enterprises. Design/methodology/approach To distinguish the concepts of “assets” and “capital” and rationalize the relationship between “transactions” and “investments”, authors systematically design the “real leverage” indicators and “real short-term solvency” indicators, and measure the degree of misestimate of leverage and short-term financial risk indicators by traditional research. On this basis, this paper describes and analyses the trends of leveraged misestimate and short-term financial risk misestimate of listed companies in China and analyses which companies have more serious leverage misestimate. And it helps readers to form an objective understanding of the leveraged misestimate and short-term financial risk misestimate of listed companies in China. Findings Firstly, the overall high level of leverage of listed companies in China in the traditional sense is largely because of the misestimate of indicators. And this kind of misestimate is more serious among firms that have advantages in trading, such as state-owned enterprises and firms with higher market shares. Secondly, for most firms with normal solvency, traditional research systematically overestimated the negative impact of “nominal leverage” on financial risk indicators (represented by short-term solvency). The overestimation is significant in firms with serious leverage misestimate. Thirdly, indicators’ misestimate of the traditional research makes the banks cannot make effective credit decisions according to the firm's “real leverage” and “real short-term solvency”. Originality/value Firstly, clarify the differences between the concepts of “assets” and “capital”, and clarify the level of “real leverage” of listed companies in China, which is conducive to the process of “de-leveraging”. Secondly, revise the problem of misestimate of related indicators, so that financial institutions can clearly identify the true profitability and real risk level of the entity domain, and thus improve the effectiveness of credit decisions.

“It’s time”: revolution and evolution in Australian political advertising

2016 ◽  
Vol 8 (3) ◽  
pp. 375-395
Author(s):  
Leanne White
Keyword(s):  
Political Communication ◽  
Cultural Influences ◽  
Political Advertising ◽  
Television Advertising ◽  
The Body ◽  
Advertising Agencies ◽  
Content Type ◽  
Television Advertisements ◽  
Main Components ◽  
The Individual

Purpose The purpose of this paper is to examine two significant political advertising campaigns which used the “It’s Time” slogan and to reflect on how these related to official, popular and commercial nationalism in Australia. The paper is primarily concerned with two main issues: identifying and examining the variety of images of Australia in two key television advertisements, and exploring the methods by which advertising agencies created positive images of Australia and Australians in the two campaigns. It specifically highlights the significance of the “It’s Time” campaign, which is relevant for scholars and advertisers seeking to understand effective political communication. Design/methodology/approach This paper examines television advertisements by using semiotics as the principal methodology. The research methodology devised for the advertisements consists of two main components: a shot combination analysis, also known as a shot-by-shot analysis, and a semiological reading of the visual and acoustic channels of the advertisement. Findings This paper examines the use of commercial nationalism in television advertising. As one of many social and cultural influences, advertisements assist the individual in understanding their notion of themselves and their relationship with the wider community – be it local, national, regional or global. The primary focus of this research is the phenomenon of commercial nationalism – the adoption of national signifiers in the marketplace. However, by examining the more general discourse on nationalism, particularly the voice of official nationalism – the promotion of nationalism by the nation-state (or those aspiring to power), the symbiotic relationship between these two complementary brands of nationalism is explored. Originality/value The methodology adopted for analysing the two political advertising campaigns offers conceptual and practical value. It provides a consistent set of terms and concepts for further research to build upon. The paper provides insights for the marketing or examination of advertising campaigns. The paper demonstrates the power of market research to inform a framing strategy for a political campaign. The paper contributes to the body of knowledge in this area and thus society’s understanding of these important periods in the nation’s history. In particular, the paper provides an exploration into the “It’s Time” campaign and how it mobilised a broader cultural awakening to engineer success at the ballot box in 1972. The two case studies examined in this paper are relevant to political scientists and media and communication scholars.

A deforming time approach to the treatment of risk in projects evaluation

2018 ◽  
Vol 19 (5) ◽  
pp. 548-563
Author(s):  
Salvador Cruz-Rambaud ◽  
Ana Maria Sanchez-Perez
Keyword(s):  
Alternative Model ◽  
Financial Risk ◽  
Western Europe ◽  
Function Analysis ◽  
Point Of View ◽  
Risk Level ◽  
Discount Function ◽  
Content Type ◽  
Project Assessment ◽  
Significant Difference

Purpose The purpose of the paper is to introduce a novel methodology to identify and quantify the difference of financial risks exhibited by listed and unlisted companies in their debt payments from an empirical point of view. Design/methodology/approach The paper attempts to establish the theoretical relationship between the agreed original periods and their corresponding periods of real payments. It is based on Krugman’s curve. This relationship has been implemented using data from listed and unlisted companies of Spain and from Western Europe countries (divided by companies, size and industry). Findings An alternative model has been implemented with the available information about listed and unlisted companies. There is not a significant difference in the financial risk level corresponding to listed and unlisted firms in Spain. Practical/implications The paper could provide a useful guidance in applying the risk in project assessment. Originality/value This paper provides a new methodology to reduce the subjectivity shown in the treatment of risk by traditional approaches. The method allows to including the financial risk in the time parameter of the discount function. Analysis of the delays in debt payments by both listed and unlisted companies; Alternative model able to describe the expected delays from the initial agreed period; Inclusion of the financial risk in the parameter “time” of a discount function.

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