The role of managerial risk-taking in the ‘rise and fall’ of the CDS market

This study aims to investigate the relationship between the managerial risk-taking, managerial competencies and financial service outreach of microfinance banks in Pakistan. Primary data was collected from 36 branches of microfinance banks (MFBs) in nine cities. The unit of investigation is the branch manager and senior credit officer of each MFB branch. Descriptive statistics, correlation and regression, are used for data analysis. This study found a positive relationship between financial service outreach of MFBs and managerial competencies; financial service outreach also has a positive relationship with the risk-taking behavior of managers. There is a positive relationship between risk-taking behavior and financial service outreach of banks. The risk-taking behavior partially mediates the relationship between the managerial competencies and financial service outreach. The magnitude of the relationship between managerial competencies and outreach is significant, and its magnitude reduces when there is the mediation of managerial risk-taking behavior between them. Thus, managerial competencies, along with risk-taking behavior are the keys drivers of financial service outreach of MFBs. This study informs MFB’s top management and policymakers that competencies of managers and their calculated risk-taking propensities determined outreach performance of the MFBs.

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Does managerial entrenchment matter in risk taking? Evidence from the Tunisian context

Corporate Ownership and Control ◽

10.22495/cocv5i3c4p8 ◽

2008 ◽

Vol 5 (3) ◽

pp. 482-493

Author(s):

Amel Belanes Aroui ◽

Abdelwahed Omri

Keyword(s):

Corporate Governance ◽

Factor Analysis ◽

Risk Taking ◽

Stock Exchange ◽

Global Index ◽

Managerial Entrenchment ◽

Financial Firms ◽

Managerial Risk ◽

The Impact

Building on agency and prospect theory views, many researchers have analyzed the executive risk-taking behavior. They have usually put in evidence the role of the mechanisms of corporate governance. In this research, we try to point out that even managerial entrenchment does matter. We consider the non financial firms that are listed in the Tunisian Stock exchange during the 1996 - 2006 period. To reveal the managerial risk taking, we apply factor analysis so as to construct a global index. To find out the impact of managerial entrenchment on risk-taking, we consider the ownership of the manager, his experience within the firm as well as his age. The size of the firm is also worth investigating while exploring managerial risk taking. The results are somewhat robust to different specifications. They may enhance and extend the agency-based corporate governance literature on executive risk-taking. But above all, they may shed some light on the emerging markets context namely the Tunisian one

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