The Effect of Bonus Deferral on Managers' Investment Decisions

2019 ◽  
Vol 31 (2) ◽  
pp. 31-49
Author(s):  
Mandy M. Cheng ◽  
Tami Dinh ◽  
Wolfgang Schultze ◽  
Maria Assel
Keyword(s):  
Investment Decisions ◽  
Data Availability ◽  
Managerial Compensation ◽  
Negative Consequences ◽  
Mediation Effects ◽  
Managerial Myopia ◽  
Bonus Payments ◽  
Psychology Literature ◽  
The Impact

ABSTRACT We examine the impact of deferred bonus payments and employment horizon on managers' investment decisions. Bonus deferral is an important element of compensation schemes designed to mitigate managers' tendency to avoid long-term investments that can reduce their bonuses, i.e., the problem of managerial myopia. Consistent with construal-level theory in the psychology literature, we find that bonus deferral increases managers' willingness to make an investment that has detrimental effects on their current bonus but that provides long-term benefits to the firm. This is driven by managers placing greater importance on their responsibilities for advancing their firm's long-term interests and on improving their reputations within their firms. These mediation effects are moderated by participants' employment horizon. Our study contributes to the debate on effective managerial compensation by showing that a simple deferral of bonus payments can reduce the negative consequences related to managerial myopia. JEL Classifications: M40; M41. Data Availability: Data are available from the authors upon request.

Does salience matter in investment decision?

Kybernetes ◽  
2019 ◽  
Vol 48 (8) ◽  
pp. 1894-1912
Author(s):  
Samra Chaudary
Keyword(s):  
Investment Decision ◽  
Investment Decisions ◽  
Equation Modeling ◽  
Individual Investors ◽  
Short Term ◽  
Content Type ◽  
Multigroup Analysis ◽  
Money Managers ◽  
The Impact

Purpose The paper takes a behavioral approach by making use of the prospect theory to unveil the impact of salience on short-term and long-term investment decisions. This paper aims to investigate the group differences for two types of investors’ groups, i.e. individual investors and professional investors. Design/methodology/approach The study uses partial least square-based structural equation modeling technique, measurement invariance test and multigroup analysis test on a unique data set of 277 active equity traders which included professional money managers and individual investors. Findings Results showed that salience has a significant positive impact on both short-term and long-term investment decisions. The impact was almost 1.5 times higher for long-term investment decision as compared to short-term decision. Furthermore, multigroup analysis revealed that the two groups (individual investors and professional investors) were statistically significantly different from each other. Research limitations/implications The study has implications for financial regulators, money managers and individual investors as it was found that individual investors suffer more with salience heuristic and may end up with sub-optimal portfolios due to inefficient diversification. Thus, investors should be cautious in fully relying on salience and avoid such bias to improve investment returns. Practical implications The study concludes with a discussion of policy and regulatory implications on how to minimize salience bias to achieve optimum and diversified portfolios. Originality/value The study has significantly contributed to the growing body of applied behavioral research in the discipline of finance.

scholarly journals Environment and Potential Affecting Investment Decision for Accommodation Business: Case of Less Visited Area in Samut Songkhram and Phatthalung Province

2021 ◽  
Vol 58 (2) ◽  
pp. 1706-1717
Author(s):  
Krisada Sungkhamanee, Piyadhida Sungkhamanee
Keyword(s):  
Financial Literacy ◽  
Investment Decision ◽  
Investment Decisions ◽  
Business Case ◽  
Potential Factors ◽  
Short Term Investment ◽  
The Impact ◽  
Moderating Role

Investment decisions have great importance in different sectors of various countries and these decisions are the basis on which the outcomes of the investments are based. However, there might be certain factors that might lead to the incorrect long term and short term investment decisions. In this regard, the current study has been conducted with the core motive to explore the impact casted by the environment and potential factors i.e. salience and overconfidence on the long term investment decisions for accommodation business along with the moderation of a variable i.e. financial literacy. To fulfill this objective, the researcher has collected data from the investors of accommodation businesses in Thailand. The collected data has been subjected to different statistical techniques and tools for analysis purpose and the results have been obtained. The results obtained by the analysis of the collected data indicate that salience and overconfidence have significant impact on the long term investment decision. In addition, the moderating role of financial literacy has also been found as significant in the study. The results suggest that the investors of the accommodation business must consider the aspects of salience and overconfidence before taking any long term investment decision to avoid failure of the investment decision.    

Fundamentals and Main Provisions of the Functional-Procedural Concept of Mental Deprivation

2021 ◽  
Vol 9 (5) ◽  
pp. 514-525
Author(s):  
Yuliana M. Terletska ◽  
Keyword(s):  
Negative Consequences ◽  
Normal Functioning ◽  
Mental Phenomenon ◽  
Interconnected System ◽  
Basic Principles ◽  
Methods Of Analysis ◽  
Human Psyche ◽  
Destructive Processes ◽  
The Impact

Science still does not have a single scientifically sound concept of mental deprivation, which would explain its psychological essence, this mental phenomenon cannot be adequately assessed, or measures to prevent or eliminate negative mental phenomena it provoked cannot be developed. The article aims to reveal the basic principles and substantiate the main provisions of the functional-procedural concept of mental deprivation. Psycho-energetic and energy-psycho-functional approaches were used, as well as methods of analysis, synthesis, abstraction, specification, comparison, generalisation, and grouping of knowledge about the human psyche. The functional-procedural concept of mental deprivation of humans covers an interconnected system of provisions. According to them, mental deprivation is a course of more or less powerful destructive processes in the functioning of his psyche. Such processes arose from the destruction of mental parameters in various areas due to long-term unfulfilling necessary for normal functioning and development. The development of a functional-procedural concept of mental deprivation of a human will make it possible, first, to adequately define its essence and content in the scientific dimension as a phenomenon of the psyche; secondly, to assess its impact on the functioning of the whole psyche; third, to disclose the impact on development or its delay, actions, behaviour, and activities of an individual; fourth, to develop psychotherapeutic measures to prevent the occurrence of mental deprivation and eliminate its negative consequences.

scholarly journals The Impact of Investment Decision and Funding on Financial Performance and Firm Value

2019 ◽  
Vol 8 (2) ◽  
pp. 103
Author(s):  
Hadi Santoso
Keyword(s):  
Data Analysis ◽  
Financial Performance ◽  
Firm Value ◽  
Stock Exchange ◽  
Investment Decision ◽  
Investment Decisions ◽  
The Right ◽  
The Impact ◽  
Selection Of

Managers who are responsible for the management of companies are faced with two important decisions - investment and funding. The right investment decisions and choice of funding sources are important because they affect the company's financial performance. The selection of the types of assets to be invested and the right types of financing sources result in optimal returns for the company. It reflects good company performance and future prospects. In addition, optimal return is a good sign for investors. Companies that perform well experience increase in the value of their firm. This study examined the effect of investment decisions and the selection of appropriate sources of funds on the performance of the company and the consequent impact on the firm value. The study was conducted in two parts. The first part examined the effect of investment decisions on long-term assets with long-term funding on the rate of return and firm value. The second part examined the effect of investment decisions on the company's short-term assets and funding for financial performance and firm value. The case study used in this research is a consumer goods sub-sector company listed on the Indonesia Stock Exchange in the period 2010 to 2017. Path analysis is the data analysis tools that was used. The results of data analysis showed that the asset structure has an effect on financial performance and firm value. The capital structure affects the financial performance but does not affect the firm value of the company. Financial performance was measured by ROI.

scholarly journals Phytoplankton of some rivers in the south of broadleaved forests subzone of the Middle Volga basin in a long-term perspective

2021 ◽  
Vol 10 (2) ◽  
pp. 45-53
Author(s):  
Pavel Vladimirovich Kulizin ◽  
Ekaterina Leonidovna Vodeneeva ◽  
Alexander Gennadievich Okhapkin
Keyword(s):  
Southern Taiga ◽  
Taiga Zone ◽  
Negative Consequences ◽  
Blue Green Algae ◽  
Middle Volga Basin ◽  
Middle Volga ◽  
Composition Structure ◽  
Quantitative Indicators ◽  
The Impact

The paper provides information on the composition, structure and dynamics of phytoplankton of three morphologically different tributaries of the Cheboksary reservoir (the Vetluga, the Kerzhenets and the Vishnya rivers). The species composition of algae includes 826 species and intraspecific taxa, the flora was formed by diatom, green and euglena algae. It reflects the watercourses particularities of the southern taiga zone. Based on long-term studies of phytoplankton a change in the composition of algoflora by more than half was noticed, especially in the groups of Charophyta, Cryptophyta, Miozoa, Ochrophyta and Euglenophyta. An increase in quantitative indicators of algocoenoses from oligotrophic to oligotrophic-mesotrophic level in the middle reaches of rivers by mesotrophic-eutrophic level in estuarine areas is shown. In a fifty-year research series a tendency of phytoplankton reduction in size by more than 3,5 times has been established. It reflects the impact of eutrophication and gradual warming of the climate. The period of abnormally hot summer of 2010 led to increased vegetation in the middle reaches of rivers of diazotrophic blue-green algae and dinophytes. Since the early 2000s, gradual penetration and naturalization of both planktonic invasive algae species and representatives of benthic algocoenoses have been noticed. The mentioned changes reflect the nature of phytoplankton rearrangements as the essential component of the biota and emphasize the importance of long-term research with a possibility to predict negative consequences.

scholarly journals Reconciling Flagging Strategies for Multi-Sensor Satellite Soil Moisture Climate Data Records

2020 ◽  
Vol 12 (20) ◽  
pp. 3439
Author(s):  
Mendy van der Vliet ◽  
Robin van der Schalie ◽  
Nemesio Rodriguez-Fernandez ◽  
Andreas Colliander ◽  
Richard de Jeu ◽  
...  
Keyword(s):  
Soil Moisture ◽  
European Space Agency ◽  
Data Availability ◽  
Climate Data ◽  
Mountainous Regions ◽  
Soil Moisture Data ◽  
Climate Records ◽  
The Individual ◽  
The Impact

Reliable soil moisture retrievals from passive microwave satellite sensors are limited during certain conditions, e.g., snow coverage, radio-frequency interference, and dense vegetation. In these cases, the retrievals can be masked using flagging algorithms. Currently available single- and multi-sensor soil moisture products utilize different flagging approaches. However, a clear overview and comparison of these approaches and their impact on soil moisture data are still lacking. For long-term climate records such as the soil moisture products of the European Space Agency (ESA) Climate Change Initiative (CCI), the effect of any flagging inconsistency resulting from combining multiple sensor datasets is not yet understood. Therefore, the first objective of this study is to review the data flagging system that is used within multi-sensor ESA CCI soil moisture products as well as the flagging systems of two other soil moisture datasets from sensors that are also used for the ESA CCI soil moisture products: The level 3 Soil Moisture and Ocean Salinity (SMOS) and the Soil Moisture Active/Passive (SMAP). The SMOS and SMAP soil moisture flagging systems differ substantially in number and type of conditions considered, critical flags, and data source dependencies. The impact on the data availability of the different flagging systems were compared for the SMOS and SMAP soil moisture datasets. Major differences in data availability were observed globally, especially for northern high latitudes, mountainous regions, and equatorial latitudes (up to 37%, 33%, and 32% respectively) with large seasonal variability. These results highlight the importance of a consistent and well-performing approach that is applicable to all individual products used in long-term soil moisture data records. Consequently, the second objective of the present study is to design a consistent and model-independent flagging strategy to improve soil moisture climate records such as the ESA CCI products. As snow cover, ice, and frozen conditions were demonstrated to have the biggest impact on data availability, a uniform satellite driven flagging strategy was designed for these conditions and evaluated against two ground observation networks. The new flagging strategy demonstrated to be a robust flagging alternative when compared to the individual flagging strategies adopted by the SMOS and SMAP soil moisture datasets with a similar performance, but with the applicability to the entire ESA CCI time record without the use of modelled approximations.

scholarly journals Pension fund trustee competence: decision making in problems relevant to investment practice

2006 ◽  
Vol 5 (1) ◽  
pp. 91-110 ◽  
Author(s):  
GORDON L. CLARK ◽  
EMIKO CAERLEWY-SMITH ◽  
JOHN C. MARSHALL
Keyword(s):  
Decision Making ◽  
Pension Fund ◽  
Service Providers ◽  
Investment Decisions ◽  
Pension Plan ◽  
Defined Benefit ◽  
Defined Benefit Pension Plan ◽  
Fund Governance ◽  
Psychology Literature

Government-sponsored inquiries into trustee competence, and legislation regarding the protocols and practice of trustee decision making, have raised questions about the competence of trustees to make investment decisions consistent with the long-term interest of defined benefit pension plan beneficiaries. In this paper, we report the results of an analysis of trustee competence in solving problems relevant to their investment responsibilities. Based upon a set of widely recognized problems drawn from the psychology literature, we assess their discount functions, their willingness to risk their own money and others' money, their appreciation of probability, and their use of evidence to solve problems. For comparison, where appropriate we report the results of the same testing regime applied to a group of Oxford undergraduates. Our goals are fourfold: first, to demonstrate the nature of trustee competence in decision making; second, to demonstrate the range of trustee responses to problems relevant to investment; third, to assess trustees' risk appetites in relation to their own and others' money; and fourth, to draw implications from these results for the governance of trustee boards and their relationships with advisers and service providers. It is shown that trustee competence is surprisingly heterogeneous, and the lack of common approaches to problems relevant to investment practice has significant implications for fund governance.

scholarly journals Internal Control Weakness and Managerial Myopia: Evidence from SOX Section 404 Disclosures

2019 ◽  
Vol 8 (1) ◽  
pp. 71-83 ◽  
Author(s):  
Amy E. Ji
Keyword(s):  
Financial Reporting ◽  
Internal Control ◽  
Investment Decisions ◽  
Reporting Quality ◽  
Internal Controls ◽  
Financial Reporting Quality ◽  
Section 404 ◽  
Managerial Myopia ◽  
Internal Control Weaknesses ◽  
The Impact

Problem/ Relevance: Managerial myopia is an important issue of interests to academics, practitioners, and regulators as managers have been condemned for their obsession with short-term earnings and myopic investment decisions that sacrifice firms’ long term value for shareholders. This article contributes by examining whether the quality of firms’ internal controls over financial reporting (ICFR) is associated with managerial myopia. Research Objective/ Questions: The purpose of this study is to examine whether managers in firms reporting material internal control weaknesses (ICW) under Section 404 of the Sarbanes-Oxley Act (SOX) of 2002 engage in myopic behaviors more than those in firms without reporting ICW. Methodology: The study uses the logit regression model to investigate a sample obtained from Compustat for the period of 2005-2013. Major Findings: The study finds a positive association between internal control weaknesses reported by auditors under Section 404 of the SOX and managerial short-termism which is measured by the probability of cutting R&D expenses in the current year from the previous year. Implications: Whereas prior studies mostly examine the impact of internal controls on accounting quality, this study demonstrates the implication of internal controls beyond financial reporting quality by showing an association between internal control quality and managerial myopia. Future research may further investigate the association between firms’ financial reporting quality and managerial investment decisions.

scholarly journals Behavioural change box? Applying the COM-B model to understand behavioural triggers that support consumption of fruits and vegetable among subscribers of a fruit and vegetable box scheme

2021 ◽  
pp. 1-28
Author(s):  
Daniela Craveiro ◽  
Sibila Marques ◽  
Ruth Bell ◽  
Matluba Khan ◽  
Cristina Godinho ◽  
...  
Keyword(s):  
Structural Equation ◽  
Dietary Habits ◽  
Behavioural Change ◽  
Evaluation Research ◽  
Correlation Study ◽  
Data Availability ◽  
Fruit And Vegetable ◽  
Mediation Effects ◽  
Box Scheme ◽  
The Impact

Abstract Objective To understand the key mechanisms that support healthy dietary habits promoted by fruit and vegetable (F&V) box schemes, testing relevant behaviour change triggers identified under the COM-B model in an evaluation research study of a Portuguese F&V box scheme (PROVE). Design Correlation study with a post-test-only non-equivalent group design based on survey data. The mechanisms underpinning the differences between subscribers and non-subscribers are operationalized as mediation effects. Data availability, theoretical relevance and empirical validation supported the selection and testing of four potential mediators for the effects of subscribing to the box scheme on F&V consumption. These estimations derive from the coefficients of a structural equation model combined with the product coefficient approach and Sobel test. Setting The study is part of a wider evaluation study on the impact of the PROVE box scheme on sustainability, health, and equity. Participants A sample of PROVE box subscribers (n=294) was compared with a matched subsample of non-subscribers (n=571) in a nationally representative survey. Results Subscribing to the PROVE box correlates with an increased probability of eating at least five portions of F&V, irrespective of differences in age, education, and perceived economic difficulties. Diet quality perceptions, and more robustly, the strength of meal habits and household availability were identified as relevant mediators. Conclusions The subscription to an F&V box scheme is connected with proximal context that enables the consumption of F&V by ensuring more readily available F&V and better situational conditions associated with healthier meal habits.

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