Abstract
Loss aversion Bias in Working Capital Management and Performance Small and Medium- sized Enterprise(SMEs): Perspectives of Ghanaian SME Managers
Highlights
Small and medium enterprises (SMEs) are expected to manage working capital to enhance performance
The interviews focused on loss aversion behaviors of participants and their influence on working capital and performance decision
We found that Small and medium-sized enterprises (SMEs) managers were loss averse
Summary
Small and medium enterprises (SMEs) are expected to manage working capital to enhance performance. Managers are required to follow the standard working capital practices for optimum decision. They hardly apply theories but rather use subjective methods of working capital decision (Filbeck and Lee, 2000; Bandara and Rathnasiri, 2016). This subjective decision can expose managers to several biases, including loss aversion (Tversky and Kahneman, 1974) which is one of less studied managerial biases compared to overconfident bias. There is still limited knowledge about loss aversion behaviors of managers(owners) of SMEs, given their managerial role and as key financier
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