Religiosity and corporate financial decisions: a literature review

This chapter, first, draws an overview of the theoretical and conceptual framework of corporate decisions in the global financial crisis (GFC) context. Then, it shows the connectedness of corporate finance and international trade. Finally, employing a rich dataset, this chapter assesses the impact of international trade as well as the GFC on corporate financial decisions, particularly cash holdings, debt financing, and dividend payouts over the period 2002-2016. The findings show that international trade significantly affects corporate decisions. Firms with higher trade countries have higher debt level but lower cash and dividends across the globe. During the GFC, the positive impact of trade on debt shifts to negative. Also, trade has a positive effect on both cash and debt in the aftermath of the GFC. Taken together, international trade as an institutional setting influences corporate decisions and its role on cash, debt, and dividend differ during and after the GFC.

The study examines the development and formation of behavioral corporate finance based on various theories and the work of scholars, highlighting the key stages and their distinctive features. A comparative analysis of different behavioral economic approaches has been conducted. The paper analyzes the current state of national and foreign achievements, as well as the conceptual foundations for the development of behavioral corporate finance. Currently, behavioral sciences have become one of the key tools for predicting economic behavior at the micro, meso, and macro levels. Behavioral corporate finance has emerged as a distinct field at the intersection of finance, economics, neuroscience, and psychology. It explains corporate managers’ decision-making processes and forecasts irrational behavior influenced by emotions and cognitive biases, which affect corporate strategy and capital structure. The relevance of the study increases, particularly during critical economic periods when the level of irrational corporate behavior rises and the level of objective analysis decreases due to uncertainty. An analysis of corporate governance and financial decision-making shows that managerial behavior often deviates from the traditional rational decision-making model due to emotional and cognitive factors. Loss aversion, overconfidence, the status quo effect, and irrational optimism are the key factors influencing financial decisions. The key factors for studying behavioral corporate finance in Ukraine include: 1. The impact of globalization processes and the complexity of corporate processes. 2. Deviations from the rational model in corporate decision-making. 3. The lack of clear forecasting in investment and dividend policies due to the influence of social and psychological biases. 4. The low level of implementation of behavioral approaches in Ukraine. Behavioral corporate finance is actively applied in developed countries, especially in the United States, the United Kingdom, and Western European countries. This enhances the profitability of mergers and acquisitions, encourages the closure of low-profit business segments, and increases the use of internal financing (e.g., share buybacks by Apple and Microsoft). It also reduces debt financing (e.g., Tesla), ensures stability in dividend policies (e.g., Johnson & Johnson, Coca-Cola), promotes investment conservatism (e.g., Berkshire Hathaway), and reduces the risk of underestimating the management of target companies during acquisitions. In conclusion, the development and implementation of behavioral corporate finance at the national level are essential for further improving corporate governance and enhancing the quality of corporate financial strategies during periods of economic instability.

Traditional corporate finance models generally assume that agents are fully rational, but this assumption is not consistent with evidence from the psychology literature. For example, a particular type of bias, overconfidence, has been shown to have a substantial impact on various corporate decisions. Accordingly, this thesis aims to contribute to the fast- rowing behavioral corporate finance literature by focusing on how overconfidence affects corporate finance policies. There are two types of overconfidence: (1) optimism and (2) miscalibration. Optimism is defined as agents’ overestimation of the mean for uncertain distributions, whereas miscalibration is defined as agents’ underestimation of variance.In the first study, I examine how CEO optimism affects corporate debt maturity choices. I first develop a simple model to illustrate that optimistic CEOs prefer more short-term debt and then empirically examine this prediction. Consistent with a demand-side story, I find that firms with optimistic CEOs tend to adopt a shorter debt maturity structure by using a higher proportion of short-term debt (due within 12 months). This behavior of optimistic CEOs is not deterred by the high liquidity risk associated with such a financing strategy. The demand-side explanation remains robust even after considering six alternative drivers, including a competing supply-side explanation in which creditors are reluctant to extend long-term debt to optimistic CEOs.Due to the lack of a reliable measure for the second type of overconfidence, miscalibration, researchers are normally constrained from empirically examining the impact of miscalibration on corporate finance policies. In the second study, I develop accessible empirical measures to disentangle optimism and miscalibration through a novel exploitation of earnings forecasts issued by firm managers. Optimism is proxied by the earnings forecast error, whereas miscalibration is derived from the earnings forecast interval, after controlling for confounding factors. The resulting measures capture different aspects of the link between overconfidence and managerial decisions. In terms of investment, miscalibrated CEOs are more likely to scale up investment in real assets (especially via mergers and acquisitions); firms with optimistic CEOs display no such proclivity.In the third study, leveraging the overconfidence measures developed in the second study, I examine whether and to what extent optimism and miscalibration affect debt-equity choices differently. This study is important because the various types of overconfidence can have countervailing implications for debt or equity choices based on alternative capital structure theories. I show that firms with miscalibrated CEOs are more likely to issue debt both conditional and unconditional on accessing the external financing market, resulting in a greater increase in leverage. I further show that miscalibrated CEOs’ reluctance to issue equity is attenuated by higher stock valuation. In contrast, firms with optimistic CEOs are found to have higher leverage and to increase leverage more aggressively. The results support the important roles of both optimism and miscalibration in corporate financing decisions.

The recent value integration of science and religion has become a topic of research in Indonesia, especially in developing critical-thinking skills and students’ personal religious belief. The purpose of this research is to see the results of the implementation of the DBUS (Discovery-Based Unity of Sciences) learning model analyzed in detail at each step of the learning. This research uses a qualitative approach with interactive analysis of data reduction, data presentation, and conclusion drawing. The research sample was 101 students and two biology lecturers from UIN Walisongo Semarang, 94 students and two biology lecturers from UIN Sunan Kalijaga Yogyakarta. The results of the analysis of this research show that, by implementing the DBUS learning model, students learn constructively, meaningfully, and can apply each syntax in the learning process to develop critical-thinking skills and students’ personal religious beliefs. The DBUS learning model becomes a way to integrate the value of science and religion in developing students' abilities to learn constructively and meaningfully so they can develop critical-thinking skills and personal religious beliefs (PRB).

Traditionally, financialists have based their work on the standard assumption that agents are fully rational, self-interested, and maximisers of expected utility. However, researchers are increasingly recognizing that the psychological biases of managers may affect decision-making and outcomes in corporations. Behavioral Finance (BF) and Behavioral Corporate Finance (BCF) examine the effects of managerial and investor psychological biases on firm’s corporate finance decisions (such as investment appraisal and capital structure). This study investigates professional corporate managers’ behavior across decision settings. Specifically, manager’s decisions to take or avoid risk are investigated when evaluating data. The study also, examines the factors which may affect the manager’s tendency towards risk taking or avoiding. Therefore, the relation between Education, Specialist in Education, experience, capitals of the company, understanding financial concepts and the degree of risk aversion has been examined in different business sector in Jeddah area, KSA.

Previous research in behavioral corporate finance has demonstrated that managerial optimism has an explanatory power and it can explain observed distortions in corporate decisions. What makes it special is its being a major source of investment cash flow sensitivity and it can affect the firm value since it causes overinvestment or overinvestment (Heaton in Financ Manag 31(2):33–45, 2002; Malmendier and Tate in J Financ 60(6):2661–2700, 2005a, Eur Financ Manag 11(5):649–659, 2005b; Pacific-Lin et al. in Basin Financ J 13:523–546, 2005; Huang et al. in Pac Basin Financ J 19:261–277, 2011). However the behavioral corporate finance literature is still silent about the ability of corporate governance mechanisms to affect the CEOs’ optimism bias. In this paper, we present an original essay that aims to discuss the determinants of managerial optimism by adopting a corporate governance framework. We concentrate especially on the effect of corporate governance mechanisms regarding this bias. We construct a managerial optimism using the “Net Buyer” criterion as developed by Malmendier and Tate (J Financ 60(6):2661–2700, 2005a) and we regress directly the optimism measure to some well-documented mechanisms of corporate governance. We also explore the effect of some CEO’s personal characteristics on the emergence of managerial optimism. Departing from a sample of American manufactures’ firms, we find strong evidence concerning the effect of internal corporate governance structure on managerial optimism bias.

Behavioral Corporate Finance provides new and testable explanations for long-standing corporate-finance puzzles in mergers, investment-cash flow sensitivity, and fads in equity financing or dividend payments. The research applies by applying insights from psychology to the behavior of investors, managers, and third parties (e.g., analysts or bankers). corporate finance decisions. capital-structure decisions. This chapter gives an overview of the three leading streams of research and quantifies publication output and trends in the field. It emphasizes how Behavioral Corporate Finance has contributed to the broader field of Behavioral Economics. One contribution arises from the identification of biased behavior (also) in successful professionals, such as CEOs, entrepreneurs, or analysts. This evidence constitutes a significant departure from the prior focus on individual investors and consumers, where biases could be interpreted as ‘low ability,’ and it implies development of much broader applicability and implications of behavioral biases. A related contribution is the emphasis on individual heterogeneity, i.e., the careful consideration of the type of biases that are plausible for which type of individual and situation.

The debate about Islam and science extends to a debate about the relationship between Islam and science education. In this paper, I explore Egyptian teachers’ views of the relationship between science and religion within the Islamic context. Teachers’ key vision of the relationship between science and religion was that “religion comes first and science comes next. I will argue that teachers’ personal religious beliefs are among the major constructs that drive teachers’ ways of thinking and interpretation of scientific issues related with religion. Then, I discuss how teachers’ personal religious beliefs have been formed and influenced their pedagogical beliefs related to science and religion issues. Finally, I will argue, how we use the personal religious beliefs model as a framework of teaching/learning scientific issues related with religion within sociocultural (Islamic) context. Open image in new window Open image in new window Open image in new window

This research investigates the role of experience in relation to personal religion beliefs teachers and implementation in basic biology learning. The study adopted a social-cultural constructivist perspective using an interpretive approach. The research was guided by teachers’ interpretations of their experiences related to basic biology learning. These interpretations are re-interpreted to find meaningful conceptual categories (grounded in the data) from which to build a model to understand the influence of experiences within socio-Islamic culture on teachers’ beliefs and implementation in basic biology learning. Data was collected from five teachers using interviews and observations. The findings of this study suggest that it was mainly teachers’ personal religious beliefs and experiences that shaped their beliefs and implementation in basic biology learning. The research also led to a model, constructed on the basis of the data analysis, which suggests an explanation of how teachers’ personal religious beliefs and experiences influence their beliefs and implementation in basic biology learning.

This research investigates the role of experience in relation to teachers’ beliefs and practices. The study adopted a social‐cultural constructivist perspective using an interpretive approach. The research was guided by teachers’ interpretations of their experiences related to teaching science through Science‐Technology‐Society (STS) issues. These interpretations are re‐interpreted to find meaningful conceptual categories (grounded in the data) from which to build a model to understand the influence of experiences within socio‐Islamic culture on teachers’ beliefs and practices. Data was collected from ten teachers using interviews and observations. The findings of this study suggest that it was mainly teachers’ personal religious beliefs and experiences that shaped their beliefs and practices. The research also led to a model, constructed on the basis of the data analysis, which suggests an explanation of how teachers’ personal religious beliefs and experiences influence their beliefs and practices.

Behavioural corporate finance (BCF) examines the effects of managerial and investor psychological biases on a firm's corporate finance decisions (such as investment appraisal and capital structure). In contrast to the well-developed research in behavioural finance (which examines the effects of investors' biases on the behaviour of the financial markets), the emerging research in BCF is relatively young. In this paper, we review the existing research to date in BCF and suggest areas for future development.

Behavioural Corporate Finance (BCF) examines the effects of managerial and investor psychological biases on a firm's corporate finance decisions (such as investment appraisal and capital structure). In contrast to the well-developed research in behavioural finance (which examines the effects of investors' biases on the behaviour of financial markets), the emerging research in BCF is relatively young. In this paper, we review the existing research to date in BCF, and suggest areas for future development.

The research paper investigated on the financial decision, corporate governance and financial performance in emerging market value, such as in the Indian Context. In spite of the significant published work on investigations into corporate finance decision and Practices, Corporate governance and financial performance, none have comprehensive research in the context of emerging market value in India. Without a doubt most of the pragmatic research the above mention topic has been conducted in developed market such as the USA and UK. The practical evidence shows that the way corporate boards make the decision is not always in tune of with academic decision procedures and theories. The main aim of the present research paper is to study whether theories are associated with the behaviors of financial manager in the terms their practices in the context of Indian emerging market value. The study is based on the survey condected to collect and to analyze data on corporate financial decision, corporate governance, financial performance, associated with the capital budgeting techniques to capital structure, cost of capital, and dividend policy. The study adopted the methodology to investigate the research from the perspective financial manager toward concerns for the sustainable business practices when making the corporate financial decision. The study was conducted in the context of Indian emerging market, through the structured and semi structured questionnaires from the listed companies of NSE in the region of Hyderabad, Bangalore, Chennai, Mumbai and Delhi. The findings of the research have significant implications for both academics and practitioners in the Indian context. It may provide insights on corporate governance in companies in India.

Speculative culture and corporate greenwashing: Evidence from China

Since the proxy fights of the 1950s, commentators have debated the welfare implications of corporate takeovers. Although observers such as Manne (1965), Jensen and Meckling (1976), Fama (1980), and Jensen and Ruback (1983) argue that the market for corporate control promotes efficiency and enhances wealth, some critics, such as managers of firms subject to hostile takeover attempts, contend that takeovers destroy firm value. The critics frequently assert that takeover pressure forces managers to sacrifice profitable, but slowyielding, long-term investments in favor of less productive short-term investments that offer immediate returns. While the evidence supporting takeover-induced shortsightedness is largely anecdotal, a recent paper by Stein (1988) develops a formal