Abstract
This study analyses risk-attitudes of NSE 500 firms by using Bowman's (1980) paradox from Kahneman and Tversky's (1979) prospect theory perspectives. It hypothesises that below median firms incline to be risk-seeking in light of Bowman's paradoxical negative risk–return association, and firms above the reference point level would be risk-averse. On an overall basis and also under controlled sector, size, age and risk sub-samples, Indian firms show significant presence of the prospect theory implications, and below median firms exhibit presence of Bowman's (1980) paradox. This is evidenced when firm's own and cross-sectional industry mean target return benchmarks are taken.
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