Risk-averse Tendencies Research Articles

성과 피드백이 기업의 R&D 활동에 미치는 영향에 대한 성과주의 제도의 조절 효과

This study examines the moderating effect of performance-based pay systems on the relationship between performance feedback and research and development (R&D) activities. When a firm’s performance either falls short of or exceeds aspiration levels, such performance feedback influences organizational decision-making by increasing or decreasing search behaviors. Prior research has highlighted the significant impact of performance feedback on R&D activities, which are critical to a firm’s long-term survival and growth, despite their inherent uncertainty and risk. However, the role of reward systems—which significantly influence employee motivation and attention allocation—in shaping the relationship between performance feedback and R&D activities remains underexplored. This study argues that performance-based pay systems, widely adopted by Korean firms since the late 1990s, pressure employees to prioritize short-term performance and reinforce their risk-averse tendencies, potentially hindering R&D decisions. An analysis of panel data from Korean manufacturing firms between 2009 and 2017 reveals that firms with performance-based pay systems tend to reduce R&D activities more significantly than their counterparts when performance falls short of aspiration levels. Similarly, these firms are more likely to decrease R&D activities even when their performance exceeds aspiration levels. The findings underscore the importance of incorporating organizational reward systems into performance feedback models and provide theoretical insights into how performance-based pay systems indirectly influence R&D activities by shaping responses to performance feedback. Practically, the study emphasizes the need for strategically designed reward systems to prevent unintended reductions in R&D activities in response to performance feedback.

Risk preference and rural livelihood transitions in the hilly and mountainous region of southern China: a case study in Ruijin City

Rural livelihood transition towards non-agriculturalization, non-grainization and even anti-urbanization has become a thorny social problem that undermines farmland resources and worldwide food security. Based on a simulation survey, this study explored the risk preferences and the livelihood transition mechanisms of typical farmers in the hilly and mountainous region. The results indicated that: (1) 76.86% of rural households exhibited risk aversion tendencies, with 60.67% being highly risk-averse. The ranking of risk aversion among the three typical farmers is consistent with asset abundance, with non-agriculture oriented households > semi-farmer and semi-labour households > vocational farmer households. (2) The non-grainization of vocational farmer households is significantly and positively correlated with the family labour force, land management area, and housing assets, yet negatively correlated with risk preferences. Compared to traditional grain cultivation, non-grainization in the hilly and mountainous region possesses lower risks and higher profitability for vocational farmer households. (3) The total non-agriculturalization of semi-farmer and semi-labour households correlates negatively with land management area but positively with family income. (4) Anti-urbanization and returning hometowns for farming are still regarded as a livelihood fallback by the non-agriculture oriented households, but excessive gift expenditure has become a heavy burden in rural society. Therefore, practical and systematical countermeasures are proposed in this research to guide sustainable livelihood transition.

Cultivating Innovative Employees: The Influence of Regulatory Focus and Institutional Empowerment.

The relationship between regulatory focus, a pivotal trait, and innovative behavior has been long recognized, with previous scholars often emphasizing the reluctance of individuals possessing a prevention focus to engage in innovation due to their risk-averse tendencies. This study introduces a research model proposing that the relationship between promotion focus, prevention focus, and innovation behavior, is positively mediated by knowledge sharing. Additionally, institutional empowerment is posited as a moderating variable that enhances the positive relationship between regulatory focus and knowledge sharing. Empirical investigation of a moderated-mediation model reveals that the impact of regulatory focus on innovation behaviors is mediated by knowledge sharing, with this mediation being more pronounced under conditions of elevated perceptions of institutional empowerment. This research significantly advances the understanding of regulatory focus and its implications for innovation behavior. In addition, it highlights the significance of institutional empowerment as a boundary condition that encourages individuals with diverse regulatory focus to expand their behavioral boundaries. It specifically emphasizes the managerial capacity to leverage the needs and motivations of individuals with a pronounced prevention focus through institutional empowerment, resulting in transformative outcomes even in unfavorable situations.

Does the leverage of a company differ when led by a CEO from a reputable university?

This study investigates the influence of the educational background of Chief Executive Officers (CEOs) from reputable universities on corporate leverage. Company leverage is an important financial policy that determines a company’s success. A review grounded in upper echelons theory indicates a correlation among CEO characteristics, strategic decisions, and corporate outcomes, with financial leverage serving as the representation in this study. The study was conducted on top-rated Environmental, Social, and Governance (ESG) companies in Southeast Asia during 2020–2022 using 1108 observations. Data were obtained from annual reports, company websites, and Refinitiv, and analyzed using regression. The results indicate that CEOs with an educational background from reputable universities tend to have lower leverage. This suggests that CEOs from prestigious universities tend to exhibit risk-averse tendencies when formulating or executing company debt policies. This study contributes to the literature on the correlation between CEO educational backgrounds and firms’ leverage, providing insight into the relationship between CEOs from reputable universities and the level of corporate leverage. It is also expected to contribute to the development of Upper Echelons Theory and the implementation of company policies such as CEO qualifications, CEO recruitment, and debt policy.

Birth Order and Executive Risk-Taking: A Study on CEO Behavioral Disposition

This paper explores the potential influence of chief executive officers’ (CEOs’) birth order on corporate decision-making. Drawing upon both theoretical frameworks and existing empirical studies, birth order considerably impacts individual personality attributes and risk aversion tendencies. Our analyses reveal a pronounced positive association between CEO’s birth order and their propensity for risk-taking. Specifically, CEOs born later in their familial succession are more inclined to risk-taking than their first-born counterparts, who are more conservative. These findings persist after controlling for CEO characteristics, year, and industry-specific factors. Moreover, further analyses were conducted to mitigate potential selection biases in companies choosing CEOs with specific risk preferences.

Digital Rural Construction and Rural Household Entrepreneurship: Evidence from China

Promoting rural entrepreneurship is an important approach to achieving rural revitalization, accelerating the construction of a new development pattern, and enhancing the well-being of farmers. Based on the County Digital Rural Index (CDRI) and the China Household Finance Survey (CHFS), we empirically examine the impact and role of digital rural construction (DRC) on rural household entrepreneurship. Our findings are as follows: (1) DRC plays a vital role in facilitating entrepreneurial behaviors (EB) and entrepreneurial performance (EP) among rural households. (2) DRC indirectly fosters rural household entrepreneurship by facilitating resource acquisition and opportunity identification. (3) Our heterogeneity analysis reveals that DRC’s promotion effect is stronger among local entrepreneurs and individuals with risk-averse tendencies. Additionally, DRC has a more pronounced effect in stimulating EB within lower-income families, while its impact on EP shows the opposite trend. Furthermore, DRC’s influence on rural household entrepreneurship is particularly significant in regions with more advanced digital rural development. (4) Additionally, we observe a significant positive impact of the four dimensions of DRC on rural household entrepreneurship, further affirming the role of DRC in driving rural household entrepreneurship. In the digital economy era, this study provides empirical evidence to promote the integration of digital technology and rural entrepreneurship, offering valuable insights for advancement in this domain.

Utility basis of consumption and investment decisions in a risk environment.

Using expectations regarding utilities to make decisions in a risk environment hides a paradox, which is called the expected utility enigma. Moreover, the mystery has not been solved yet; an imagined utility function on the risk-return plane has been applied to establish the mean-variance model, but this hypothetical utility function not only lacks foundation, it also holds an internal contradiction. This paper studies these basic problems. Through risk preference VNM condition is proposed to solve the expected utility enigma. How can a utility function satisfy the VNM condition? This is a basic problem that is hard to deal with. Fortunately, it is found in this paper that the VNM utility function can have some concrete forms when individuals have constant relative risk aversion. Furthermore, in order to explore the basis of mean-variance utility, an MV function is founded that is based on the VNM utility function and rooted in underlying investment activities. It is shown that the MV function is just the investor’s utility function on the risk-return plane and that it has normal properties. Finally, the MV function is used to analyze the laws of investment activities in a systematic risk environment. In doing so, a tool, TRR, is used to measure risk aversion tendencies and to weigh risk and return.

The foreign language effect on decision-making: A meta-analysis.

In recent years, a growing body of literature has shown that being in a foreign language (FL) context affects the way in which people make choices. This phenomenon is known as the foreign language effect (FLE). The FLE affects both moral decision-making and risk-aversion tendencies, but no cumulative evidence is available. Herein, we aimed to estimate, through a meta-analytical approach, the effect of being in an FL context as compared with that of a native language (NL). We found 17 studies matching our criteria and, in total, 47 experiments were included (N = 38 investigated the FLE in the moral decision-making domain; N = 9 investigated the FLE in the risk-aversion domain). Results showed that FL affects participants' decisions as compared with NL in both the moral decision-making and risk-aversion domains, inducing participants to be more willing to accept harm in order to maximize outcomes in the former and reducing risk aversion in the latter. In addition, two metaregressions were performed on the studies that investigated the moral decision-making domain in order to assess whether participants' proficiency in the FL, or NL-FL similarity, moderated the observed effect. Our findings indicate that proficiency in the FL does not moderate the observed effect, while NL-FL similarity does. Our results support previous findings on the FLE and provide suggestions for future research.

CEO Compensation Gap between Gender and Risk-Averse Tendency

This paper examines the CEO compensation gap between gender and the female CEOs’ risk preference for incentive. Previous studies argue that women in upper positions receive lower compensation and incentive than men due to their risk-averse tendency. Meanwhile, the literature suggests no significant difference in the CEO compensation gap between gender. Recently, the proportion of female CEOs has been increased significantly. Therefore, female CEOs' compensation levels may increase because of the demand for them. This study examines whether female CEOs significantly receive higher compensation than men. This study divided the sample into several periods to examine the significance level of CEO pay between gender. When investigating the differences in CEO compensation between genders by setting a period similar to the previous study, this study cannot find a significant difference in CEO pay between gender. However, when expanding the sample to the recent period, I confirm that female CEO receive significantly higher compensation than men. This finding suggests that CEO compensation gap between gender have become more significant in recent years. Moreover, this research demonstrates that female CEOs receive higher incentives than men and do not show risk-averse tendencies regarding incentive pay. It contradicts previous studies that women receive lower rewards because of their risk aversion tendency. This study contributes to alleviating the perception that women's risk-averse tendencies make them incompetent and receive lower compensation than men.

Risk Overgeneralization in Times of a Contagious Disease Threat.

People’s assessment of risks is swayed by their current feelings. COVID-19 invokes powerful feelings because it is (i) a salient, enormous threat, (ii) unfamiliar, and (iii) intertwined with xenophobia. These three factors are known to exert predictable influence on people’s risk overgeneralization, policy preference, and sociopolitical attitudes. We provide a succinct, illustrative review of empirical work on these dynamics in times of a disease outbreak (e.g., the 2009 H1N1 swine flu, the 2014 Ebola). Theoretical and applied implications for the present COVID-19 pandemic include the value of salience in motivating public opinion change, the importance of reducing unfamiliarity for curbing risk-averse tendencies, and the need for policies that guard against xenophobia-driven racism in collaborative efforts.

Strategic government policies on agricultural financing in African emerging markets

PurposeThe purpose of this study is to identify and review strategic government policies on agricultural financing in Egypt, Morocco, Nigeria and South Africa. Four factors dictated the choice of these countries. In the first place, the study is set in African emerging markets – and the four countries are the widely acknowledged emerging markets in Africa (Onyiriuba, 2015). Secondly, the spread of the countries, to a large extent, mirrors Africa in general – Egypt and Morocco are in North Africa; Nigeria is a West African country; and, of course, South Africa. Thirdly, other countries in Africa tend to look up to the four countries, apparently as the largest economies in their respective regions. Needless to say, Nigeria alternates with South Africa as the largest economy in Africa. In this capacity, the two countries influence – indeed, mirror – continental Africa's emerging economic progress. Fourthly, lessons from agricultural policy and financing experiences of the four countries will certainly be useful to the other African countries. The specific objective of this paper is to determine how the government seeks to address the financing issues attendant on the risk-laden nature of agriculture through policy interventions. With this end in view, the paper analyses the strategic goals, objectives and beneficiaries of the agriculture financing policies of the government, as well as the constraints on access to finance by the farmers and the policy response.Design/methodology/approachThe study involves a review of empirical literature and government policies on agricultural financing in Egypt, Morocco, Nigeria and South Africa. The high risks in agriculture (Onyiriuba, 2015; Mordi, 1988), risk aversion behaviour of banks towards agricultural financing (Onyiriuba, 2015, 1990), and the reluctance of insurers to take on agricultural risks (World Bank, 2018; Federal Republic of Nigeria, 2016; Onyiriuba, 1990; Mordi, 1988) underpin this methodology. There are two other considerations: the needs to find out how government seeks to address the financing issues in agriculture through policy intervention, and to avoid unwieldy research, one that combines government and institutional policy perspectives on agriculture financing. Thus the study is not approached from the perspective of banks and other lending institutions; neither does it combine government and institutional policy perspectives. It rather focuses on government policy in order to properly situate implications of the findings.FindingsThe authorities seek to get rid of bottlenecks, ease participation and redress constraints on access to finance in agriculture through policy interventions as a means of sustainable economic growth. The findings are characteristic of emerging markets, rooted in the transitional challenge of opening economies, economic reforms and the March of progress. However, with agriculture and natural resources – rather than industrialisation – as the main stay of their economies, the African emerging markets face an uphill task in their development efforts. This is evident in the divergent and gloomy pictures in which the literature paints their agricultural economies.Practical implicationsGovernment should gear financing policies to boost output as a means of ensuring food security. It should address risk aversion tendencies among the lenders and feeble credit guarantee, subsidies and budgetary allocations to agriculture. This will ensure effective commitment of the lenders to agriculture and underpin agricultural insurance. However, it demands strengthening links in the chain of access to, and monitoring of, credit for agricultural production. A realistic policy response should target the rural economy – with youth, women and smallholder farmers as ultimate beneficiaries. These actions should be intensified as measures to boost farming and the rural economy.Originality/valueCurrent literature fails to situate the empirical findings in emerging markets context, reflecting economies in transition. Besides, in its current state, the literature does not explicitly clarify that agriculture, like most other sectors in such economies, is bound to experience the observed financing constraints. Neither does it clearly reflect how and why the findings should be seen as fleeting realities of the March of progress in transitional economies. This study will help to fill the gap.

Social inclusion in a ‘risk society’: Identifying the barriers and facilitators of inclusion across different communities and contexts

In this edition of JoSI we are pleased to present a collection of six papers that explore social inclusion issues as applied to children, young people and people with disabilities across different settings and geographic locations. In various ways this issue examines how meaningful progress in social inclusion can be achieved. Many of the suggested ways forward are discussed in the context of policies and practices reflective of risk averse tendencies that can, implicitly or explicitly, reproduce restrictive assumptions about not only the nature of ‘children’, ‘young people’ or ‘disability,’ but also about what is possible.

Provenance and risk in transfer of biological materials

Whereas biological materials were once transferred freely, there has been a marked shift in the formalisation of exchanges involving these materials, primarily through the use of Material Transfer Agreements (MTAs). This paper considers how risk aversion dominates MTA negotiations and the impact it may have on scientific progress. Risk aversion is often based on unwarranted fears of incurring liability through the use of a material or loss of control or missing out on commercialisation opportunities. Evidence to date has suggested that complexity tends to permeate even straightforward transactions despite extensive efforts to implement simple, standard MTAs. We argue that in most cases, MTAs need do little more than establish provenance, and any attempt to extend MTAs beyond this simple function constitutes stifling behaviour. Drawing on available examples of favourable practice, we point to a number of strategies that may usefully be employed to reduce risk-averse tendencies, including the promotion of simplicity, education of those engaged in the MTA process, and achieving a cultural shift in the way in which technology transfer office (TTO) success is measured in institutions employing MTAs.

Provenance and Risk in Transfer of Biological Materials

Whereas biological materials were once transferred freely, there has been a marked shift in the formalisation of exchanges involving these materials, primarily through the use of Material Transfer Agreements (MTAs). This paper considers how risk aversion dominates MTA negotiations and the impact it may have on scientific progress. Risk aversion is often based on unwarranted fears of incurring liability through the use of a material or loss of control or missing out on commercialisation opportunities. Evidence to date has suggested that complexity tends to permeate even straightforward transactions despite extensive efforts to implement simple, standard MTAs. We argue that in most cases, MTAs need do little more than establish provenance, and any attempt to extend MTAs beyond this simple function constitutes stifling behaviour. Drawing on available examples of favourable practice, we point to a number of strategies that may usefully be employed to reduce risk-averse tendencies, including the promotion of simplicity, education of those engaged in the MTA process, and achieving a cultural shift in the way in which technology transfer office (TTO) success is measured in institutions employing MTAs.

Risky prospects and risk aversion tendencies: does competition in the classroom depend on grading practices and knowledge of peer-status?

When students are faced with the decision of whether to assist a peer, they should be sensitive to the potential risks associated with doing so. Two factors associated with risky helping behaviour in the classroom are: (1) the grading practices that are used, and (2) knowledge of a peer’s relative status. Normative (“curved”) grading creates a situation in which peer-interactions are potentially competitive, but it is only those interactions with peers of a similar status that carry the potential for assistance to be costly to oneself. In two studies, we created hypothetical scenarios in which the grading practices (normative or absolute) and peer-status proximity (proximate, distant, or unknown) were manipulated, and asked participants to report their willingness to cooperate with a peer by sharing their notes from an important lecture. We found that when normative grading was used, individuals were less willing to assist a peer when they knew that the peer’s status was proximate to their own. There was also less cooperation when peer status was unknown, under normative grading, which is consistent with a risk-aversion tendency.

Radical practice in a risk-averse environment: Learning from ATD Fourth World UK

INTRODUCTION: The escalation of coercive, risk-averse policy directives in Aotearoa New Zealand’s child and family social work sphere is undermining the profession’s potential to meet its social justice, human rights based aspirations. Social workers may need to look further afield for best practice models that facilitate emancipatory practice in neoliberal social policy environments. This article posits the radical practice of anti-poverty organisation ATD Fourth World in England (where child protection is characteristically risk-averse, individualised and coercive), as an alternative for work with families experiencing poverty and social exclusion.METHODS: We drew on the voices of ATD Fourth World activists cited in previous publications, alongside Activists(a-d) interviewed specifically for this article, and Activist(e) who contributed at a roundtable discussion on a previous project. Interviews focused on ATD Fourth World’s approach to working with families in poverty; three distinctive aspects emerged: the organisation’s philosophy on poverty, and its collaborative and relational family support model. We contrasted these three aspects with state child protection policies in Aotearoa New Zealand and England.FINDINGS: The often inflexible, top-down nature of state child protection policies, coupled with an atmosphere of policing, control and disregard for the impact of poverty, constrain social workers and families alike, eroding the crucial social worker/family relationship underpinning best practice. ATD Fourth World’s approach suggests that genuine strengths-based practice relies on nuanced understandings of poverty, a commitment to advance families’ wishes, and trusting relationships grounded in human dignity and commonality.CONCLUSION: The Aotearoa New Zealand reforms may amplify coercive, risk-averse tendencies in the state’s child protection system. Child and family social workers could consider adapting aspects of ATD Fourth World’s approach to resist or mitigate these coercive aspects and steer the reforms’ implementation in more emancipatory directions.

Board gender diversity and dividend policy: Case of Jordanian commercial banks

This paper aims to investigate the impact of board gender diversity on dividend policy in the context of Jordanian commercial banks. Using a sample of 13 Jordanian commercial banks listed on Amman Stock Exchange during the period 2005-2014, we find strong and robust evidence indicating that diversified boards tend to pay higher cash dividends to shareholders since women can better address the needs of investors in impatient emerging markets. Moreover, this paper presents the negative moderating effect of both, the government existence in the boardroom and international financial crisis on the relationship between gender diversity and dividend policy indicators. Under such conditions, the diversified boards became more conservative and retained most of the profit and paid fewer dividends because of the risk-averse tendencies of women directors.

Understanding clinical and non-clinical decisions under uncertainty: a scenario-based survey.

BackgroundProspect theory suggests that when faced with an uncertain outcome, people display loss aversion by preferring to risk a greater loss rather than incurring certain, lesser cost. Providing probability information improves decision making towards the economically optimal choice in these situations. Clinicians frequently make decisions when the outcome is uncertain, and loss aversion may influence choices. This study explores the extent to which prospect theory, loss aversion, and probability information in a non-clinical domain explains clinical decision making under uncertainty.MethodsFour hundred sixty two participants (n = 117 non-medical undergraduates, n = 113 medical students, n = 117 resident trainees, and n = 115 medical/surgical faculty) completed a three-part online task. First, participants completed an iced-road salting task using temperature forecasts with or without explicit probability information. Second, participants chose between less or more risk-averse (“defensive medicine”) decisions in standardized scenarios. Last, participants chose between recommending therapy with certain outcomes or risking additional years gained or lost.ResultsIn the road salting task, the mean expected value for decisions made by clinicians was better than for non-clinicians(−$1,022 vs -$1,061; <0.001). Probability information improved decision making for all participants, but non-clinicians improved more (mean improvement of $64 versus $33; p = 0.027). Mean defensive decisions decreased across training level (medical students 2.1 ± 0.9, residents 1.6 ± 0.8, faculty1.6 ± 1.1; p-trend < 0.001) and prospect-theory-concordant decisions increased (25.4%, 33.9%, and 40.7%;p-trend = 0.016). There was no relationship identified between road salting choices with defensive medicine and prospect-theory-concordant decisions.ConclusionsAll participants made more economically-rational decisions when provided explicit probability information in a non-clinical domain. However, choices in the non-clinical domain were not related to prospect-theory concordant decision making and risk aversion tendencies in the clinical domain. Recognizing this discordance may be important when applying prospect theory to interventions aimed at improving clinical care.Electronic supplementary materialThe online version of this article (doi:10.1186/s12911-016-0391-3) contains supplementary material, which is available to authorized users.

Does Crime Pay? The Effect of Off-Field Behavior on Player Salaries In the National Football League

Mixed evidence exists on the relationship between arrest and labor market outcomes such as employment and earnings. We analyze the effect of arrest on earnings in a sample of National Football League players who were arrested between 2000 and 2009. We use propensity score matching to construct a comparison sample of players who were not arrested over the same period. Regression results suggest that players who were arrested earned about 10% to 14% more than similar players who were not arrested. Relatively lower risk aversion and aggressive tendencies may explain this difference in compensation.

Trait Emotional Intelligence is Related to Risk-Taking Through Negative Mood and Anticipated Fear

Abstract. Existing research showed that negative mood and the anticipated fear of bad outcomes lead people to prefer risk-averse tendencies, and these effects have often been implicitly considered as a universal phenomenon. Nevertheless, interactionist accounts emphasized the importance of both person and situation in predicting outcomes. We aimed to prove whether trait Emotional Intelligence (EI; a person’s characteristic) was related to risk-taking through factors naturally occurring in decision-making processes (i.e., negative mood and anticipated fear). One hundred fifty-eight participants completed the Positive and Negative Affect Schedule (PANAS), the anticipated fear rating and the hot-Columbia Card Task (CCT; a risk-taking measure), 1 month following assessment of trait EI. Results showed that negative mood and anticipated fear were two simultaneous mediators of the relationship between trait EI and risk-taking.