English, Article edition: Risk and decision making by finance executives: a survey study Les Coleman

User activity

Share to:
 
Bookmark: http://trove.nla.gov.au/version/28384
Physical Description
  • article
Language
  • English

Edition details

Title
  • Risk and decision making by finance executives: a survey study
Author
  • Les Coleman
Physical Description
  • article
Notes
  • Purpose – When finance managers face decisions, they do not always make clinical evaluations using rational methodology, but systematically depart from utility maximisation. This article addresses biases that are related to risk propensity, and categorises them under five headings: decision makers' characteristics and perception; reference levels; mental accounting and the assumption of mean reversion; the longshot bias or overconfidence; and the desire for immediate gratification. The research reported in the paper seeks to understand the mechanisms of these biases using a study of decision making by Australian finance executives in a setting that is representative of a typical business decision. Design/​methodology/​approach – This paper uses a case study that was designed to identify why decision makers facing choices will prefer a risky alternative. Data were collected using e-mail contact and an electronic survey. Respondents (n=​67) provided demographic data, and answered questions that probed their attitudes and decision styles. Risk propensity was quantified by respondents' attitude towards a risky decision, and was explained using independent variables related to decision maker traits. Findings – Just over half the executives proved willing to take a risk, and almost half the variance in their risk propensity was explained roughly equally by respondents': endowment, perception of risk's role in decisions, assessment of alternative choices, and expectation of the decision's outcome. Manipulation of the cases along four dimensions varied the decision's facts, but they proved only marginally significant to risk taking. Originality/​value – The study provides a practical explanation of the risk taking behaviour of finance executives; confirms that context is more important to decisions than their content; and adds to the growing body of applied behavioural research in finance.
  • Decision making, Managers, Risk management
  • RePEc:eme:ijmfpp:v:3:y:2007:i:1:p:108-124
Language
  • English
Contributed by
OAIster

Get this edition

  • Set up My libraries

    How do I set up "My libraries"?

    In order to set up a list of libraries that you have access to, you must first login or sign up. Then set up a personal list of libraries from your profile page by clicking on your user name at the top right of any screen.

  • All (1)
  • Unknown (1)
None of your libraries hold this item.
None of your libraries hold this item.
None of your libraries hold this item.
None of your libraries hold this item.
None of your libraries hold this item.
None of your libraries hold this item.
None of your libraries hold this item.
None of your libraries hold this item.

User activity


e.g. test cricket, Perth (WA), "Parkes, Henry"

Separate different tags with a comma. To include a comma in your tag, surround the tag with double quotes.

Be the first to add a tag for this edition

Be the first to add this to a list

Comments and reviews

What are comments? Add a comment

No user comments or reviews for this version

Add a comment