| 11. |
- Fang, Dawei, 1983, et al.
(författare)
-
How tournament incentives affect asset markets: A comparison between winner-take-all tournaments and elimination contests
- 2017
-
Ingår i: Journal of Economic Dynamics and Control. - : Elsevier BV. - 0165-1889. ; 75, s. 1-27
-
Tidskriftsartikel (refereegranskat)abstract
- We investigate the impact of investment managers׳ tournament incentives on investment strategies and market efficiency, distinguishing between winner-take-all tournaments (WTA), where a minority wins, and elimination contests (EC), where a majority wins. Theoretically, we show that investment managers play heterogeneous strategies in WTA and homogeneous strategies in EC, and markets are more prone to mispricing in WTA than in EC. Experimentally, we find that investment managers play more heterogeneous strategies in WTA than in EC, but this does not trigger significant differences in prices. Moreover, prices in WTA and EC do not differ significantly from markets composed of linearly incentivized subjects.
|
|
| 12. |
- Farago, Adam, 1984, et al.
(författare)
-
Cognitive Skills and Economic Preferences in the Fund Industry
- 2022
-
Ingår i: Economic Journal. - : Oxford University Press (OUP). - 0013-0133 .- 1468-0297. ; 132:645, s. 1737-1764
-
Tidskriftsartikel (refereegranskat)abstract
- We investigate the impact of cognitive skills and economic preferences on fund managers' professional decisions by running a battery of experiments with them. First, we find that fund managers' risk tolerance positively correlates with fund risk when accounting for fund benchmark, fund category and other controls. Second, we show that fund managers' ambiguity tolerance positively correlates with the funds' tracking error from the benchmark. Finally, we report that cognitive skills do not explain fund performance in terms of excess returns. However, we do find that fund managers with high cognitive reflection abilities compose funds at lower risk.
|
|
| 13. |
|
|
| 14. |
- Gärling, Tommy, 1941, et al.
(författare)
-
Fast and Slow Investments in Asset Markets: Influences on Risk Taking
- 2019
-
Ingår i: Behavioral Finance Working Group Conference. London: 6-7 June 2019.
-
Konferensbidrag (övrigt vetenskapligt/konstnärligt)abstract
- In an experiment business school students (n=123) role play being investment managers in a fund company incentivized by rank-based performance compensations. Investments are made at self-paced rates in stocks with normal return distributions varying in expected value and variance. Results show that investments increase above but decrease and are relatively more risky below a relative comparison standard. Above the comparison standard, hypothetical monetary bonuses do not increase risk taking more than non-monetary bonuses, while below the comparison standard hypothetical monetary penalties suppress risk taking more than non-monetary penalties do. Compared to a control condition with no relative comparison standard and hypothetical incentives, risk taking is lower below but not different above the comparison standard. The difference in results suggest that time pressure and complexity of strategic optimization are determinants of elevated risk taking in asset market experiments investigating effects of rank-based performance compensations.
|
|
| 15. |
- Gärling, Tommy, 1941, et al.
(författare)
-
Fast and slow investments in asset markets: Influences on risk taking
- 2021
-
Ingår i: Journal of Behavioral Finance. - : Informa UK Limited. - 1542-7560 .- 1542-7579. ; 22:1, s. 84-96
-
Tidskriftsartikel (refereegranskat)abstract
- © 2020, © 2020 The Author(s). Published with license by Taylor & Francis Group, LLC. The aim is to investigate whether elevated risk taking in asset market experiments driven by rank-based performance incentives decrease if removing a time limit on choices and minimizing complexity of strategic optimization. In a scenario experiment, business school students (n = 123) acting as investment managers in a fund company make investments at self-paced rates. The results show that investments are influenced by rank-based compensations implemented as a relative comparison standard but not that risk taking is elevated. The motive to minimize losses relative to others appear to counteract risk taking, particularly if poor performance is penalized by reducing the fixed income.
|
|
| 16. |
|
|
| 17. |
- Gärling, Tommy, 1941, et al.
(författare)
-
Financial risk-taking related to individual risk preference, social comparison and competition
- 2021
-
Ingår i: Review of Behavioral Finance. - 1940-5979. ; 13:2, s. 125-140
-
Tidskriftsartikel (refereegranskat)abstract
- Purpose – The purpose of this paper is to investigate how social comparison and motivation to compete account for elevated risk-taking in fund management corroborated by asset market experiments when performance depends on rank-based incentives. Design/methodology/approach – In two laboratory experiments, university students (n1 5 240/n2 5 120) make choices between risky and certain outcomes of hypothetical sums of money. Both experiments investigate in which direction risky choices in an individual condition (individual risk preference) are shifted when participants compare their performance to another participant’s performance (social comparison), being instructed or not to outperform the other (incentive to compete). Findings – In the absence of incentives to compete, participants tend to minimize the differences between expected outcomes to themselves and to the other, but when provided with incentives to compete, they tend to maximize these differences. An independent additional increase in risk-taking is observed when participants are provided with incentives to compete. Originality/value – Original findings include that social comparison does not evoke motivation to compete unless incentives are offered and that increases in risk-taking depend both on what the other chooses and the incentives.
|
|
| 18. |
- Gärling, Tommy, 1941, et al.
(författare)
-
Review of behavioral explanations of how rank-based incentives influence risk taking by investment managers in mutual fund companies
- 2020
-
Ingår i: Review of Behavioral Finance. - 1940-5979. ; 12:2
-
Tidskriftsartikel (refereegranskat)abstract
- Purpose: The purpose of this paper is to review behavioral explanations of the empirical observation that investment managers in mutual fund companies increase their risk taking when offered incentives based on how their performance is ranked compared to peers. Design/methodology/approach: A conceptual model is proposed of how research on social comparison, competition and financial risk taking may explain increased investor risk taking induced by rank-based incentives. Research findings in each of the strands of research are reviewed. Findings: A proposed main explanation is that an above-average bias in comparing oneself with competitors results in overconfidence that increases risk taking. A complementary proposed explanation is that an anticipated loss when lagging behind increases risk taking, and another proposed complementary explanation the belief that risk taking is a winning strategy. Originality/value: The results provide a broad framework for directions of research on social comparison processes in the mutual fund industry addressing the difficulties in implementing performance evaluations. © 2019, Emerald Publishing Limited.
|
|
| 19. |
- Hagelin, Niclas, et al.
(författare)
-
Family Ownership, Dual Class Shares and Risk Management
- 2006
-
Ingår i: Global Finance Journal. - : Elsevier BV. - 1044-0283. ; 16:3, s. 283-301
-
Tidskriftsartikel (refereegranskat)abstract
- We investigate whether the use of dual-class shares affects the financial policy of Swedish public corporations. Specifically, we distinguish between firms that are controlled by owners with poor portfolio diversification (families) and those controlled by owners with diversified portfolios (institutions). We find that, on average, family-controlled firms do not rely on less debt, more corporate diversification, or more financial hedging than non-family firms do. For family-controlled firms, however, we find that controlling owners with higher vote-to-capital ratios are associated with firms with less debt and lower probabilities of hedging. This evidence is consistent with the perception that family-controlled firms use shares with different voting rights so as simultaneously to maintain control and reduce the family's portfolio risk.
|
|
| 20. |
|
|
