Leena B. Dam and Medha Kulkarni
Prospect theory suggests that investors’ investment choices are influenced by expected outcomes as well as subjective sensitivities of losses and gains. Statutory disclaimers of…
Abstract
Purpose
Prospect theory suggests that investors’ investment choices are influenced by expected outcomes as well as subjective sensitivities of losses and gains. Statutory disclaimers of mutual funds refer to how asset management companies (AMCs) communicate important legal information to investors. This study explored how prospect theory mediates the relationship between statutory disclaimers and investors’ decisions, with a focus on how investors’ experience in the field might influence this dynamic. This study aims to examine whether investor experience could moderate the relationship between familiarity with prospect theory and investment choices.
Design/methodology/approach
This study involved 268 participants. Data were analyzed using PLS-SEM.
Findings
The findings indicate that simply being familiar with prospect theory does not significantly affect investment decisions when statutory disclaimers are involved. However, investment experience plays a critical role in how investors apply prospect theory in their decision-making. This suggests that seasoned investors might use prospect theory in a different way compared to less experienced investors when considering investment decisions influenced by statutory disclaimers. AMCs may design creative disclaimers for investors according to their level of receptivity.
Originality/value
Combination of prospect theory and investment experience offers a fresh perspective, highlighting the complex interactions between regulatory factors and investor behavior.
Details
Keywords
Raju Varghese Vazhapilly and Leena B. Dam
The protagonist of the case is Mr. Prasad Dhumal. Prasad is technically gifted and is considered a subject expert in his line. Prasad exhibits all entrepreneurial traits like high…
Abstract
Purpose
The protagonist of the case is Mr. Prasad Dhumal. Prasad is technically gifted and is considered a subject expert in his line. Prasad exhibits all entrepreneurial traits like high energy, positive and a never say die attitude, technical expertise, etc. In a short career span, Prasad has already been instrumental in opening at least 7 different ventures and is now planning the 8th one and hence the name of the case. None of the ventures have survived. This is a classic case of differences between entrepreneurial qualities and managerial qualities, required for the success of a small business.
Design/methodology/approach
The case is ideal for students of management. The focus areas are Career Management and Entrepreneurship. It also discusses the failure of a business unit from a societal and family perspective rather than simply a financial one. The case is also good to impress upon the audience the distinction between entrepreneurial skills and managerial skills. The focus that the protagonist shows in starting multiple ventures is also a good indicator of objective-driven and clear Career Management, but the lack of the identified skill set to run a business.
Findings
The case brings about the clear distinctions between entrepreneurial qualities and managerial qualities. Career Management has three objectives, expression of the self as a person through the activities one does (job/entrepreneurship) and personal fulfilment, to have an effective work-life balance so that the workplace does not become simply a chore and finally financial security which is also expressed as a reward for something one does or contributes. Even a well-defined career management plan may at times, not yield the desired results.
Research limitations/implications
This is an attempt at a case-based approach highlighting how entrepreneurial zeal and drive may not result in a success of a business venture. Further, the case highlights the serious financial and social isolation that the protagonists faced due to his business failures. The basic learnings from the case are as follows: (1) Start-ups go through phase after establishment; (2) The skill set used to start a venture and sustain it are different and (3) The venture has to survive in a business environment on its merits.
Practical implications
It is a good source material for students of entrepreneurship to understand that sound entrepreneurial qualities may not ensure business success. Businesses may require a blend of managerial, strategic and entrepreneurial qualities to help them navigate through the business environment.
Social implications
Although a lot has been written about entrepreneurship, the social implications of a business failure and the impact on the entrepreneurs, his family and his loved ones forms the crux of the case. Financial losses result in social isolation for the protagonist. The humiliation and isolation associated with a business loss and its serious impact on friends and family also is highlighted in the case.
Originality/value
The case is factual and describes the exact entrepreneurial journey of Prasad.