It is now common for finance textbooks to discuss the concepts of the CAPM, diversification benefit, and systematic risk, as measured by beta. The purpose of this paper is to…
Abstract
It is now common for finance textbooks to discuss the concepts of the CAPM, diversification benefit, and systematic risk, as measured by beta. The purpose of this paper is to clarify aspects of these concepts and make the textbooks readers aware of them. In particular, this paper seeks to: (1) clarify the notion that “diversification reduces risk,” (2) provide geometric expositions and algebraic expressions of portfolio benefits in the context of both total risk and market risk, and (3) improve the interpretation of beta.
Philosophers and historians of science, along with scientists themselves, have long been interested in the problem of theory succession: “How does one theory supersede another?”…
Abstract
Philosophers and historians of science, along with scientists themselves, have long been interested in the problem of theory succession: “How does one theory supersede another?” Concern with this general topic has led to the development of two major recent theories regarding the issue. These theories of theory succession have emerged principally from reflection on physics. In the eyes of most scientists, this is probably appropriate, since physics seems to offer (at least to most observers) science in its purest form.
O. Duangploy, V.H. Bakay and P.A. Belk
This study examines how US multinational enterprises manage foreign exchange risks by exploring the concepts applied by management, the objectives followed, and how management has…
Abstract
This study examines how US multinational enterprises manage foreign exchange risks by exploring the concepts applied by management, the objectives followed, and how management has organised this important function of multinational financial management. Despite the change in generally accepted accounting principles from SFAS8 to SFAS52 and the fact that translation exposure is not real exposure, 19 of the 22 surveyed companies closely monitored accounting exposure and would take action under certain circumstances. Further, transaction exposure management still plays a significant role in foreign exchange risk management. Economic exposure management, which focuses on foreign exchange‐induced changes in future cash flows, was also perceived as essential, although the degree of sophistication varies. The majority of the participating companies are risk averse and have centralised their foreign exchange risk management.
In this chapter, I present the development of enterprise risk management (ERM) in Poland from the policy and the organizational point of view. I examine the impact of ERM research…
Abstract
In this chapter, I present the development of enterprise risk management (ERM) in Poland from the policy and the organizational point of view. I examine the impact of ERM research on practice, and the professionalization of ERM, being facilitated by professional bodies and associations, and promoted by the evolvement of principles and practices. At the organizational level, I analyse and present the effects of laws and regulations on ERMs development, the advantages and disadvantages of decentralized corporate governance. While Poland is considered to be behind other European countries in leveraging the value creation aspects of ERM, I see evidence at the individual firm level that organizations in different industries are actively working with their version of ERM to realize organizational benefits, and that certain dimensions of integration can still be reached even in the absence of some of the formalized structural components of ERM to create value for the firm.
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Liam Leonard and Maria Alejandra Gonzalez-Perez
We are pleased to introduce this volume dedicated to International Business, Sustainability and Corporate Social Responsibility as part of the Advances in Sustainability and…
Abstract
We are pleased to introduce this volume dedicated to International Business, Sustainability and Corporate Social Responsibility as part of the Advances in Sustainability and Environmental Justice Series. Within the context of International Business, Corporate Social Responsibility (CSR) might be considered a mechanism through which investments made can achieve the full economic benefits as long as there is an agreement to promote social and political stability. The control over political and social variables determines or helps to build a competitive advantage and insures a corporation's long-term running position on the market and the facilitation of capital accumulation.
Carolina Herrera-Cano and Maria Alejandra Gonzalez-Perez
The purpose of this study is to show how socially responsible investment (SRI) could represent a powerful tool (trust recovering in political and economic institutions) in the…
Abstract
Purpose
The purpose of this study is to show how socially responsible investment (SRI) could represent a powerful tool (trust recovering in political and economic institutions) in the case of failure or stagnation of economic and financial growth. The purpose of this chapter is to evaluate the current status of SRI in the context of the recent financial and economic crises. The main objective of this analysis is to consider the different benefits and challenges that this type of investment transactions bring into the international economy, and how SRI entrance could represent a major benefit not only for investors a different approach to corporate sustainability but as an important possibility in times of global economic and political crisis.
Methodology/approach
By analysing the literature about SRI, it has been developed a discussion regarding its benefits and obstacles in today’s financial scenario. By evaluating the performance of SRI in the context of the global financial crisis and the important opportunities regarding development, we would like to present the SRI as an important tool in today’s Post 2015 development agenda.
Findings
After revising the existent literature, it has been found that there are two important discussions in the field of SRI. The first one is related with the financial performance of SRI in contrast with the conventional investment funds while the second one is related with important considerations about the SRI in the context of the global financial crisis. After considering the arguments from the different authors, we address some conclusions regarding the importance of SRI in nowadays sustainable development discussion.
Practical implications
Due to failure in the traditional modus operandi of financial institutions and the recent global crises, investors, corporate executives and governments are increasingly paying more attention on the social, environmental and ethical behaviour of individual managers, shareholders and institutional investors. Therefore, it is being observed a shift and maturing process in SRI from an exclusive practice of few and specialised niche investment funds with minor financial implications and limited economic importance, to mainstream adopted by a growing number of institutional investors at the international level. This shift may influence companies and managers to adopt universal values and to assume a committed and strategic CSR agenda to respond to markets and societal expectations, in order to have guilt-free and sustainable investment and sustainable financial markets.
Originality/value
Within the context of the Post 2015 development agenda, the role of business and the private sector has become crucial for funding the new sustainable development goals (SDGs). This chapter not only discussed the relationship between SRI as an alternative to overcome financial crises and lack of sustainability in investment, but it does also conceptually demonstrates the potential of SRI to achieve the funding of the SDGs.
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The purpose of this paper is to explore whether there is a prevalent entrepreneurial learning style trait associated with successful knowledge industry entrepreneurial practice.
Abstract
Purpose
The purpose of this paper is to explore whether there is a prevalent entrepreneurial learning style trait associated with successful knowledge industry entrepreneurial practice.
Design/methodology/approach
The paper reviews prior entrepreneurship studies utilizing experiential learning theory and examines the learning style preferences of 168 knowledge industry entrepreneurs to deduce a hypothesized entrepreneurial learning style. The entrepreneur participants’ Kolb Learning Style Inventory scores are modeled to explore causal links to individual and firm level entrepreneurial success.
Findings
Preference for the Kolb Active Experimentation (AE) learning mode over Reflective Observation (RO) predicts adoption of a key entrepreneurial innovation behavior and significant entrepreneurial performance benefits. In contrast to published theories, the RO learning mode exhibits surprising negative effects on entrepreneurial performance. Data analysis also reveals that 90 percent of sampled co-founder/partners had at least one partner with the hypothesized entrepreneurial style.
Research limitations/implications
The study fills a major research gap in entrepreneurial learning literature by identifying learning style traits associated with entrepreneurial success. The study findings can also be used by educators, practitioners and investors to help identify, appraise and develop entrepreneurial talent.
Originality/value
The study provides novel insights into the learning styles of practicing technology entrepreneurs by establishing a significant preference within this community for the AE and Concrete Experience learning modes. The study illustrates the negative effects of the RO learning mode which has previously linked to successful entrepreneurial practice.
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Purpose – The aim of this paper is to examine the relationship of the efficient management of shareholder value as the main objective of corporate governance systems with…
Abstract
Purpose – The aim of this paper is to examine the relationship of the efficient management of shareholder value as the main objective of corporate governance systems with stakeholder theory.
Design/Methodology – The study uses data from 29 emerging market economies from 1997 to 2006. In order to control possible endogeneity issue, generalized two-stage least squares (G2SLS) and generalized method of moments (GMM) estimation techniques were conducted using country-level panel data.
Findings – The results provide evidence that the efficient management of shareholder value is strongly associated with managers' credibility, social responsibility, employment, and customer satisfaction, suggesting that emerging market economies should consider the interests of stakeholders for the efficient management of shareholder value.
Originality/Value – This is the first study of its kind that attempts to explore the association of the efficient management of shareholder value with country-level determinants of stakeholder theory.
Research Limitations/Implications – The lack of sufficient data is a major problem in international studies. This study also has some limitations in this respect as some emerging economies have not been included in the sample.
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Why is it that highly trained and seasoned executives fail? On the surface, this doesn’t make sense because they are very successful; yet research in the organization sciences…
Abstract
Why is it that highly trained and seasoned executives fail? On the surface, this doesn’t make sense because they are very successful; yet research in the organization sciences provides no shortage of evidence to prove just that. From the classic Mann Gulch fire disaster of Weick’s famous collapse of sensemaking study, to studies of myopia of learning, escalation of commitment, threat-rigidity, dominant logic, the architecture of simplicity, the Icarus Paradox, to core competencies turning into core rigidities, and navigating new competitive markets using “old” cognitive maps, and many more such examples point to a ubiquitous phenomenon where highly trained and experienced professionals find themselves “stuck” in the heat of battle, unable to move and progress. On the one hand, for some, there is a desperate need for change, but are unable to do so, due to their trained incapacities. On the other hand, some simply cannot see the need for change, and continue with their “business as usual” mentality. For both, their visions of the world shrink, they have a tendency to cling onto their past habitual practices and oversimplify the complexity of the situation. In moments like these: DROP YOUR TOOLS and UNLEARN! This book chapter introduces a framework (grounded in clinical psychology) that has had consistent success in helping seasoned executives and key decision-makers open up the alternatives whenever they find themselves stuck with complexity.