The author proposes an update to the mean variance (MV) framework that replaces a constant risk aversion parameter using a dynamic risk aversion indicator. The contribution to the…
Abstract
Purpose
The author proposes an update to the mean variance (MV) framework that replaces a constant risk aversion parameter using a dynamic risk aversion indicator. The contribution to the literature is made through making the static risk aversion parameter operational using an indicator of market sentiment. Results suggest that Sharpe ratios improve when the author replaces the traditional risk aversion parameter with a dynamic sentiment indicator from the behavioral finance literature when allocating between a risky portfolio and a risk-free asset. However, results are mixed when using the behavioral framework to allocate between two risky assets.
Design/methodology/approach
The author includes a dynamic risk aversion parameter in the mean variance framework and back test using the traditional and updated behavioral mean variance (BMV) framework to see which framework leads to better performance.
Findings
The author finds that the behavioral framework provides superior performance when allocating between a risky and risk-free asset; however, it under performs when allocating between risky assets.
Research limitations/implications
The research is based on back testing; therefore, it cannot be concluded that this strategy will perform well in real-time circumstances.
Practical implications
Portfolio managers may use this strategy to optimize the allocation between a risky portfolio and a risk-free asset.
Social implications
An improved allocation between risk-free and risky assets that could lead to less leverage in the market.
Originality/value
The study is the first to use such a sentiment indicator in the traditional MV framework and show the math.
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George Li, Ming Li and Shuming Liu
The paper aims to investigate whether or not a firm’s capital structure can interact with past stock returns to affect future stock returns. Specifically, the authors examine…
Abstract
Purpose
The paper aims to investigate whether or not a firm’s capital structure can interact with past stock returns to affect future stock returns. Specifically, the authors examine whether or not capital structure can help improve momentum profit.
Design/methodology/approach
The authors use the US common stocks data from 1965 to 2022 to empirically examine the impact of capital structure on momentum profit.
Findings
When capital structure is measured either as the ratio of debt to asset or the ratio of liability to asset, we all find out that momentum strategies tend to be more profitable for stocks with large capital structure.
Originality/value
Besides documenting the empirical evidence of the impact of capital structure on momentum profit, the authors also present a simple explanation for their empirical results and show that their finding is consistent with the behavioral finance theory that characterizes investors’ increased psychological bias and the more limited arbitrage opportunity when the estimation of firm value becomes more difficult or less accurate.
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Lijing Zhao, Shuming Zhao, Hao Zeng and Jingyi Bai
Drawing on identity theory and the symbolic interactionism perspective of identity theory, this study aims to construct a moderated mediation framework to test the effects of…
Abstract
Purpose
Drawing on identity theory and the symbolic interactionism perspective of identity theory, this study aims to construct a moderated mediation framework to test the effects of perceived overqualification (POQ) on knowledge sharing (KS) through professional identity threat (PIT) and the moderating role of coworkers' help-seeking behavior (CHSB).
Design/methodology/approach
This paper uses a quantitative multistudy research design with a combination of a scenario experiment (Study 1) and a two-wave field study among 220 supervisor-subordinate dyads at a power company in China. Using analysis of variance, confirmatory factor analysis (CFA) and bootstrapping method, the authors validated the research hypothesis.
Findings
In the scenario experiment study (study 1), the authors find that POQ is positively related to PIT and that CHSB negatively moderates the positive impact of POQ on PIT. The field study (study 2) replicated the above findings and found that PIT mediates the negative effect of POQ on KS. In addition, CHSB negatively moderates the mediating role of PIT between POQ and KS.
Originality/value
First, the current study extended the nomological network of POQ research by examining its influence on employees' KS. Second, this study empirically investigated the mediating role of PIT, which provided a new explanatory mechanism for the influence of POQ. Finally, this study demonstrates the moderating role of CHSB—a situational factor that has been ignored in previous studies.
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Jiaojiao Qu, Mingwei Liu, Shuming Zhao, Yixuan Zhao and Xia Cao
The function of cognitive diversity has not yet been studied to a sufficient degree. To address this gap, the current study aims to answer the questions of how and when team…
Abstract
Purpose
The function of cognitive diversity has not yet been studied to a sufficient degree. To address this gap, the current study aims to answer the questions of how and when team cognitive diversity fosters individual creativity by integrating the intellectual capital view and the inclusion literature.
Design/methodology/approach
With a paired and time-lagged sample consisting of 368 members and 46 leaders from Chinese high-tech organizations, a multilevel moderated mediation model was developed to test the hypothesized relationships using structural equation modeling.
Findings
Team cognitive diversity is positively related to individual creativity via team intellectual capital, but this positive indirect effect is obtained only when the inclusive team climate is high.
Research limitations/implications
Team intellectual capital serves as an alternative mechanism for translating team cognitive diversity into favorable outcomes, and an inclusive team climate plays a pivotal role in harvesting the benefits of team cognitive diversity. Future research could extend our study by adopting a multiwave longitudinal or experimental design, examining the possibility of curvilinearity, considering the changes in patterns over time, and conducting cross-cultural studies.
Practical implications
Managers should take the initiative to assemble a team featuring cognitive diversity when facing creative tasks, and should proactively cultivate an inclusive culture when leading such a team.
Originality/value
This study is among the first to consider the mediating role of team intellectual capital in the cross-level effect of team cognitive diversity on individual creativity and to examine the boundary role of an inclusive team climate with respect to this indirect effect.
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Lulu Zhou, Yan Liu, Zhihong Chen and Shuming Zhao
The purpose of this paper is to explore how a perceived ethical climate influences employees’ intention to whistle-blow through internal organizational channels and incorporates…
Abstract
Purpose
The purpose of this paper is to explore how a perceived ethical climate influences employees’ intention to whistle-blow through internal organizational channels and incorporates the mediating role of organizational identification and moral identity as well as the moderating role of individual risk aversion.
Design/methodology/approach
The five proposed hypotheses were tested using hierarchical regression analysis with two waves of data collected in 2016 from 667 employees in Chinese organizations.
Findings
The findings indicate that perceived ethical climate had a positive effect on employees’ internal whistle-blowing intention, which was mediated by organizational identification and moral identity. Furthermore, employees’ risk aversion weakened the effect of organizational identification, while the moderating role by moral identity on internal whistle-blowing intention was not validated.
Originality/value
This study explains the psychological mechanism of whistle-blowing intention from the perspective of social identity, which contributes to opening the “black box” of the transmitting processes from the perceived ethical climate to whistle-blowing intention. This study also extends the literature by defining a boundary condition of risk aversion that hinders organizational identification influence on employee whistle-blowing intention.
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Shuming Cai, Ngai Weng Chan, Hsiang‐te Kung and Pin‐Shuo Liu
This study examines the causes of flood disasters in Jianghan Plain, China and provides practical solutions to mitigate them. Results from this study indicate that both historical…
Abstract
This study examines the causes of flood disasters in Jianghan Plain, China and provides practical solutions to mitigate them. Results from this study indicate that both historical archives and more recent recorded data point to an increasing frequency in flood disasters since 1961. Furthermore, damage and losses from flood disasters have also increased significantly in the region. By analyzing the physical geographic factors and human activities, this study found that the main causative factors contributing to increasing flood disasters are landform/topography, climate elements, reduced drainage capacity of rivers in contrast to increased flood discharge, and human activities. Finally, the study examines various practical solutions to mitigate flood disasters in the Jianghan Plain.
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Qin Xu, Hao Huang and Shuming Zhao
Prior studies have consistently treated participative leadership as a given leadership style. Conversely, this study aims to prove that participative leadership can be predicted…
Abstract
Purpose
Prior studies have consistently treated participative leadership as a given leadership style. Conversely, this study aims to prove that participative leadership can be predicted by leaders and teams collectively, depending on leaders' work characteristics (i.e. workload).
Design/methodology/approach
A two-source survey was designed to collect data from a sample of 89 leader-team dyads in a trading company in a southeastern Chinese city. Polynomial regression and response surface analysis were used to test the hypotheses.
Findings
The leader showed more participative leadership when leader-team future orientation was congruent rather than incongruent; in the congruent situation, there was an inverted U-shaped relationship between leader-team future orientation congruence and participative leadership; in the incongruent situation, when the team's future orientation gradually exceeded the leader's, participative leadership first increased and then decreased; and leader workload positively moderated the relationship between leader-team future orientation congruence and participative leadership.
Originality/value
These findings theoretically respond to the call for investigating the influence of leader-team future orientation congruence on leaders’ behaviors, and in practice enlighten managers on how to encourage supervisors to involve employees in decision-making processes.
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Dejun Cheng, Jie Huang, Xiaoyu Wang and Shuming Zhao
There is a clear correspondence between different types of high performance work systems (HPWS), economic rents and market entry strategies. This correspondence is manifested…
Abstract
Purpose
There is a clear correspondence between different types of high performance work systems (HPWS), economic rents and market entry strategies. This correspondence is manifested through the strategic vertical fit and internal synergetic horizontal fit within HPWS, leading to a “core-periphery” structure in human resource management practice configurations. This study aims to depict the “core-periphery” structure within specific HPWSs by identifying human resource (HR) practice configurations and by analyzing the matching mechanisms and structural characteristics among different HR practices based on the interaction between vertical and horizontal fits.
Design/methodology/approach
This study uses a sample of 277 enterprises in East China and employs the ability-motivation-opportunity (AMO) framework and fuzzy-set qualitative comparative analysis (fsQCA) to identify and depict the “core-periphery” structure within HPWS. By integrating fsQCA with t-test, the study explores the interaction between vertical and horizontal fits within HPWS based on economic rent formation mechanisms.
Findings
Seven specific HR practice configurations, shown to effectively enhance organizational performance, have been identified and systematically classified into three typologies of HPWS, based on their distinct underlying mechanisms of horizontal and vertical fit.
Research limitations/implications
The data used in this study were sourced from manufacturing enterprises. Future research can enhance generalizability by expanding the dataset and examining whether efficient HPWS exist across different industries.
Practical implications
The findings of this study emphasize the crucial roles of interaction and complementarity among HR practices within HPWS. By extracting and synthesizing HR practice configurations from empirical data, this study provides practical insights for constructing effective HPWS in real-world settings.
Originality/value
First, this study incorporates both vertical and horizontal fits of HPWS into a unified analytical framework, emphasizing their interactive mechanisms and providing a more nuanced understanding of how these fits operate together. This contributes to the existing literature by validating and expanding the understanding of how specific HR practice configurations align with corporate strategies. Second, by adopting a configurational perspective, this study is able to conduct an in-depth exploration of the “core-periphery” structure within HPWS, thereby challenging the widely held assumption within the AMO framework that all HR practices carry equal significance within a specific HPWS. Third, the empirical analyses identify three specific types of HPWS that can be applicable to different new product strategies from a dynamic perspective, providing practical references for companies to select appropriate HPWS types based on their characteristics.
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The purpose of this paper is to report on the findings and implications associated with the millions of financial and other fraud complaints that are reported to the Federal Trade…
Abstract
Purpose
The purpose of this paper is to report on the findings and implications associated with the millions of financial and other fraud complaints that are reported to the Federal Trade Commission and published in the Consumer Sentinel Network Data Book each year since 2002. Based on the three dimensions, namely, the number of complaints, growth rates and geographic locations of those crimes, this study found similar as well as unique trends that are new and are critical for addressing the rise of cybercrimes in the USA. The trends and patterns identified may also have implications for addressing cybercrimes in other parts of the world.
Design/methodology/approach
This research is a cross-sectional time-series study that covers frauds and cybercrimes in the USA from 2002 to 2015. The observed cases included the number of total complaints, complaints categories and payment amount or loss incurred both at the national and state levels. First, aggregate fraud totals, categories, payments and payment methods were analyzed and ranked. Second, state data for fraud categories, payments and filing rate per capita were organized into panel data for analysis, comparison and ranking. This cross-sectional and longitudinal approach of the different dimensions of financial and other frauds generate new rankings and more robust results.
Findings
The key findings are related to the long-term occurrences and trends of financial and online frauds in the USA. While some general trends are consistent with prior studies, the cross-sectional and longitudinal panel analysis produced some unique results. States that reported the most complaints do not necessarily rank high when examined with their growth per capital or their rates of growth. Their rankings could change dramatically due to other factors. In addition, eight of the top ten crime categories are the same both at the national and state levels, indicating that law enforcement could target the same crime categories.
Originality/value
The panel data analysis is new (first attempt at using this technique on the data set) and robust because it allows cross-sectional and longitudinally analysis of the various financial and online fraud crimes, in aggregate and by state, for a more comprehensive and comparative examination of the fraud behavioral trends. This research can be viewed as an improvement over earlier studies because the panel analysis identifies what fraud trends, scam types and payment amount exist on the national and state levels. The rate of fraud growth in the respective states provides a better understanding about future development of this problem.