Vicki L. Bogan, David R. Just and Chekitan S. Dev
The purpose of this paper is to investigate whether the gender composition of a fund management team influences investment decision-making behavior. Specifically, we focus on how…
Abstract
Purpose
The purpose of this paper is to investigate whether the gender composition of a fund management team influences investment decision-making behavior. Specifically, we focus on how portfolio choice is affected by team risk aversion and loss aversion.
Design/methodology/approach
Using an experimental economics approach, the paper examines the relationship between gender diversity and investment decisions. Teams of four persons each were given the task of making investment portfolio management decisions.
Findings
The paper finds that team composition does influence financial decisions with regard to the assessment of risk and loss. The paper finds evidence that a male presence increases the probability of selecting a higher risk investment. However, the all male teams are not the most risk seeking. Moreover, having a male presence can increase loss aversion.
Originality/value
In the context of workforce composition, these results could have important implications for team investment decisions driven by the assessment of risk and return tradeoffs. To curb excessive risk taking and loss aversion, the findings would suggest that understanding the role of gender diversity in risk management would be useful in effecting change.
Details
Keywords
Calum G. Turvey, Vicki L. Bogan and Cao Yu
Firms facing significant income volatility can often suffer from downside risk such that return on assets is insufficient to meet fixed financial obligations. The purpose of this…
Abstract
Purpose
Firms facing significant income volatility can often suffer from downside risk such that return on assets is insufficient to meet fixed financial obligations. The purpose of this paper is to provide a prescriptive credit solution for small businesses facing exogenous income risk.
Design/methodology/approach
Formulas for risk‐contingent operating and collateralized loans are developed and simulated in the context of a specific business sector.
Findings
The paper demonstrates that a structured credit product with an imbedded option can reduce or eliminate financial risks by providing payouts that decrease the amount of principal and/or interest that firms must repay under low income states.
Originality/value
The overall objective of this paper is to provide a means to mitigate exogenous income risk faced by firms through the design and application of a risk‐contingent credit product that is tied to primary markets and simple to implement. In this context, risk contingency credit refers to a suite of financial products with payoff schedules (loan principal) that are linked to specific commodities or indices. The authors are in fact unaware of any commercial financial products of the type considered in this paper and thus their approach is a prescriptive solution to the identified problem.