A behavioral agency model of managerial risk taking

Article Abstract:

Building on agency and prospect theory theory views, we construct, in this article, a behavioral agency model of executive risk taking. In the model we combine elements of internal corporate governance with problem framing to explain executive risk-taking behavior. The model suggests that executive risk taking varies across and within different forms of monitoring and that agents may exhibit risk-seeking as well as risk-averse behaviors. We develop specific propositions that combine monitoring with performance and the framing of strategic problems to explain executive choices of strategic risk. The resulting propositions enhance and extends the agency-based corporate governance literature on executive risk taking. (Reprinted by permission of the publisher.)

Models, Risk management, Executives, Risk-taking (Psychology), Risk taking

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A longitudinal disaggregation of operational risk under changing regulations: evidence from the savings and loan industry

Article Abstract:

The reported research examines the relative contributions of prospect and agency theory explanations for specific operational risks and subsequent firm performance in regulated and unregulated environments. Specifically, this study simultaneously models competing theoretical explanations for risk using three distinct realized operational risks managed by savings and loan (S&L) firms. It then examines the effects of these risks on performance. Implications of this study argue for a mesotheoretic approach to the modeling of risk and for its disaggregation into distinct risk choices. (Reprinted by permission of the publisher.)

Savings & Loan Assns, Savings Institutions, Risk (Economics), Savings and loan associations, Agency theory

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The effects of endowment and loss aversion in managerial stock option valuation

Article Abstract:

The influences of endowment and loss aversion on subjective stock option valuation are examined. The results have shown that stock option holders overvalue exercisable options relative to options being offered and to normative valuations. The effect of stock price volatility on holders' subjective valuations has depended on stock price trend.

Forecasts, trends, outlooks, Capital funds & cash flow, Stocks, Forecasts and trends, Stock options, Market trend/market analysis, Stock prices, Valuation

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