What Determines the Innovation Capability of Firm Founders?

Innovative start-ups, not start-ups in general, seem to be important drivers of economic growth. However, little is known about how such firms look like. As activities of start-ups are strongly related to firm founders, we investigate this question focusing on the innovation capability of firm founders. We find that the combination of different founder characteristics such as university education (at best a combination of technical and commercial education), prior experience in R&D, and strong motivation to realize own innovative ideas increases innovative activities of start-ups by more than 40%

Does Gender Affect Investors' Appetite for Risk? Evidence from Peer-to-Peer Lending

This study investigates the role of gender in financial risk-taking. Specifically, I ask whether female investors tend to fund less risky investment projects than males. To answer this question, I use real-life investment data collected at the largest German market for peer-to-peer lending. Investors' utility is assumed to be a function of the projects expected return and its standard deviation, whereas standard deviation serves as a measure of risk. Gender differences regarding the responses to projects' risk are tested by estimating a random parameter regression model that allows for variation of risk preferences across investors. Estimation results provide no evidence of gender differences in investors' risk propensity: On average, male and female investors respond similarly to the changes in the standard deviation of expected return. Moreover, no differences between male and female investors are found with respect to other characteristics of projects that may serve as a proxy for projects' risk. Significant gender differences in investors' tastes are found only with respect to preferred investment duration, purpose of investment project and borrowers' age

Sex differences in risk-based decision making in adolescents with conduct disorder

Altered decision making processes and excessive risk-seeking behaviours are key features of conduct disorder (CD). Previous studies have provided compelling evidence of abnormally increased preference for risky options, higher sensitivity to rewards, as well as blunted responsiveness to aversive outcomes in adolescents with CD. However, most studies published to date have focused on males only; thus, it is not known whether females with CD show similar alterations in decision making. The current study investigated potential sex differences in decision making and risk-seeking behaviours in adolescents with CD. Forty-nine adolescents with CD (23 females) and 51 control subjects (27 females), aged 11-18 years, performed a computerised task assessing decision making under risk—the Risky Choice Task. Participants made a series of decisions between two gamble options that varied in terms of their expected values and probability of gains and losses. This enabled the participants’ risk preferences to be determined. Taking the sample as a whole, adolescents with CD exhibited increased risk-seeking behaviours compared to healthy controls. However, we found a trend towards a sex-by-group interaction, suggesting that these effects may vary by sex. Follow-up analyses showed that males with CD made significantly more risky choices than their typically developing counterparts, while females with CD did not differ from typically developing females in their risk-seeking behaviours. Our results provide preliminary evidence that sex may moderate the relationship between CD and alterations in risk attitudes and reward processing, indicating that there may be sex differences in the developmental pathways and neuropsychological deficits that lead to CD

Female Institutional Directors on Boards and Firm Value

The aim of this research is to examine what impact female institutional directors on boards have on corporate performance. Previous research shows that institutional female directors cannot be considered as a homogeneous group since they represent investors who may or may not maintain business relations with the companies on whose corporate boards they sit. Thus, it is not only the effect of female institutional directors as a whole on firm value that has been analysed, but also the impact of pressure-resistant female directors, who represent institutional investors (investment, pension and mutual funds) that only invest in the company, and do not maintain a business relation with the firm. We hypothesize that there is a non-linear association, specifically quadratic, between institutional and pressure-resistant female directors on boards and corporate performance. Our results report that female institutional directors on boards enhance corporate performance, but when they reach a certain threshold on boards (11.72 %), firm value decreases. In line with female institutional directors, pressure-resistant female directors on boards also increase firm value, but only up to a certain figure (12.71 % on boards), above which they have a negative impact on firm performance. These findings are consistent with an inverted U-shaped relationship between female institutional directors and pressure-resistant female directors and firm performance

Female Audit Partners and Extended Audit Reporting: UK Evidence

This study investigates whether audit partner gender is associated with the extent of auditor disclosure and the communication style regarding risks of material misstatements that are classified as key audit matters (KAMs). Using a sample of UK firms during the 2013–2017 period, our results suggest that female audit partners are more likely than male audit partners to disclose more KAMs with more details after controlling for both client and audit firm attributes. Furthermore, female audit partners are found to use a less optimistic tone and provide less readable audit reports, compared to their male counterparts, suggesting that behavioural variances between female and male audit partners may have significant implications on their writing style. Therefore, this study offers new insights on the role of audit partner gender in extended audit reporting. Our findings have important implications for audit firms, investors, policymakers and governments in relation to the development, implementation and enforcement of gender diversity

Family Financial Risk Taking When the Wife Earns More

Bargaining theory, Dual earners, Financial risk taking, Household decision making,

Is More Always Better? Empirical Evidence on Optimal Portfolio Size

A restriction on portfolio size results in welfare losses for investors. To measure these welfare losses, we compare n-asset optimal portfolios with 26-asset optimal portfolios using the concept of proportionate opportunity cost. The original historical asset returns data are used with a VAR in generating joint returns distributions for the portfolio formation period. We find that suboptimal diversification imposes substantial costs on investors with low levels of relative risk aversion. Investors with high levels of risk aversion incur very small or no cost at all diversifying sub-optimally. We show that investors with high levels of risk aversion place most of their initial wealth in the safe asset and, therefore, few stocks are needed to achieve optimal diversification. Eastern Economic Journal (2009) 35, 84–95. doi:10.1057/palgrave.eej.9050045

ON THE LINKAGE BETWEEN FINANCIAL RISK TOLERANCE AND RISK AVERSION

We explore the linkage between financial risk tolerance (FRT) and risk aversion. To do this, we obtain FRT scores from a psychometrically validated survey and conduct a battery of online lottery choice experiments involving the same nonstudent participants. We contrast: real and hypothetical payoffs, low and high stakes, decisions involving gains and losses, and order effects. Our key finding is that the two approaches to analyzing decision making under uncertainty are strongly aligned. We present evidence that this is particularly the case for the female participants in our sample and when high-stake gambles are employed. 2008 The Southern Finance Association and the Southwestern Finance Association.