The effect of anticipated and experienced regret and pride on investors' future selling decisions : [Version November 2012]

This paper investigates the effect of anticipated/experienced regret and pride on individual investors’ decisions to hold or sell a winning or losing investment, in the form of the disposition effect. As expected the results suggest that in the loss domain, low anticipated regret predicts a greater probability of selling a losing investment. While in the gain domain, high anticipated pride indicates a greater probability of selling a winning investment. The effects of high experienced regret/pride on the selling probability are found as well. An unexpected finding is that regret (pride) seems to be not only relevant for the loss (gain) domain, but also for the gain (loss) domain. In addition, this paper presents evidence of interconnectedness between anticipated and experienced emotions. The authors discuss the implications of these findings and possible avenues for further research

Why do investors sell losers? How adaptation to losses affects future capitulation decisions

According to disposition effect theory, people hold losing investments too long. However, many investors eventually sell at a loss, and little is known about which psychological factors contribute to these capitulation decisions. This study integrates prospect theory, utility maximization theory, and theory on reference point adaptation to argue that the combination of a negative expectation about an investment’s future performance and a low level of adaptation to previous losses leads to a greater capitulation probability. The test of this hypothesis in a dynamic experimental setting reveals that a larger total loss and longer time spent in a losing position lead to downward adaptations of the reference point. Negative expectations about future investment performance lead to a greater capitulation probability. Consistent with the theoretical framework, empirical evidence supports the relevance of the interaction between adaptation and expectation as a determinant of capitulation decisions. Keywords: Investments , Adaptation , Reference Point , Capitulation , Selling Decisions , Disposition Effect , Financial Markets JEL Classification: D91, D03, D8

Securing higher-quality data from self-administered questionnaires

No abstract available

Leo J. Paas - Extending Dynamic Segmentation with Lead Generation: A Latent Class Markov Analysis of Financial Product Portfolios

Content: Dynamic segmentation results in apartitioning of consumers for multiple occasions; Dynamic segmentation also models switching between segment

Discovery behaviour and creation behaviour of Ethiopian entrepreneurs:the implications for the performance of their small tourism firms

Purpose: The purpose of this study is to assess the effects of discovery and creation behaviour in opportunity identification on firm performance in a developing country context. By doing so, the study adds new knowledge and insights in researching the entrepreneurial behaviour types at the start-up phase and their eventual effects on firm performance. Design/methodology/approach: The study was conducted amongst Ethiopian tour operators (n = 118), which are formally established small tourism firms. A survey questionnaire, which is the main data gathering tool in this study, was prepared based on a distinction between discovery and creation behaviour with regard to the seven entrepreneurial actions described by Alvarez and Barney (2007). Hence, 14 multiple-item measurement scales were derived to define the entrepreneurial behaviour types. Firm performance was measured using four indicators. A regression analysis was conducted to predict the effect of entrepreneurial behaviour at the start-up phase on firm performance. Findings: The findings of this study provide consistent support for the hypothesis that tour-operating firms in Ethiopia founded through creation behaviour instead of discovery behaviour are performing better in terms of sales, employment, profit and asset size change. Research limitations/implications: The theoretical contribution of this study is two-fold. First, it provides a scale for measuring the extent to which discovery and/or creation opportunity identification played a role in the start-up phase of the business. Second, the study assesses the effects of discovery behaviour and creation behaviour in opportunity identification on firm performance in a developing country context. Originality/value: The entrepreneurs' behaviour through which they identify and pursue new opportunities may have a considerable effect on the subsequent performance of their newly established firms. It is, therefore, important to understand effects, which result from differences in entrepreneurs' behaviour at the start-up phase, in terms of outcomes such as firm performance among small businesses. Nonetheless, there is little empirical research conducted in this regard, particularly in the context of developing countries. This study contributes to the literature of entrepreneurship by applying entrepreneurial behaviour types, i.e. discovery and creation, as determinants of small firms' performance in a developing country context. Furthermore, it is one of the few studies concentrating on formal instead of informal operations in an African context

Causation and effectuation behaviour of Ethiopian entrepreneurs:Implications on performance of small tourism firms

Purpose – The purpose of this paper is to investigate the implications of causation and effectuation behaviour of Ethiopian entrepreneurs on the eventual performance of their newly established small firms. It adds new knowledge and insights to advance the theory of effectuation by extending its scope into the domain of entrepreneurial behaviour and firm performance and by testing one of the operationalized scales in an African context. Design/methodology/approach – This empirical research is conducted amongst Ethiopian tour operators (n=118) based on primary data from the field. The scales are based on Chandler et al. (2011), which are adapted to fit to the tourism sector and validated in an African context using a two-stage exploratory factor analysis (EFA). Hierarchical multiple regression is used to assess the ability of entrepreneurs' behaviour (i.e. causation and effectuation) at the startup phase to predict the eventual performance of their newly established firms (self-reported changes in employment size, sales, profit and assets) over three years (January 2012-2015). Findings – The findings reveal a varied effect of causation and effectuation on financial and non-financial measures. Causation is positively related to an increase in employment size, whereas the overall effect of effectuation is positively related to financial performance measures, although its dimensions vary in their effects on sales, profit and assets increase. The paper concludes that causation and effectuation have varied implications on firm performance. In other words, unlike the findings of other research in Western contexts, a strong empirical support is not found to claim that effectuation is superior to causation in outcomes such as firm performance in Ethiopian context. Research limitations/implications – While this paper provides a new data set for entrepreneurship literature, its findings may lack generalisability. Not only it is industry specific (tourism sector), but also it is conducted in a single African country (Ethiopia). Despite its limitations, the paper adds new knowledge and insights for empirical studies in entrepreneurship field on the effects of entrepreneurs' behaviour, such as causation and effectuation; on firm performance. Future research should focus on other economic sectors and in different African countries before making generalisations about the effect of causation and effectuation behaviour of African entrepreneurs on firm performance. Practical implications – The findings of this paper can be used in other hospitality and tourism sectors like hotels and souvenir shops since tour operating business includes a broad range of service activities such as sightseeing, accommodation, transportation, recreational activities and shopping. Besides, these results have practical implications to prepare and provide business and management training tools to enhance entrepreneurial and managerial skills of owners of small tourism firms in Ethiopia. The findings of the study can also be applied in other African countries with similar culture and business environments to promote tourism development and success in Africa. Originality/value – There have been hardly any empirical studies that are undertaken on the implications of entrepreneurial behaviour such as causation and effectuation on the performance of small tourism firms, particularly in an African context. The paper addresses this research gap in entrepreneurship literature in drawing on empirical evidence from small tourism firms (tour operators) in Ethiopia

Factors Influencing the Identification of Sustainable Opportunities by SMEs: Empirical Evidence from Zambia

This study uses the model of Patzelt and Shepherd (2011) to examine the factors influencing the identification of sustainable opportunities among SMEs in a developing country, Zambia. The factors under investigation include knowledge of the natural/social environment, perception of threats to the natural/social environment, altruism towards others and entrepreneurial knowledge. We interviewed 220 owner-managers in the trading and service sector who supply goods and services to the mining industry in Zambia. We found that altruism towards others was partially supported by our empirical results while the positive effects of knowledge of the natural/social environment and perception of threats to the natural/social environment on the identification of sustainable opportunities were not supported. Contrary to our expectations, entrepreneurial knowledge does not positively moderate the relationship between explanatory variables and the identification of sustainable opportunities. In sum, we found only limited empirical support for the model of Patzelt and Shepherd (2011) concerning the identification of sustainable opportunities. Our findings contribute to literature on entrepreneurship and sustainable opportunity identification by showing what factors influence the identification of sustainable opportunities. This can help us to create awareness among entrepreneurs regarding the effects of entrepreneurial activities on the environment and society; consequently, stimulating entrepreneurs to identify sustainable opportunities