The Effect Of Conformity On Economic Decision Making

Inspired by research in the field of behavioral economics as well as social psychology, this study aimed to explore if conformity plays a role in the occurrence of herd behavior in the financial market. Participants received one of nine different versions of a survey either online or on paper. They answered questions related to riskiness when making decisions, dependency on others when making decisions, and investment preferences among other questions. In experimental conditions, participants were told the majority of investors, either sixty percent or eighty percent, invested in a certain stock or won a game. It was predicted that individuals would conform to the group behavior in both experimental conditions with the highest level of conformity in the high pressure to conform condition. Results of experiments revealed that when the overwhelming majority of other investors behaved a certain way (80%), participants were more likely to behave that same way. Results of the third experiment supported previous research stating that emotion affects economic decision-making and facilitates herd behavior.

Changes in annual reporting rituals of financial services firms in periods of market crisis

This paper examines accounting and financial reporting as ceremonial rituals. Its specific focus is upon changes in annual reporting rituals of financial services firms during periods of market crisis. Our preliminary findings suggest that several of the firms in our study may have made changes in their reporting rituals to construct alternative realities in an attempt to mask conflict, preserve stability, foster unity, and reinforce new social norms, core values, and corporate identities.

The Pre-1980 Roots of Neoliberal Financial Deregulation

U.S. financial deregulation is often popularly presented as a fundamental attack on financial regulation that began with neoliberalism's Big Bang in 1980. This paper argues this position is wrong in two ways. First, it is a process that stretches back decades before 1980. Textbook mentions of 1970s precursor "financial innovations" fall far short of presenting the breadth and duration of the pre-1980 attack on the system of regulation. Second, it has not been an across-the-board attack on financial regulation in the name of market efficiency as required by its ideology and claimed by its advocates, but rather a focused attack on only one of the five pillars of the system of regulation. This paper develops both of these assertions through a presentation of the five central pillars of the pre-1980 system of financial regulation, and the four major attacks on the three different aspects of the restrictions on financial competition.

The Dual Ownership Structure: a Model to Connect the Cooperative Model With Financial Markets

In business literature, the conflicts among workers, shareholders and the management have been studied mostly in the frame of stakeholder theory. The stakeholder theory recognizes this issue as an agency problem, and tries to solve the problem by establishing a contractual relationship between the agent and principals. However, as Marcoux pointed out, the appropriateness of the contract as a medium to reduce the agency problem should be questioned. As an alternative, the cooperative model minimizes the agency costs by integrating the concept of workers, owners and management. Mondragon Corporation is a successful example of the cooperative model which grew into the sixth largest corporation in Spain. However, the cooperative model has long been ignored in discussions of corporate governance, mainly because the success of the cooperative model is extremely difficult to duplicate in reality. This thesis hopes to revitalize the scholarly examination of cooperatives by developing a new model that overcomes the fundamental problem in the cooperative model: the limited access to capital markets. By dividing the ownership interest into financial and control interest, the dual ownership structure allows cooperatives to issue stock in the capital market by making a financial product out of financial interest.