Corporate Social Responsibility, Corporate Governance, And Managerial Risk-Taking

This dissertation investigates the association between corporate social responsibility (CSR) and managerial risk-taking, as well as the differences in governance structure that affect this association. Using a sample of US public firms from 1995 to 2009, we find that firms with strong CSR records engage in higher risk-taking. Furthermore, we find that this relationship is robust when accounting for differences in governance structure and correcting for endogeneity via simultaneous equations modeling. Additional testing indicates that performance in the employee relations dimension of CSR in particular increases with risk-taking, while high firm visibility dampens the association between CSR and the accounting-based measures of risk-taking. Prior literature establishes that high managerial risk-tolerance is necessary for the undertaking of risky yet value-enhancing investment decisions. Thus, the main findings suggest that CSR, rather than being a waste of scarce corporate resources, is instead an important aspect of shareholder value creation. They contribute to the debate on CSR by documenting that corporate risk-taking is one mechanism among others through which CSR maps into higher firm value.

Effects of credit rating change on risk-taking

This thesis investigates whether there are changes in risk-taking behavior following an upgrade or downgrade in credit ratings. Research on effects of rating changes on capital markets is well-documented but the literature on how rating changes may affect firm behavior is sparse. Following, a downgrade in credit rating, managers may increase risk-taking to improve their overall performance or reduce risk-taking following upgrades to ensure that their performance is assessed more on the basis of what they may deem success in the form of an upgrade. Using a sample of firms trading in the U.S from 1994-2013, we find evidence of change in risk-taking behavior. We use cross-sectional regressions and matching using propensity scores and Barber and Lyon (1997) methodology to measure changes in risk-taking and we do find evidence of changes in managerial risk-taking behavior. Furthermore, we find that the direction of change (increase or decrease) in some cases is dependent on the type of measure rather than the type of rating change.

Kindergarten characteristics and risk-taking behaviors in middle childhood = Caractéristiques à la maternelle et comportements de prise de risques en 6e année

Mémoire numérisé par la Division de la gestion de documents et des archives de l'Université de Montréal

Risk-taking and inhibitory control in behaviourally inhibited and disinhibited preschool children

The temperament style Behavioural Inhibition (BI) has been implicated as a risk factor for the development of internalising disorders such as anxiety. Of interest is what factors influence the developmental trajectories of both inhibited and disinhibited children and the development of psychopathology. One such factor is risk-taking behaviour. Using the computer based Balloon Analogue Risk Task, we assessed risk taking behaviour in behaviourally inhibited (n = 27) and behaviourally disinhibited (n = 43) children. This is the first study to examine the relationship between BI, executive functioning and risk-taking. The results indicated Behavioural Inhibition was not related to risk-taking but that inhibitory control predicted reward focused results. These findings illustrate how inhibitory control affects risk-taking and risk avoidance in both inhibited and disinhibited children.

Risk-taking for others under accountability

We let subjects take risky decisions that affect themselves and a passive recipient. Adding a requirement to justify their choices significantly reduces loss aversion. This indicates that such an accountability mechanism may be effective at debiasing loss aversion in agency relations.

Risk taking for oneself and others: a structural model approach

Economic theory makes no predictions about social factors affecting decisions under risk. We examine situations in which a decision maker decides for herself and another person under conditions of payoff equality, and compare them to individual decisions. By estimating a structural model, we find that responsibility leaves utility curvature unaffected, but accentuates the subjective distortion of very small and very large probabilities for both gains and losses. We also find that responsibility reduces loss aversion, but that these results only obtain under some specific definitions of the latter. These results serve to generalize and reconcile some of the still largely contradictory findings in the literature. They also have implications for financial agency, which we discuss.

Risk taking of executives under different incentive contracts: experimental evidence

Classic financial agency theory recommends compensation through stock options rather than shares to counteract excessive risk aversion in agents. In a setting where any kind of risk taking is suboptimal for shareholders, we show that excessive risk taking may occur for one of two reasons: risk preferences or incentives. Even when compensated through restricted company stock, experimental CEOs take large amounts of excessive risk. This contradicts classical financial theory, but can be explained through risk preferences that are not uniform over the probability and outcome spaces, and in particular, risk seeking for small probability gains and large probability losses. Compensation through options further increases risk taking as expected. We show that this effect is driven mainly by the personal asset position of the experimental CEO, thus having deleterious effects on company performance.

Reining in excessive risk-taking by executives: the effect of accountability

Performance-contingent compensation by means of stock options may induce risk-taking in agents that is excessive from the point of view of the company or the shareholders. We test whether increasing shareholder control may be an effective checking mechanism to rein in such excessive risk-taking. We thus tell one group of experimental CEOs that they may have to justify their decision-making processes in front of their shareholders. This indeed reduces risk-taking and increases the performance of the companies they manage. Implications are discussed.

Pre-service pedagogies : atorylines of responsibility and risk-taking

This paper emerges from a three year study within a core education subject in preservice teacher education classrooms in Australia. This ‘practitioner research’ (Zeichner, 1999) engaged the problematics of ‘teaching and learning‘ and ‘teacher and learner’ in a learner-centred, arts based curriculum. An abundance of storylines and positionings (Harré & van Langenhove, 1991, 1999; Harré & Slocum, 2003) were revealed; among them were storylines of ‘responsibility for teaching and learning’ and ‘risk taking in learning’
The paper provides accounts of how preservice teachers positioned themselves and others within these storylines. The shifts made by students of positioning and between storylines provide substantial argument for the use of leaner-centred, arts based curriculum. Account is also made of the ways participants persisted with positioning even when this jeopardized their own learning or that of others.

Ontogeny of energy allocation reveals selective pressure promoting risk-taking behaviour in young fish cohorts

Given limited food, prey fishes in a temperate climate must take risks to acquire sufficient reserves for winter and/or to outgrow vulnerability to predation. However, how can we distinguish which selective pressure promotes risk-taking when larger body size is always beneficial? To address this question, we examined patterns of energy allocation in populations of age-0 trout to determine if greater risk-taking corresponds with energy allocation to lipids or to somatic growth. Trout achieved maximum growth rates in all lakes and allocated nearly all of their acquired energy to somatic growth when small in early summer. However, trout in low-food lakes took greater risks to achieve this maximal growth, and therefore incurred high mortality. By late summer, age-0 trout allocated considerable energy to lipids and used previously risky habitats in all lakes. These results indicate that: (i) the size-dependent risk of predation (which is independent of behaviour) promotes risk-taking behaviour of age-0 trout to increase growth and minimize time spent in vulnerable sizes; and (ii) the physiology of energy allocation and behaviour interact to mediate growth/mortality trade-offs for young animals at risk of predation and starvation.

Predators select against high growth rates and risk-taking behaviour in domestic trout populations

Domesticated (farm) salmonid fishes display an increased willingness to accept risk while foraging, and achieve high growth rates not observed in nature. Theory predicts that elevated growth rates in domestic salmonids will result in greater risk–taking to access abundant food, but low survival in the presence of predators. In replicated whole–lake experiments, we observed that domestic trout (selected for high growth rates) took greater risks while foraging and grew faster than a wild strain. However, survival consequences for greater growth rates depended upon the predation environment. Domestic trout experienced greater survival when risk was low, but lower survival when risk was high. This suggests that animals with high intrinsic growth rates are selected against in populations with abundant predators, explaining the absence of such phenotypes in nature. This is, to our knowledge, the first large–scale field experiment to directly test this theory and simultaneously quantify the initial invasibility of domestic salmonid strains that escape into the wild from aquaculture operations, and the ecological conditions affecting their survival.

From individuals to populations : prey fish risk-taking mediates mortality in whole-system experiments

Recent research suggests that the behavior of individuals under risk of predation could be a key link between individual behavior and population and community dynamics. Yet existing theory remains largely untested at large spatial and temporal scales. We manipulated food available to age-0 rainbow trout while at risk of cannibalism, in a replicated factorial whole-lake experiment, to test whether the trade-off between growth and mortality rates is mediated by foraging activity by young fish under predation risk. We found that this trade-off exists for young fish at the whole-system scale, and that food-dependent behavioral variation has large mortality consequences. In high-food lakes, age-0 trout spent less time moving, fewer individuals swam continuously, and those swimming continuously swam at slower speeds relative to those in low-food lakes. Age-0 trout also used deep, risky habitats less when food was abundant. This lower activity, combined with avoidance of risky habitats, coincided with 68% higher survival in high-food lakes. If general, this trade-off may be a key mechanism linking individual behavior to population-level processes in size-structured populations.