Jarboui Anis

CEO emotional bias and investment decision, Bayesian network method

Article history: Received October 1, 2011 Received in Revised form November, 14, 2011 Accepted 15 February 2012 Available online 23 February 2012 This research examines the determinants of firms’ investment introducing a behavioral perspective that has received little attention in corporate finance literature. The following central hypothesis emerges from a set of recently developed theories: Investment decisions are influenced not only by their fundamentals but also depend on some other factors. One factor is the biasness of any CEO to their investment, biasness depends on the cognition and emotions, because some leaders use them as heuristic for the investment decision instead of fundamentals. This paper shows how CEO emotional bias (optimism, loss aversion and overconfidence) affects the investment decisions. The proposed model of this paper uses Bayesian Network Method to examine this relationship. Emotional bias has been measured by means of a questionnaire comprising several items. As for the selected sample, it has been composed of some 100 Tunisian executives. Our results have revealed that the behavioral analysis of investment decision implies leader affected by behavioral biases (optimism, loss aversion, and overconfidence) adjusts its investment choices based on their ability to assess alternatives (optimism and overconfidence) and risk perception (loss aversion) to create of shareholder value and ensure its place at the head of the management team.

Market, interest rate, and exchange rate risk effects on financial stock returns during the financial crisis: AGARCH-M approach

Abstract Our aim is to investigate the sensitivity of financial sector stock returns to market, interest rate, and exchange rate risk in three financial sectors (financial services, banking, and insurance) in eight countries, including various European, the US, and China economies, over the period 2006–2009 during the financial crisis. The econometric framework is a four-variate GARCH-in-mean model and volatility spillovers. The empirical results show the significant effects (positive and negative, respectively) of the stock market returns, interest rate, and exchange rate volatility of the financial sector during the crisis. Besides, we find, in most cases, significant (positive and negative, respectively) volatility spillovers from market return, interest rate, exchange rate, and interest rate in the financial services and the banking sector both in the European and the US economies during the financial crisis.

Cognitive governance, cognitive mapping and cognitive conflicts: Structural analysis with the MICMAC method

Abstract This research aims to achieve a better understanding of the modes of conceptualization and thinking on issues of governance. It is part of a cognitive approach, to our knowledge unprecedented. This research has shown that the mapping concepts of governance can provide the original performance and meaningful. The purpose was to plot the thought of governance actors in the form of a cognitive map and analyze it. The results highlighted the relative importance of the concepts they used, the dimensions from which they structured more or less consciously, here own thoughts, and the nature and characteristics of the concepts they considered primarily as an explanation or consequences. They allowed characterizing very special or very precise structure and content of the thought of these actors. The construction of collective cognitive maps is to help structure the relationship between governance actors in the sense that it will detect the conflict relations of cognitive order. The cognitive map is by definition a representation of mental models of actors on any topic. Actors of governance do not have the same definitions of the concepts of governance that represents for us a sort of cognitive conflict and hence through cognitive mapping can map the concentration of these conflicts and we are still looking for more to show the effectiveness governance mechanisms to resolve these conflicts.

CEO’s commitment bias, ownership concentration, and innovation decision: Behavioral management of CEO’s discretion

Abstract This paper deals with approving the effect of both a governance system and individual cognitive and emotional features in the financial analysis of a firms’ innovation decision. After discussing the theoretical linking between ownership concentration and the CEO’s attitude and behavior, we are showing on empirical grounds the relationship between the manager’s behavior toward the innovation decision and his cognitive commitment level. The CEO’s commitment bias and attitude conception were measured using a questionnaire. The data analysis was performed using the Bayesian network method on 220 Tunisian managers. In particular, we found that the application of a persuasion mechanism does not have a real impact on the alignment of the manager’s attitude and behavior in key tasks, such as the innovation decision. The CEO’s real behavior was more related to an important individual involvement in this behavior rather than to persuasive effort committed by block holders to make him contract this action. Attitude and behavior toward innovation appeared to be associated with psychological commitment “manager-task” which suggests that the disciplinary governance system plays no role in the process of a CEO’s discretion management. We argue that the persuasion approach is not an interesting path in behavior alignment; yet, it should be reinforced with the commitment approach for understanding manager choices.

The venture capitalist’s cognitive approach: Validation through the Tunisian context

Abstract This study is aimed to examine the major determinants of cognitive approach investigated with according to a set of 150 firms financed by Tunisian venture capital agencies observed over the period 2010–2015. We are led to conclude that some venture capitalist’s characters do appear to affect the cognitive contribution within funded firms. In addition, it has been revealed that the manager’s share held, the venture capitalist’ participation in the capital and the firm age appear to have a significant influence on the cognitive approach adopted by the venture capital.

Corporate governance and firm characteristics as explanatory factors of shareholder activism: Validation through the French context

Abstract This study deals with the major determinants of company shareholder activism investigated with according to a set of SBF 120 listed firms. Based on a sample of 77 companies, observed over the period 2008–2012, we are led to conclude that some firm governance characteristics do appear to affect shareholding activism. In addition, it has been revealed that the presence of institutional investors, ownership concentration, leaders’ presence in the capital, control structure, leadership change, firm growth as well as leverage level appear to have a significant influence on the probability of activism to take place.

The factors forming investor’s failure: Is financial literacy a matter? Viewing test by cognitive mapping technique

Abstract The objective of this paper is to apply cognitive map-related techniques to extract causal knowledge from a specific problem domain. This paper proposes to draw an average cognitive map in order to identify the failure factors of the Tunisian small investors. Our paper extends traditional and behavioral finance and previous research by proposing a new approach to building an average cognitive map for the explanation of small investors’ failure in the stock market.

The evidence of management motivation to revalue property plant and equipment in Tunisia

This article deals with the relationship between emotions and accounting method. Specifically, it examines the links between cognitive biases and use of assets revaluation. Indeed, in order to improve the explanatory power of the positive theory of accounting, we integrated the behavioural dimension in the analysis of accounting choices: our goal is to show the role of these biases on the choice of revaluation (negativity through the loss of optimism and complacency). All four cognitive biases were measured means of a questionnaire consisting of several items. The selected sample is composed of 120 Tunisians managers. Our results suggest that the presence of a revaluation is always positively correlated with the executives’ suggestibility in relation to the behavioural biases. Key words: Loss aversion, optimism, overconfidence, assets revaluation