Liana Holanda Nepomuceno Nobre

Managerial risk taking: a conceptual model for business use

The purpose of this paper is to establish a conceptual model for managerial risk taking that considers objective measures related to an organization’s characteristics and subjective factors related to a decision maker’s profile.,A multilevel process-centered managerial decision-making framework was developed based on previously published risk taking models. The framework accounts for the conflict between agents and principals, as well as the macro- and micro-level environments in which risky decisions are made.,The integrative model presented in this paper provides a theoretically robust tool that can be used to further explore the interrelationships among known risk concepts that influence decision making in corporate settings.,The present research is a conceptual model for managerial risk-taking. Further research is needed to test the linkages and propositions within the model, developing measures of the constructs and empirically testing the relationships among the dimensions of risk.,The proposed model can help firms define what manager profile is most suitable in terms of a match to the company’s investment strategy.,This paper is theoretically valuable in describing the relationships among several elements of risk: risk need, risk capacity, risk profile, risk perception, and risk tolerance. Future directions for empirical research are also presented.

Análise da relação entre variáveis demográficas e escores de tolerância ao risco

Behavioral Finance is a modern branch of financial theory that aims to incorporate psychological and sociological issues in the investigation of market anomalies and individual investor behavior. This research sought to assess which demographic variables can be used to classify decision makers regarding to risk tolerance level. The questionnaire was applied with 305 individuals and its structure was based of the work of Gava and Vieira (2006), Grable and Lyntton (2001) and the Survey of Consumer Finances (SCF). Risk tolerance level was measured in two ways: an observable variable, from the SCF, and a latent variable composed of three constructs that refer to some risk dimensions: risk as investment, comfort and experience at risk and speculative risk (GRABLE; LYNTTON, 2001). In the analysis of data, Confirmatory Factor Analysis (CFA) and variance analysis (ANOVA) were used. Results show that the greatest impact on risk tolerance among the analyzed dimensions was the dimension comfort and experience with risk; it presented the highest mean and the highest correlation with the risk tolerance score. Regarding to the demographic variables, the research shows that young, single and childless individuals tend to accept more risk in their investments. The income presented a nonlinear effect on the risk tolerance, but the more risk tolerant are those who are better able to withstand the possible losses arising from higher risk investments.

Stock Market Volatility and Changes in Financial Risk Tolerance During the Great Recession

This study investigated the degree to which the financial risk tolerance of individuals was influenced by volatility in the U.S. equities market during the period of the Great Recession. Based on data from a valid and reliable risk tolerance scale and return information for the Standard and Poor’s (S&P) 500 index, there does appear to be some associations between daily market volatility and changes in risk tolerance scores. Changes in risk tolerance scores were also calculated using short- and intermediate-term volatility measures. The relationships do vary, however, with evidence supporting the relationship only 64% of the time. Overall, changes in financial risk tolerance scores were found to be modest. Although not following hypothesized directions at all times, risk tolerance was not influenced by the length of volatility measurements.