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Emerald Group Publishing Limited
Copyright © 2011, Emerald Group Publishing Limited
Article Type: Editorial From: Qualitative Research in Financial Markets, Volume 3, Issue 1
Welcome to the first issue of Volume 3 of Qualitative Research in Financial Markets (QRFM). I would again like to thank everyone involved with the journal in ensuring that it continues to develop and gather momentum in its early years. The submissions we receive continue to provide fascinating insights into the range and breadth of on-going work in the field and I hope that the launch of QRFM has, in some small way, played a part in helping to encourage such endeavours. This issue contains four papers that, while divergent in approach and focus, all contribute to topical and energetic debates in the broad finance/financial markets area. First, in “Herding, information uncertainty, and investors’ cognitive profile,” Beatriz Fernández, Teresa Garcia-Merino, Rosa Mayoral, Valle Santos and Eleuterio Vallelado examine issues surrounding “herding” behaviour on the part of investors, focussing in particular on the effect of interaction between the availability of information and investors’ cognitive profile. On the basis of an experiment conducted with undergraduate students, the paper reports that both information uncertainty and the number of previous transactions act as determinants of investors’ herding propensity. In addition, investors’ cognitive profiles are shown to have the ability to explain why individuals exhibit different imitation propensities in identical informational contexts.
The three other papers in this issue all relate to debates arising from the global financial crisis, illustrating once again the usefulness of qualitative research techniques in the current climate. “Trading strategies of individual investors in times of financial crisis: an example from the Central European emerging stock market of Poland,” by Lukasz Prorokowski, employs a range of research methods to investigate the techniques used by non-professional investors (both UK and domestic) in the Polish Stock Market. The evidence presented in the study indicates that, unlike their counterparts from more developed stock markets, these investors rely primarily on technical analysis. Interestingly however, during the global financial crisis the investors became more inclined to employ fundamental analysis to capture the risk inherent in a time of extreme financial market volatility. In “Shareholder and stakeholder theory: after the financial crisis,” Terence Tse reviews the renewed (in the context of the crisis, including its effects on the UK banking sector) debate about the efficacy of replacing the shareholder view of the firm with a broader stakeholder view. The author argues that, while the former approach has some obvious limitations, it should not be considered obsolete as it was the misuse of the notion, rather than the notion itself, that should be considered culpable. However, Tse argues that to prevent the disaster from repeating itself, policy makers could work usefully with industry bodies and business leaders to encourage them to place greater emphasis on the interests of non-shareholders, whilst at the same time working to develop more collaboration between various groups of stakeholders. Finally, “A brief review of the role of shareholder wealth maximisation and other factors contributing to the global financial crisis,” by Noel Yahanpath and Tintu Joseph, describes and analyses some of the purported causes and antecedents of the crash. The authors’ central theme is that much of the blame for the crisis should be laid at the door of the corporate pursuit of shareholder wealth maximisation; they conclude by arguing that risk shifting and dysfunctional behaviour are inevitable side effects of a shareholder wealth-based objective function and that only a much stronger and effective governance system will ensure the re-focussing required to avoid a repeat of recent events.
I am pleased to say that the next issue of QRFM will take the form of a special issue on Islamic Finance, edited by Dr Omar Masood of the University of East London. The call for papers for this special issue has generated such a large number of high quality papers that a second volume will be published in the future. Given the success of this venture, I would again like to invite suggestions for such issues in the future; interest in joining the editorial board and/or the team of reviewers for QRFM are also welcome.