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1 – 10 of 445
Open Access
Article
Publication date: 9 June 2023

Marco Santorsola, Rocco Caferra and Andrea Morone

Expanding on the real-world financial market framework and considering the current market turmoil, with cryptocurrencies (where contracts for difference (CFDs) are extremely…

Abstract

Purpose

Expanding on the real-world financial market framework and considering the current market turmoil, with cryptocurrencies (where contracts for difference (CFDs) are extremely common) (Hasso et al., 2019) displaying unprecedented volatility, the authors aim to test in an online laboratory setting whether displaying a risk warning message is truly effective in reducing the level of risk taken and whether the placement of this method makes a difference.

Design/methodology/approach

To explore the impact of risk disclosure framing on risk-taking behavior, the authors conducted an online pair-wise lottery choice experiment. In addition to manipulating risk awareness through the presence or absence of risk warning messages of varying intensity, the authors also considered dynamic inconsistency, cognitive ability and questionnaire-based financial risk tolerance (FRT) scores. The authors aimed to identify potential relationships between these variables and experimentally elicited risk aversion. The authors' study offers valuable insights into the complex nature of risky decision-making and sheds light on the importance of considering dynamic inconsistency in addition to risk awareness and aversion.

Findings

The authors' results provide statistical evidence for the efficacy of informative and very salient messages in mitigating risky decision, hinting at several policy implications. The authors also provide some statistical evidence in support of the relationship between cognitive abilities and risk preferences. The authors detect that individual with low cognitive abilities scores display great risk aversion.

Originality/value

This study investigates the impact of risk warning messages on investment decisions in an online laboratory setting – a unique approach. However, the authors go beyond this and also examine the potential influence of dynamic inconsistency on decision-making, adding further value to the literature on this topic. To ensure a comprehensive understanding of the participants, the authors collect data on cognitive ability and FRT using questionnaires. This study provides a simple and cost-effective framework that can be easily replicated in future research – a valuable contribution to the field.

Details

Journal of Economic Studies, vol. 51 no. 9
Type: Research Article
ISSN: 0144-3585

Keywords

Article
Publication date: 15 June 2023

Avani Sebastian

An understanding of the role of decision-making has been emphasised since the seminal works on human information processing and professional judgements by accountants. The…

Abstract

Purpose

An understanding of the role of decision-making has been emphasised since the seminal works on human information processing and professional judgements by accountants. The interest in these topics has been reignited by the increasing digitisation of the financial reporting and auditing processes. Whilst the behavioural research on accounting is well-established, the application of seminal works in cognitive psychology and behavioural finance is lacking, especially from recent research endeavours. The purpose of this paper is to provide a synthesis of theories relating to accounting behavioural research by evaluating them against the theories of cognitive psychology.

Design/methodology/approach

Using theory synthesis, this research draws seemingly isolated strands of research into a coherent framework, underpinned by cognitive psychology.

Findings

Evidence from accounting and auditing behavioural research is largely consistent with the psychology and finance research on cognitive limitations and errors. There remains a lacuna in accounting behavioural research on debiasing techniques. Such research, if underpinned by a single, cohesive theoretical framework, is likely to have practical relevance.

Research limitations/implications

The current research has theoretical implications for the accounting decision-making and uncertainty research. Areas for future research, based on identified gaps in the current accounting behavioural research, are also proposed.

Details

Meditari Accountancy Research, vol. 32 no. 2
Type: Research Article
ISSN: 2049-372X

Keywords

Article
Publication date: 16 February 2023

Amir Emami, Zeinab Taheri and Rasim Zuferi

This paper aims to investigate the interactive relationship between learning styles and cognitive biases as two essential factors affecting information processing in online…

Abstract

Purpose

This paper aims to investigate the interactive relationship between learning styles and cognitive biases as two essential factors affecting information processing in online purchases.

Design/methodology/approach

This research is applied in nature but extends the knowledge in the area of consumer behavior. By using the correlational research method, the present study uncovers the relationship between various sorts of decision biases and learning styles among online buyers.

Findings

According to the results, the most affected learning style among all is reflective observation. Several biases influence people with this learning style, namely, risky framing, attribute framing and aggregated/segregated framing. In the case of active experimentation, online customers can undo its effect. Therefore, online sellers should be aware of their target customers with such a learning style. In addition, online purchasers with the reflective observation learning style are more prone to aggregation and segregation of sales information.

Originality/value

The findings enhance the understanding of consumer buying behavior and the extent to which learning styles impact cognitive biases and framing effects in online shopping.

Details

Journal of Enterprising Communities: People and Places in the Global Economy, vol. 18 no. 2
Type: Research Article
ISSN: 1750-6204

Keywords

Open Access
Article
Publication date: 23 February 2024

Sarah Mueller-Saegebrecht

Managers must make numerous strategic decisions in order to initiate and implement a business model innovation (BMI). This paper examines how managers perceive the management team…

460

Abstract

Purpose

Managers must make numerous strategic decisions in order to initiate and implement a business model innovation (BMI). This paper examines how managers perceive the management team interacts when making BMI decisions. The paper also investigates how group biases and board members’ risk willingness affect this process.

Design/methodology/approach

Empirical data were collected through 26 in-depth interviews with German managing directors from 13 companies in four industries (mobility, manufacturing, healthcare and energy) to explore three research questions: (1) What group effects are prevalent in BMI group decision-making? (2) What are the key characteristics of BMI group decisions? And (3) what are the potential relationships between BMI group decision-making and managers' risk willingness? A thematic analysis based on Gioia's guidelines was conducted to identify themes in the comprehensive dataset.

Findings

First, the results show four typical group biases in BMI group decisions: Groupthink, social influence, hidden profile and group polarization. Findings show that the hidden profile paradigm and groupthink theory are essential in the context of BMI decisions. Second, we developed a BMI decision matrix, including the following key characteristics of BMI group decision-making managerial cohesion, conflict readiness and information- and emotion-based decision behavior. Third, in contrast to previous literature, we found that individual risk aversion can improve the quality of BMI decisions.

Practical implications

This paper provides managers with an opportunity to become aware of group biases that may impede their strategic BMI decisions. Specifically, it points out that managers should consider the key cognitive constraints due to their interactions when making BMI decisions. This work also highlights the importance of risk-averse decision-makers on boards.

Originality/value

This qualitative study contributes to the literature on decision-making by revealing key cognitive group biases in strategic decision-making. This study also enriches the behavioral science research stream of the BMI literature by attributing a critical influence on the quality of BMI decisions to managers' group interactions. In addition, this article provides new perspectives on managers' risk aversion in strategic decision-making.

Details

Management Decision, vol. 62 no. 13
Type: Research Article
ISSN: 0025-1747

Keywords

Open Access
Article
Publication date: 14 November 2023

Hajer Chenini and Anis Jarboui

A separate study of the different behavioral biases does not allow for a full understanding of the complexity and stability of the heterogeneity of beliefs. Therefore, through a…

Abstract

Purpose

A separate study of the different behavioral biases does not allow for a full understanding of the complexity and stability of the heterogeneity of beliefs. Therefore, through a more global view of these anomalies, the authors wish to show that they can converge on a single concept, which is the heterogeneity of beliefs.

Design/methodology/approach

It is therefore essential to stress that the importance of this study is mainly reflected in the methodological approach used in the construction and analysis of the map and not only in the results achieved. This contribution states that structural analysis, as a means of building the cognitive map, can facilitate the task of investors and other decision-makers, in the identification and analysis of the heterogeneity of beliefs that can therefore guide investors' strategy in decision-making.

Findings

The authors have studied the behavior of the investor and its way of interpreting the information and the authors have emphasized the value of studying the concept of heterogeneity of beliefs in its complexity. So that part of the work seems to be relevant and crucial to filling, if you will, that void. In this sense, the authors have shown that behavioral abnormalities are multidimensional concepts: “self-deception”, “cognitive bias”, “emotional bias” and “social bias”.

Originality/value

In particular, this article will aim to achieve the objective of proposing a model for measuring the heterogeneity of beliefs. Thus, the authors want to show that the heterogeneity of beliefs can be measured directly through the different behavioral anomalies.

Details

Journal of Economics, Finance and Administrative Science, vol. 29 no. 57
Type: Research Article
ISSN: 2077-1886

Keywords

Article
Publication date: 1 June 2023

Maqsood Ahmad and Qiang Wu

This study aims to use a qualitative approach to explore and clarify the mechanism by which heuristic-driven biases influence the decisions and performance of individual investors…

Abstract

Purpose

This study aims to use a qualitative approach to explore and clarify the mechanism by which heuristic-driven biases influence the decisions and performance of individual investors actively trading on the Pakistan Stock Exchange (PSX). It also aims to identify how to overcome the negative effect of heuristic-driven biases, so that finance practitioners can avoid the expensive errors which they cause.

Design/methodology/approach

This study adopts an interpretative approach. Qualitative data was collected in semistructured interviews, in which the target population was asked open-ended questions. The sample consists of five brokers and/or investment strategists/advisors who maintain investors’ accounts or provide investment advice to investors on the PSX, who were selected on a convenient basis. The researchers analyzed the interview data thematically.

Findings

The results confirm that investors often use heuristics, causing several heuristic-driven biases when trading on the stock market, specifically, reliance on recognition-based heuristics, namely, alphabetical ordering of firm names, name memorability and name fluency, as well as cognitive heuristics, such as herding behavior, disposition effect, anchoring and adjustment, repetitiveness, overconfidence and availability biases. These lead investors to make suboptimal decisions relating to their investment management activities. Due to these heuristic-driven biases, investors trade excessively in the stock market, and their investment performance is adversely affected.

Originality/value

This study provides a practical framework to explore and clarify the mechanism by which heuristic-driven biases influence investment management activities. To the best of authors’ knowledge, the current study is the first to focus on links between heuristic-driven biases, investment decisions and performance using a qualitative approach. Furthermore, with the help of a qualitative approach, the investigators also highlight some factors causing an increased use of heuristic variables by investors and discuss practical approaches to overcoming the negative effects of heuristics factors, so that finance practitioners can avoid repeating the expensive errors which they cause, which also differentiates this study from others.

Details

Qualitative Research in Financial Markets, vol. 16 no. 2
Type: Research Article
ISSN: 1755-4179

Keywords

Article
Publication date: 28 March 2024

Allam Abu Farha, Said Elbanna, Osama Sam Al-kwifi and Satoko Uenishi

This study seeks to investigate how managerial assumptions shape international market orientation (IMO) and how IMO, in turn, affects the performance of small and medium-sized…

Abstract

Purpose

This study seeks to investigate how managerial assumptions shape international market orientation (IMO) and how IMO, in turn, affects the performance of small and medium-sized enterprises (SMEs), drawing from cognitive theory and the resource-based view (RBV) to provide the theoretical framework.

Design/methodology/approach

The study focuses on the relatively unexplored domain of small and medium-sized enterprises (SMEs) in Japan. A survey was developed and tested using data from 303 Japanese SMEs. The study model was subsequently analyzed using the partial least squares (PLS) technique.

Findings

The study reveals a nuanced relationship between managerial frames of reference (FoRs) and IMOs. The results confirmed notable congruence between interfunctional market orientation and managers who exhibit a political FoR. They also revealed a positive correlation between professional FoR managers and customer market orientation. Additionally, the findings showed that entrepreneurial FoR managers displayed a significant association with competitive market orientation and Bureaucratic FoR matched with the three types of IMO. Finally, the results indicate that all three forms of IMO have a substantial impact on performance, albeit to varying degrees.

Research limitations/implications

The applicability of our results to multinational corporations (MNCs) has not been evaluated. Since the primary focus was to identify the types of associations among FoR and IMO, the causal pathways and explanatory factors that underpinned these observed relationships were not examined in this study. Additionally, due to the geographical concentration of our sample in Japan, we were unable to conduct tests on the suggested model in other countries to validate and potentially generalize the research findings.

Practical implications

By developing an implicit understanding of the market orientation fit within the organization’s FoR, managers can enhance their understanding of competitors' activities and enable them to respond with greater efficiency.

Originality/value

To the authors’ knowledge, this is one of the rare papers that inspect the relationship between International market orientations and managerial assumptions as well as their effect on performance.

Details

Marketing Intelligence & Planning, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0263-4503

Keywords

Article
Publication date: 29 December 2023

Yini Chen and Ting Chi

This research investigates apparel consumers' psychological and behavioral responses to omnichannel (OC) integration. Specifically, the study applies the…

Abstract

Purpose

This research investigates apparel consumers' psychological and behavioral responses to omnichannel (OC) integration. Specifically, the study applies the cognitive–affective–conative (CAC) model to reveal consumers' decision-making process under the impact of channel integration quality (CIQ), perceived fluency (PF) and cognitive and affective trust (AT).

Design/methodology/approach

Primary data were collected through an online survey. In total, 657 eligible responses were received. This study applied partial least square structural equation modeling for data analysis.

Findings

The findings demonstrate that the extrinsic cognitive factor, CIQ, substantially affects consumers' intrinsic cognition (cognitive trust [CT] and PF), which consequently fosters consumers' AT and shopping intentions. Specifically, integrated promotion and transaction information positively affects CT, while integrated product and price and information access negatively impact CT. All the dimensions of CIQ, except integrated promotion (IP), significantly affect PF. CT and AT exhibit mediation effects in the CAC model.

Practical implications

Apparel brands and retailers may apply the findings to effectively design their retail channels and implement channel integration to boost consumers' shopping intentions and trust.

Originality/value

This study is one of the pioneering studies applying the CAC model to empirically examine OC consumers' decision-making process. It is also among the first to determine that cognitive and AT have theoretical distinctions in the OC retailing setting.

Details

Marketing Intelligence & Planning, vol. 42 no. 2
Type: Research Article
ISSN: 0263-4503

Keywords

Article
Publication date: 30 May 2023

R.V. ShabbirHusain, Atul Arun Pathak, Shabana Chandrasekaran and Balamurugan Annamalai

This study aims to explore the role of the linguistic style used in the brand-posted social media content on consumer engagement in the Fintech domain.

Abstract

Purpose

This study aims to explore the role of the linguistic style used in the brand-posted social media content on consumer engagement in the Fintech domain.

Design/methodology/approach

A total of 3,286 tweets (registering nearly 1.35 million impressions) published by 10 leading Fintech unicorns in India were extracted using the Twitter API. The Linguistic Inquiry and Word Count (LIWC) dictionary was used to analyse the linguistic characteristics of the shared tweets. Negative Binomial Regression (NBR) was used for testing the hypotheses.

Findings

This study finds that using drive words and cognitive language increases consumer engagement with Fintech messages via the central route of information processing. Further, affective words and conversational language drive consumer engagement through the peripheral route of information processing.

Research limitations/implications

The study extends the literature on brand engagement by unveiling the effect of linguistic features used to design social media messages.

Practical implications

The study provides guidance to social media marketers of Fintech brands regarding what content strategies best enhance consumer engagement. The linguistic style to improve online consumer engagement (OCE) is detailed.

Originality/value

The study’s findings contribute to the growing stream of Fintech literature by exploring the role of linguistic style on consumer engagement in social media communication. The study’s findings indicate the relevance of the dual processing mechanism of elaboration likelihood model (ELM) as an explanatory theory for evaluating consumer engagement with messages posted by Fintech brands.

Details

International Journal of Bank Marketing, vol. 42 no. 2
Type: Research Article
ISSN: 0265-2323

Keywords

Open Access
Article
Publication date: 5 December 2023

Simon Lundh, Karin Seger, Magnus Frostenson and Sven Helin

The purpose of this study is to identify the norms that underlie and condition the decisions made by preparers of financial reports.

Abstract

Purpose

The purpose of this study is to identify the norms that underlie and condition the decisions made by preparers of financial reports.

Design/methodology/approach

This interview-based study illustrates how financial report preparers engage in behaviors linked to the perception of recognition and measurement of internally generated intangible assets by important stakeholders. All of the companies included in the study adhere to International Financial Reporting Standards when creating their consolidated financial statements. The participants selected for the study are involved in accounting decisions related to research and development in accordance with International Accounting Standard (IAS) 38.

Findings

The authors identify the normative assumptions underlying the recognition and measurement of internally generated intangibles, which are based on concerns of consistency, credibility and reasonableness. The authors find that the normative basis for legitimacy in financial accounting is primarily related to cognitive legitimacy and is not of a moral or pragmatic nature.

Originality/value

The study reveals that recognition and measurement of internally generated intangibles in financial accounting relate to legitimacy. The authors identify specific norms that form the basis of this legitimacy, namely, consistency, credibility and reasonableness. These identified norms serve as constraints, mitigating the risk of judgment misuse within the IAS 38 framework for earnings management.

Details

Qualitative Research in Accounting & Management, vol. 21 no. 2
Type: Research Article
ISSN: 1176-6093

Keywords

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