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Article

Scott J. Boylan

The purpose of this paper is to examine the potential effectiveness of government reforms aimed at improving the accuracy of ratings issued by credit ratings agencies in…

Abstract

Purpose

The purpose of this paper is to examine the potential effectiveness of government reforms aimed at improving the accuracy of ratings issued by credit ratings agencies in US financial markets.

Design/methodology/approach

The paper identifies unconscious bias as a source of inaccuracy in the credit ratings process. It examines prior behavioral research on unconscious bias, and uses this research to identify structural issues within the credit ratings industry that give rise to biased judgments. Finally, it examines whether government reforms will be effective in improving the accuracy of credit ratings, and offers additional reforms aimed at combating unconscious bias.

Findings

Recent government reforms will be most effective in curbing intentional decisions to compromise the ratings process. However, the reforms will be less effective at mitigating unconscious biases in judgments underlying credit ratings, because they do not adequately address relevant structural issues. To combat unconscious bias, changes need to be made to ratings agencies' fee structures, business models, and risk management functions.

Practical implications

The analysis is of use to regulators who are contemplating the need for reforms aimed at improving the accuracy of credit ratings. While focusing on events in the USA, the analysis is relevant to any country in which credit ratings are influential in financial markets.

Originality/value

This is the first paper to examine the performance of credit ratings agencies through the lens of behavioral psychology, and to introduce the concept of unconscious bias as a determining factor in the accuracy of credit ratings.

Details

Journal of Financial Regulation and Compliance, vol. 20 no. 4
Type: Research Article
ISSN: 1358-1988

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Abstract

Details

The Emerald Review of Industrial and Organizational Psychology
Type: Book
ISBN: 978-1-78743-786-9

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Book part

Celeste Campos-Castillo

A long-standing question is how group perception, which is the perception of a whole group, becomes an exaggerated perception of the individuals who comprise the group…

Abstract

Purpose

A long-standing question is how group perception, which is the perception of a whole group, becomes an exaggerated perception of the individuals who comprise the group. The question receives scant attention within computer-mediated communication (CMC), which is increasingly a communication mode for groups and a research tool to study groups. I address this gap by examining bias in group perception when rating copresence, which is the sense of being together, with the group.

Methodology/approach

I model bias as occurring when perceivers differentially weigh ratings of individual group members on a variable while rating the whole group on the same variable. I analyzed how the degree of bias in participants’ ratings of copresence with a status-differentiated group varied by the availability of visual cues during CMC in an experiment. I also examined how the group’s status hierarchy impacted bias.

Findings

Bias increase as the availability of visual cues decreased and ratings of middle status members were weighed more in group perception than ratings of other members.

Research limitations

Middle status was based on possessing inconsistent statuses. Inconsistency, and not status position, may have rendered these members more salient than others.

Social implications

Interventions that target group perception may benefit from targeting the group’s middle status members. Researchers and practitioners can minimize bias in group perception through increasing the availability of visual cues in CMC.

Originality/value

The findings illustrate the underpinnings of copresence with an entire group. This is important because copresence shapes several group processes during CMC.

Details

Advances in Group Processes
Type: Book
ISBN: 978-1-78743-192-8

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Article

Robert L. Cardy and T.T. Selvarajan

The objective of this empirical study is to apply the methodology commonly used to performance appraisal and examine if outcomes achieved by ratees bias rater's judgment…

Abstract

Purpose

The objective of this empirical study is to apply the methodology commonly used to performance appraisal and examine if outcomes achieved by ratees bias rater's judgment of ratee ethical behavior.

Design/methodology/approach

Two studies were conducted: in study 1 the participants were undergraduate business students and in study 2, the participants were MBA students but who were also full time employees. In both these studies, participants read the vignettes and rated the ratee performance using behavior observation scale.

Findings

Both the studies found support for the main hypothesis that outcomes achieved by the ratees influenced judgment of ethical behavior. The hypothesis that ethical beliefs of raters will moderate the biasing influence of outcomes on ethical judgment bias was not supported.

Research limitations/implications

If outcomes achieved by employees influence judgment of ethical behavior, future research has to examine how the biasing influence of outcomes on ethical judgments can be mitigated or eliminated.

Practical implications

If managers are influence by outcomes achieved by their employees in judging the ethical behavior, it can lead to “success breeds acceptance” culture. If organizations place undue emphasis on outcomes at the cost of ethical standards, unethical behavior of individuals could be condoned or justified which would lead to worsening of ethical climate in these organizations.

Originality/value

This study demonstrated that outcomes achieved by employees biases judgment of their ethical behavior and this finding has important implications for designing effective appraisal systems for assessing ethical behavior of employees.

Details

Journal of Managerial Psychology, vol. 21 no. 1
Type: Research Article
ISSN: 0268-3946

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Article

Susana Almeida Lopes, Jorge Miguel Gonçalves Sarraguça, João Almeida Lopes and Maria Eduarda Duarte

The purpose of this paper is to propose a new approach to talent management that consists of averaging performance appraisal and assessment center ratings for in-depth…

Abstract

Purpose

The purpose of this paper is to propose a new approach to talent management that consists of averaging performance appraisal and assessment center ratings for in-depth identification of lawyers’ talents.

Design/methodology/approach

The approach’s adjustment was examined using a 61 senior-lawyer sample from a Portuguese law firm. Comparisons between assessment center and performance appraisal ratings were analyzed using paired-sample t-tests and a kernel density function, and predictive validity was assessed with Pearson correlations. Evidence of both a general performance factor and two additional factors was verified using principal component analysis. Varimax rotation was used to verify three broad factors with job profile’s three broad areas.

Findings

Results suggest support for the assessment center’s predictive validity. Its lower and more variable ratings overcome performance appraisal rating bias. Adjustment of the new approach to lawyers’ overall talent identification (the general factor) and each lawyer’s relative talents (three broad factors) was observed.

Research limitations/implications

This study contributes to the body of knowledge regarding the substantive existence of a general performance factor, and adds to empirical research concerning talent management, which is lacking. However, generalizability requires broader samples and replication.

Practical implications

The approach is a methodology that informs career management, high-flyers’ identification, talent mapping, development, succession planning, team composition, and diversity analysis. For lawyers, objective feedback allows benchmarking talent and managing one’s career.

Originality/value

This study pioneers empirical research that develops methods for identifying talent in law firms, vital for firm sustainability.

Details

International Journal of Productivity and Performance Management, vol. 64 no. 4
Type: Research Article
ISSN: 1741-0401

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Article

Bruce J. Sherrick, Christopher A. Lanoue, Joshua Woodard, Gary D. Schnitkey and Nicholas D. Paulson

The purpose of this paper is to contribute to the empirical evidence about crop yield distributions that are often used in practical models evaluating crop yield risk and…

Abstract

Purpose

The purpose of this paper is to contribute to the empirical evidence about crop yield distributions that are often used in practical models evaluating crop yield risk and insurance. Additionally, a simulation approach is used to compare the performance of alternative specifications when the underlying form is not known, to identify implications for the choice of parameterization of yield distributions in modeling contexts.

Design/methodology/approach

Using a unique high-quality farm-level corn yield data set, commonly used parametric, semi-parametric, and non-parametric distributions are examined against widely used in-sample goodness-of-fit (GOF) measures. Then, a simulation framework is used to assess the out-of-sample characteristics by using known distributions to generate samples that are assessed in an insurance valuation context under alternative specifications of the yield distribution.

Findings

Bias and efficiency trade-offs are identified for both in- and out-of-sample contexts, including a simple insurance rating application. Use of GOF measures in small samples can lead to inappropriate selection of candidate distributions that perform poorly in straightforward economic applications. The β distribution consistently overstates rates even when fitted to data generated from a β distribution, while the Weibull consistently understates rates; though small sample features slightly favor Weibull. The TCMN and kernel density estimators are least biased in-sample, but can perform very badly out-of-sample due to overfitting issues. The TCMN performs reasonably well across sample sizes and initial conditions.

Practical implications

Economic applications should consider the consequence of bias vs efficiency in the selection of characterizations of yield risk. Parsimonious specifications often outperform more complex characterizations of yield distributions in small sample settings, and in cases where more demanding uses of extreme-event probabilities are required.

Originality/value

The study helps provide guidance on the selection of distributions used to characterize yield risk and provides an extensive empirical demonstration of yield risk measures across a high-quality set of actual farm experiences. The out-of-sample examination provides evidence of the impact of sample size, underlying variability, and region of the probability measure used on the performance of candidate distributions.

Details

Agricultural Finance Review, vol. 74 no. 3
Type: Research Article
ISSN: 0002-1466

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Article

Izabela I. Szymanska and Beth A. Rubin

This research aims to investigate the differences in evaluations of job performance between male and female managers by those managers’ immediate bosses and peers.

Abstract

Purpose

This research aims to investigate the differences in evaluations of job performance between male and female managers by those managers’ immediate bosses and peers.

Design/methodology/approach

Drawing on gender structure theory, along with ideas about status characteristics, the authors use hierarchical regression to test the hypotheses that male and female bosses and peers deferentially evaluate the male and female manager’s global job performance. The authors hypothesize significant two-way interactions (gender of the manager by gender of evaluator) in predicting a manager’s job performance.

Findings

The results suggest that while male peers rate female managers’ job performance significantly lower than that of male managers, female peers do not discriminate between genders in their performance evaluations. Also, managers’ bosses were found not to discriminate between genders of their subordinates.

Research limitations/implications

The limitations of this study have to do primarily with the data. While the data are rich on some dimensions, they are weak on others, especially with regard to the detail about the jobs the respondents did, detailed level of familiarity with the evaluated managers, as well as racial background. The data also do not provide information on the different facets of job performance, the evaluation of which could potentially be impacted by managerial gender; this study is focused exclusively on global job performance.

Practical implications

The authors discuss various theoretical explanations of this pattern of results, as well as its possible influence on female managers’ careers. Although the effect size of the negative bias that male peers exhibit toward female managers is relatively small, it may be argued that lower performance assessments can accumulate over years in multiple job evaluations, negatively affecting the career of female leaders.

Originality/value

The evaluations supplied by different organizational members gain importance with the increased use of 360-degree feedback instruments not just for developmental but also for the job performance appraisal purposes. While the job evaluations of managers’ bosses have been investigated in the past with regard to the possible gender bias, this study provides the first known to the authors’, evidence. Also, this study points to a direct bias in performance assessments, rather than a potentially more subtle, non-performance-based bias that affects the disparities in wages and promotions of female managers. Thus, this study helps to fill a significant gap in the literature on organizations and it may have practical implications for the advancement of female managers. In addition to this contribution, this study also provides data that may be useful in resolving the ongoing debate whether female bosses act more as cogs in the machine or as change agents in organizations.

Details

Gender in Management: An International Journal, vol. 33 no. 4
Type: Research Article
ISSN: 1754-2413

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Article

Stéphane Brutus, John W. Fleenor and Manuel London

In order to determine the usefulness of multi‐source rating in different types of organizations, this study explored differences among organization types in four areas…

Abstract

In order to determine the usefulness of multi‐source rating in different types of organizations, this study explored differences among organization types in four areas: leniency, interrater agreement, relationships between these ratings and effectiveness, and the relationship between agreement and effectiveness. Used self, subordinate, peer, and supervisor ratings for 1,080 target managers in six types of organizations: education, military, government, manufacturing, finance, and health. Interrater agreement was measured in three ways: an index of variance, a point‐difference categorization method, and categories of self‐other agreement. Results indicated that a leniency bias was present in educational institutions, after controlling for demographic characteristics. Interrater agreement was lowest in government agencies and highest in education and manufacturing organizations. In private sector organizations, more poor‐performing managers tended to over‐estimate their performance relative to the perceptions of others. Interrater agreement was positively related to effectiveness especially in education and finance organizations. Results suggest that multi‐source feedback may work differently in different types of organizations, and such differences may need to be taken into account by researchers, practitioners, and feedback recipients.

Details

Journal of Management Development, vol. 17 no. 3
Type: Research Article
ISSN: 0262-1711

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Article

JAMES M. FRASHER and RAMONA S. FRASHER

Using a set of in‐basket materials that suggest specific leadership styles, 135 graduate students in educational administration evaluated hypothetical superintendents who…

Abstract

Using a set of in‐basket materials that suggest specific leadership styles, 135 graduate students in educational administration evaluated hypothetical superintendents who were depicted as female or male and rule bound or flexible. Overall, the fictitious female superintendent was rated as less fair and less flexible than her male counterpart. Moreover, the female superintendent described as rule bound was rated as more inflexible than the male who exhibited identical behaviors and the woman described as flexible was rated as less flexible than the identidal male. When these results were viewed in the context of a body of literature that shows women administrators to be fully as effective as men and in the context of the small number of women in educational leadership positions, they strongly suggest that sex bias has operated to the disadvantage of women and the education profession.

Details

Journal of Educational Administration, vol. 18 no. 2
Type: Research Article
ISSN: 0957-8234

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Article

Hernan Riquelme and Wang Kegeng

The presence of cues embedded in the online environment influence how consumers interpret information and eventually make a decision. These cues can be biased, thus…

Abstract

The presence of cues embedded in the online environment influence how consumers interpret information and eventually make a decision. These cues can be biased, thus affecting decision quality. The aims of the research study were to identify sources of biases of different web sites, to identify how frequently they are observed, and to investigate to what extent these biases are more or less present across different online businesses. A sample of 93 Australian web sites was evaluated along the presence or absence of biases in rating of stores and products with which they deal, information on price and cost of products, information on seals or logo endorsements, and paid inclusion or advertising in search results. On average, one third of the web sites that posted price information were biased. Of those web sites that used seals and logo endorsements, about half did not provide much information of what the logo stood for. About 68 percent of shopping guide search engines do not adhere to the recommendation of disclosing payment for inclusion. Online businesses may want to consider the implications of conveying incomplete information that may mislead consumers.

Details

Online Information Review, vol. 28 no. 6
Type: Research Article
ISSN: 1468-4527

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