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Investment Management Archives - Ideas for Leaders

Crowdfunding Still Attracts Local Investors to Local Ventures

Entrepreneurs need money to fund their ideas. Many legendary start-ups received their early funding from venture capitalists. However, VC’s are now more interested in contributing to later stage companies rather than take a chance with early stage start-ups that have a much greater chance of failing. Into the breach steps the Internet-based crowdfunding platforms, in […]

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Stakeholder-Focused Accounting: Value Creation and Risks

Stakeholder Theory is a view of capitalism that stresses the interconnected relationships between a business, its customers, suppliers, employees, investors, communities and others who have a stake in the organization. Traditional accounting fails to adequately represent the risk and returns of stakeholder activities — i.e. the net value created by ‘stakeholders’. Stakeholders include customers, employees, […]

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The Connection Between Disasters and Less Risk-Averse CEOs

Previous research has explored the impact of life and career experiences and circumstances on CEO managerial styles. This past research shows a monotonic or unidirectional effect of a CEO’s life experiences on risk-taking. For example, CEOs rising from difficult economic circumstances might be more risk-averse while CEOs born in prosperous circumstances might be less risk-averse. […]

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Beware of Over-Optimistic Investors Skewing High-Risk Stock Prices

In finance, a capital asset's sensitivity to risk is often represented by the quantity beta (β), and investment opportunities that have a high risk profile are known as ‘high beta’ stocks. In this research it is hypothesized that ‘high beta’ stocks are unduly influenced by sentiment due to the investment decisions taken by ‘noise’ traders. […]

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Investors Complain Proxy Statements Unclear on Executive Pay

A new survey from Stanford University’s Rock Center for Corporate Governance on how investors use information from corporate proxy statements reveals deep dissatisfaction with corporate disclosure about executive compensation. The survey, based on responses from 64 asset managers responsible for a combined $17 trillion — show that even the largest and most sophisticated investors find the […]

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Non-Executive Board Members More Risk Averse than Executives

Corporate board of directors are composed of executives (CEOs and CFOs) and non-executives. In the U.S. and the UK, the executives and non-executives are grouped on one board. In Europe, the executives form one board, and the non-executive members form a distinct ‘supervisory’ board. Together, the CEOs, CFOs and non-executive board members make up what […]

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Overreacting to Bad Financial News Can Lead to Poor Investment Decisions

Neuroscientific research reveals that the brain reacts differently to negative vs. positive outcomes; recent research in finance shows that market participants (including investors and investment professionals) draw different lessons from market conditions depending on whether conditions are good or poor. Professor Camelia Kuhnen of University of North Carolina’s Kenan-Flagler Business School designed an experiment involving […]

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