Risk Perception and Decision-Making by the Corporate Elite: Empirical Evidence for Netherlands-based Companies
Year: 2012
Type: preprint
Study design: Observational Study
Abstract: We study risk perception and actual decision-making by the corporate elite, where we consider CEOs, CFOs and non-executives. We collect data for many members of the elite for Netherlands-based companies using the vignettes method. We find that CEOs are more risk tolerant but do not act accordingly by demanding higher returns. CFOs and non-executives are found to be more risk-averse; but, interestingly, only the non-executives demand higher returns more than CEOs do. Differences in demanded returns across CEOs and CFOs are found to be negligible. When decision makers mature and get more experienced, they tend to ask higher returns on investment. For all members of the corporate elite it holds that overconfidence is consistently related to higher risk tolerance, whereas those degrees of overconfidence are similar.
Source: SSRN Electronic Journal
Authors: Bert de Groot, Sander Renes, René Segers, Philip Hans Franses
Institutions: Erasmus University Rotterdam, University of Mannheim
Language: English
Subfield: General Decision Sciences
Field: Decision Sciences
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W1530621309