An interactive three-stage model for mutual funds portfolio selection

The aim of this work is to be a useful instrument for helping finance practitioners on the selection of suitable mutual fund portfolios. The portfolio selection problem is characterized by imprecision and/or vagueness inherent in the required data and more generally, in the context where investors have to make decisions. In order to mitigate these problems, a three stage model has been proposed based on a multi-index model and considering several market scenarios described in an imprecise way by an expert. The proposed fuzzy model allows the Decision Maker to select, by means of an outranking method, a suitable portfolio taking into account the uncertainty related to the market scenarios and the imprecision and/or vagueness associated with the model data.     

AN ANALYSIS OF SHAREHOLDER AGREEMENTS

Shareholder agreements govern the relations among shareholders in privately held firms, such as joint ventures and venture capital‐backed companies. We provide an economic explanation for key clauses in such agreements—namely, put and call options, tag‐along and drag‐along rights, demand and piggy‐back rights, and catch‐up clauses. In a dynamic moral hazard setting, we show that these clauses can ensure that the contract parties make efficient ex ante investments in the firm. They do so by constraining renegotiation. In the absence of the clauses, ex ante investment would be distorted by unconstrained renegotiation aimed at (i) precluding value‐destroying ex post transfers, (ii) inducing value‐increasing ex post investments, or (iii) precluding hold‐out on value‐increasing sales to a trade buyer or the IPO market. (JEL: G34)     

Teaching Teachers to Teach Corporate Governance Differently

Journal of Management and Governance -     

Public Meetings and Risk Amplification: A Longitudinal Study

This article offers longitudinal data tracking people who did and did not attend a series of public meetings in an upstate New York rural community grappling with the expansion of an existing solid waste landfill and remediation of an adjacent inactive hazardous waste site. Before and after the public meetings, mailed questionnaires measured risk perceptions and perceived credibility of risk managers (here, the state government agencies and the responsible industry) conducting the meetings. Respondents at each measurement point included meeting attendees and nonattendees, with some fluctuation over time when attendees at one measurement point were nonattendees at the next and vice versa. The results from the first survey indicate that following the first two public meetings, attendees perceived greater risks from the waste sites than did nonattendees; attendees also perceived the risk managers as less credible. After the third public meeting, the results showed that attendees' risk perceptions remained steady; however, perceptions of government agency credibility significantly decreased. After the fourth public meeting, the survey found that attendees' risk perceptions were again not significantly different, whereas perceptions of government agency credibility increased significantly. The industry's credibility also increased, though only among attendees who had attended the most recent public meeting, not among attendees who had attended both the third and fourth public meetings. For nonattendees, risk perceptions and credibility ratings did not change. The discussion examines how distinctive characteristics of communication at each public meeting may have resulted in different effects and proposes hypotheses for future research.     

Risk Perception in a Developing Country: The Case of Chile

In this work we characterize risk perception in Chile, based on the psychometric paradigm, exploring the difference between perceived social and personal risk. For this purpose, we conducted a survey including 54 hazards, 16 risk attributes, and 3 risk constructs. The survey, divided into four parts, was administered to 508 residents of Santiago, Chile. Using factor analysis, three main factors, which accounted for 80% of the sample's variance, were identified: factor 1, commonly called "Dread Risk" in the literature, explained 37% of variance; factor 2, "Unknown Risk," explained 28%; and factor 3, which we called "Personal Effect," explained 15% of the variance. On average, individuals perceived themselves as less exposed to risk and with more control and knowledge about them than the general population. OLS regression models were used to test the association of perceived risk with the three main factors. For social risk, factor 1 had the greatest explanatory power, while factor 2 had a negative sign. For personal risk, only factors 2 and 3 were significant, with factor 3 having the greatest explanatory power. Risk denial (defined as the difference between perceived personal and social risk) was associated with factors 1 and 2 only, with factor 2 having a negative sign. The difference between desired and actual regulation levels proved positive for all hazards, thus indicating that Chileans are dissatisfied with the current regulation level for all the hazards analyzed. The comparison of data at the aggregate and at the individual subject's level suggests that while the aggregate analysis overestimates the magnitude of the correlations it still reflects the tendency of the individual responses.     

The State of the Field in UK Management Research: Reflections of the Research Assessment Exercise (RAE) Panel

This paper reviews the state of the field of the sub-disciplines within UK management research, based upon the submissions of 94 UK higher education institutions to the Business and Management Studies Panel in the UK's 2001 Research Assessment Exercise (RAE). It offers observations on the UK model of the assessment of quality in, and funding of, research conducted in publicly funded higher education institutions.     

Microsimulating the Evolution of Italian Pension Benefits: the Role of Retirement Choices and Lowest Pensions Indexing

A few years after the introduction of the Amato and Dini laws, a renewed debate on reforming the Italian pension system and on modifying its structure and technical parameters is taking place. The present work simulates individual reactions to systemic changes, distinguishing among the different typologies of workers the categories of dependent (private and public) and self‐employed ones. This approach allows us to perform a general micro‐analysis of the effects of past reforms on family pension income distribution and average individual pension benefits. Furthermore, it makes it possible to assess the consequences of legislator's choices such as the indexation of the lowest pensions (‘assegni sociali’ and ‘pensioni integrate al minimo’) to wages or to inflation. Finally, a Monte Carlo analysis projects future inequality and poverty trends with a remarkable accuracy and allows to verify the robustness of our results.     

Risk analysis under attack: How risk science can address the legal,social, and reputational liabilities faced by risk analysts

The role of the risk analyst is critical in understanding and managing uncertainty. However, there is another type of uncertainty that is rarely discussed: The legal, social, and reputational liabilities of the risk analyst. Recent events have shown that professionals participating in risk analysis can be held personally liable. It is timely and important to ask: How can risk science guide risk analysis with consideration of those liabilities, particularly in response to emerging and unprecedented risk. This paper studies this topic by: (1) Categorizing how professionals with risk analysis responsibilities have historically been held liable, and (2) developing a framework to address uncertainty related to those potential liabilities. The result of this framework will enable individual analysts and organizations to investigate and manage the expectations of risk analysts and others as they apply risk principles and methods. This paper will be of interest to risk researchers, risk professionals, and industry professionals who seek maturity within their risk programs.     

An overview of the Salmonella enteritidis risk assessment for shell eggs and egg products.

This article summarizes a quantitative microbial risk assessment designed to characterize the public health impact of consumption of shell eggs and egg products contaminated with Salmonella Enteritidis (SE). This risk assessment's objectives were to: (1) establish the baseline risk of foodborne illness from SE, (2) identify and evaluate potential risk mitigation strategies, and (3) identify data gaps related to future research efforts. The risk assessment model has five modules. The Egg Production module estimates the number of eggs produced that are SE-contaminated. Shell Egg Processing, Egg Products Processing, and Preparation & Consumption modules estimate the increase or decrease in the numbers of SE organisms in eggs or egg products as they pass through storage, transportation, processing, and preparation. A Public Health Outcomes module then calculates the incidence of illnesses and four clinical outcomes, as well as the cases of reactive arthritis associated with SE infection following consumption. The baseline model estimates an average production of 2.3 million SE-contaminated shell eggs/year of the estimated 69 billion produced annually and predicts an average of 661,633, human illnesses per year from consumption of these eggs. The model estimates approximately 94% of these cases recover without medical care, 5% visit a physician, an additional 0.5% are hospitalized, and 0.05% result in death. The contribution of SE from commercially pasteurized egg products was estimated to be negligible. Five mitigation scenarios were selected for comparison of their individual and combined effects on the number of human illnesses. Results suggest that mitigation in only one segment of the farm-to-table continuum will be less effective than several applied in different segments. Key data gaps and areas for future research include the epidemiology of SE on farms, the bacteriology of SE in eggs, human behavior in food handling and preparation, and human responses to SE exposure.