Anxiety, Overconfidence, and Excessive Risk Taking

Managerial Overconfidence and Bank Risk Taking: A Cross-Country Analysis

This paper examines the effects of managerial overconfidence on bank risk taking and investigates whether improvements in governance can help to mitigate the adverse effects of managerial overconfidence on bank risk taking by using ordinary least squares method. The sample consists of the financial institutions in G20 and Taiwan over the period of 2005-2012. The executive overconfidence is meas...

Running head: ANXIETY SENSITIVTY AND RISK-TAKING BEHAVIORS Dowd 1 Anxiety Sensitivity and Risk-Taking Behaviors

Does contingent capital induce excessive risk-taking?

In this paper, we analyze the effect of the conversion price of CoCo bonds on equity holders’ incentives. First, we use an option-pricing context to show that CoCo bonds can magnify equity holders’ incentives to increase the riskiness of assets and decrease incentives to raise new equity in a crisis in cases in which conversion transfers wealth from CoCo bond holders to equity holders. Second, ...

Reining in Excessive Risk Taking by Executives: Experimental Evidence

Compensation of executives by means of equity has long been seen as a means to tie executives' income to company performance, and thus as a solution to the principal-agent dilemma created by the separation of ownership and management in publicly owned companies. The overwhelming part of such equity compensation is currently provided in the form of stock-options. Recent events have however reviv...

The Influence of Reappraising Anxiety on Risk-taking

The literature suggests that individuals with higher levels of anxiety tend to take fewer risks. With the knowledge that there are positive risks that aid in everyday functioning, the decline in risk-taking by those with anxiety could be of concern. Reappraising anxiety as beneficial has been shown to increase subsequent performance on a variety of tasks. The purpose of this study was to examin...