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    Local creative culture and firm value
    (Elsevier Inc, 2024-01) D’ Costa M; Habib A
    In this paper we investigate the association between local creative culture, and firm value. Using data of US listed firms, we find strong evidence that firms headquartered in US counties with highly creative cultures generate higher firm value. We also find evidence that the positive association between creative culture and firm value is mediated partially through both the innovation and cash holding channels. Our results hold after controlling for endogeneity concerns. Our study contributes to the emerging literature on local creative culture by documenting that such a culture influences managers to undertake risky but profitable projects, thereby, increasing firm value.
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    Bank performance during the COVID-19 pandemic: does income diversification help?
    (Taylor and Francis Group, 2023-06-11) Ho TH; Nguyen DT; Luu TB; Le TDQ; Ngo TD
    The Covid-19 pandemic’s economic effect led to tighter credit standards and a decline in the market for many types of loans. With a rich database of 1,231 banks in 90 countries from 2018Q1 to 2021Q4, we conducted a timely, broad-based international study to investigate whether non-interest activities, serving as a shock absorber, can promote bank performance before and during the Covid−19 pandemic. When using a dynamic panel data model with a system GMM estimator, our findings indicate that banks should be encouraged to diversify their income sources to reduce the adverse effects of the shock. With comparative analysis, we also found heterogeneous effects of income diversification on bank performance by its components, in pre-Covid−19 and during-Covid−19 periods, in both developed and developing countries. This study implies that bank managers should diversify income sources, especially fee-based services, trading activities, and foreign currency, to foster financial performance and stability during exogenous shocks.
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    Local creative culture and audit fees
    (Elsevier Ltd on behalf of British Accounting Association, 2023-03-13) Costa MD; Habib A
    This paper examines the association between local creative culture and audit fees. Using a large, unbalanced panel data of listed US firms between 2004 and 2018, we find evidence that firms headquartered in US counties with high creative culture tend to pay higher audit fees than firms headquartered in counties with low creative culture. We also find that such firms tend to have longer audit report lag and are subject to more shareholder litigation. Cross-sectional tests show that real earnings management, managerial risk-taking propensity, and external corporate governance environment moderate the positive association between creative culture and audit fees. The positive association between local creative culture and audit fees remains robust to controlling for endogeneity concerns. Our study contributes to the emerging literature on local creative culture by providing evidence that local creative culture encourages managers and employees to undertake risky initiatives, thereby increasing audit risks.
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    The impact of anxiety, depression, and cognitive factors associated with anxiety, on everyday risk taking behaviour : a thesis presented in partial fulfilments [sic] for the degree of Doctor of Clinical Psychology at Massey University, Wellington, New Zealand
    (Massey University, 2012) Hunt, Brett David
    Research into risk taking behaviour (RTB) reveals that depression and anxiety (in particular) are associated with risk aversive behaviour, for many different types of risks, including gambling, simulated risk taking tasks, and everyday risks. There has, however, been little research into the relationship between cognitive factors associated with anxiety, and RTB. This is in spite of research in this area finding that perceived risk had a stronger relationship with a cognitive factor (worry) than with anxiety. The present research is investigating the everyday RTB associated with depression, anxiety, and cognitive factors associated with anxiety. Everyday risks are the type of risks being investigated as these are decisions people make on a daily basis that involve risk that cannot easily be avoided, and being overly avoidant of these risks can lead to negative consequences. This research is split into two studies, with the first study split into two sections. The first part of study one is the continued development of a measure of everyday RTB across multiple domains. All existing measures of everyday RTB either do not measure RTB in different domains, or have psychometric problems. Therefore, the development of a measure suitable for use in this research project is required. The second part of the first study is investigating the relationships of anxiety and depression level with everyday RTB, across multiple domains. Study one used three samples, New Zealand community and tertiary student samples, and an international internet sample. The second study is investigating the relationship between cognitions associated with anxiety (e.g. worry and metaworry) and everyday RTB. This study used two samples, a New Zealand tertiary student sample, and an international internet sample. Results from the development of the everyday risk taking measure indicate that the measure that underwent further development, the Everyday Risk Inventory – Expanded (ERI-E) is a reliable measure of everyday RTB, for general community samples in particular. Cronbach’s alpha values for the community sample were all above 0.7, but in some domains for the student sample were just below 0.6. Confirmatory factor analysis showed the fit for both the multiple domain and single domain models were moderate to good. Results from the second part of study 1 showed that the relationships of anxiety and depression, with everyday RTB were weak, with few significant results from either correlational or multiple regression analysis. In particular, depression has a minimal impact on RTB. Sociodemographic factors, particularly age, gender and income had more significant impacts on everyday RTB, with people on lower income, and older people, being risk averse. Gender differences varied between domains, with females significantly more risk averse for risks involving personal danger and risks to others. The concept that differences in people’s sense of power within their society affects RTB was supported, as in general socio-demographic differences associated with increased power (e.g. higher income and being male) led to people being less risk averse. Results from study two showed that everyday RTB has a stronger association with cognitive factors associated with anxiety than to anxiety level. In particular it has high correlations with worry and intolerance of uncertainty (IU). Structural equation modelling found that a model with cognitive factors leading to anxiety and differences in everyday RTB was an almost perfect fit for the model, and anxiety had no direct effect on RTB. It was also found that the relationship between everyday RTB and cognitive factors was stronger for high anxiety levels than low anxiety levels. Further research is required to determine the reason why cognitive factors associated with anxiety affect everyday RTB, rather than anxiety level. The present research contributes to knowledge in this area by showing that cognitive factors impact on RTB, rather than anxiety level. It also found that socio-demographic characteristics, particularly age, were more important in explaining differences in RTB than was found in previous research.
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    The relationship between risk-seeking behaviours and risk-taking in-flight : a thesis presented in partial fulfilment of the requirements for the degree of Master of Arts in Psychology at Massey University, Manawatu, New Zealand
    (Massey University, 2011) Carey, Stephen Ross Alexander
    Aviation safety statistics show that accident levels are increasing, especially in the area of General Aviation. Ever since aviation became a viable option for travel, research has sought to explain the potential causes for accidents and has found that the most common cause is Human Error. This can be defined as any action or in-action that results in an accident that is a direct result of piloting behaviours, such as risk-taking in-flight. Models to guide training organisations in how to best compensate for the affects of Human Error have been developed, however, even with the development of these models, the number of fatalities caused by aviation accidents continues to rise. The current research was developed to investigate the possible relationship between everyday risk-seeking behaviours and risk-taking in-flight. Using a three study format, it first sought to investigate whether there were areas of aviation flight safety which were believed to be of concern by a New Zealand flight instructor focus group. A pilot group study was then used to investigate face, content and construct validities of the Cognitive Appraisal of Risky Events scale (CARE) and Domain-Specific Risk-Taking (Adult) Scale (DOSPERT) on a New Zealand population, for use in study three. Using an online survey presentation the relationship between everyday risk-seeking behaviours and risk-taking in-flight was examined. The survey consisted of presenting participants with the two psychometric measures designed to assess everyday risk-seeking behaviours and sixteen risky in-flight vignettes to measure confidence in taking risks in-flight. Results from the focus group found that the flight instructors believed the areas of alcohol, caffeine, breaches in class two medicals and pilot fatigue levels were all of concern to aviation flight safety. It was found that there were statistically significant relationships between everyday risk-seeking behaviours against the levels of confidence in risk-taking in-flight. Implications of the findings were discussed and finally proposals for further lines of research.
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    New Zealand's experiment with prudential regulation : can disclosure discipline moderate excessive risk taking in New Zealand deposit taking institutions? : a thesis presented in partial fulfillment of the requirements for the degree Doctor of Philosophy at Massey University, Albany
    (Massey University, 2009) Wilson, William Robert
    The New Zealand economy in the period up to 2006 provides an opportunity to assess an alternative disclosure based approach to the prudential regulation of deposittakers, in a market free of many of the distortions which arise from traditional regulatory schemes. The overall objective of this research has been to assess the effectiveness of the prudential regulation of New Zealand financial institutions and judge if the country is well served by it. Analysis of New Zealand’s registered bank sector suggests public disclosure adds value to New Zealand’s financial system. However, the significant relationship found between disclosure risk indicators and bank risk premiums was not as a result of market discipline, rather it is argued self-discipline was the mechanism, demonstrating bank management and directors are discharging their duties in a prudent manner. A feature of the New Zealand disclosure regime for banks is the significant responsibilities placed on bank directors; directors are then held accountable for their actions. Findings in the management of banks were in contrast to non-bank deposittakers, where disclosure was judged to be ineffective, and of no practical use due to its poor quality. The management of non-bank deposit-takers appeared to receive very little oversight from depositors, their trustees or official agencies. As a result, many appear to have managed their institution in their own interests, with little consideration given to other stakeholders. Failures which occurred in NBDTs from 2006 resulted from deficiencies in the prudential regulation of these deposit-takers, demonstrating the severity of asymmetric information and moral hazard problems which can arise if prudential regulation is not correctly designed and management interests are not aligned with other stakeholders. The New Zealand disclosure regime will never guarantee a bank will not fail, nor should it try to do so, but it should assist the functioning of a sound and efficient financial system. To this end, it is recommended that the Reserve Bank, in re-designing the regulatory framework for NBDTs, hold the management and directors of NBDTs similarly accountable, while also incorporating regular disclosure and minimum prudential standards. Governments have an important role to play in ensuring the financial system is efficient.