Finance - Research Publications
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ItemDocumenting the functional form of dynamic risk-taking behaviour in a real options context using sporting contests(Wiley, 2018-11-01)Changes in risk-taking behaviour based on interim performance are examined in high-stakes competition. A real options framework is used to provide a richer characterisation of risk-taking behaviour than examined in extant studies. This framework is applied to an examination of ball-by-ball data from 1207 cricket matches. Consistent with modelled expectations, risk taking is found to increase (decrease) at a decreasing rate following below par (above par) interim performance. This result is especially strong in situations where the resources remaining are low, a result predicted by the real options model.
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ItemLoss aversion and high stakes(WILEY, 2022-03-01)Abstract Following Kahneman and Tversky, studies such as those by Haigh and List, Ert and Erev and Mukherjee et al. find that loss aversion increases as stake increases. This study extends the 2011 work of Berger and Pope by analysing over 68,000 US professional basketball games played from the initial National Basketball Association (NBA) season in 1946/1947 to the 2018/2019 season, and over 69,000 National Collegiate Athletic Association (NCAA) games played from the 2007/2008 season to the 2018/2019 season. We posit that, a priori, stakes, and therefore loss aversion, will be greater for NBA teams than for NCAA teams, and higher for home teams than for away teams. Further, loss aversion is expected to be greater for favourites, that is, teams that are expected to win. We model outcomes using a digital call option. This model allows for necessary non‐linearity in the relation between halftime score and winning percentage. It also provides an analysis for which the result for home (favourite) teams is not simply the converse of that for away (underdog) teams. We find evidence of better‐than‐expected performance for NBA home teams that are behind by up to four points, and for favourites that are behind by between two and seven points. We find no evidence of this effect with respect to NBA away teams, NBA underdogs, nor for NCAA teams – whether home or away. Our results suggest that loss aversion is apparent when stakes are high.
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ItemManagerial perspectives on corporate finance decisions(Accounting and Finance Association of Australia and New Zealand, 2008)
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ItemAustralian evidence on the determinants and impact of takeover resistance(Wiley, 2005-12-01)Abstract In the present paper, we examine the determinants and impact of target bid resistance on the wealth of target shareholders and the takeover process in Australia. We find that bid resistance increases target shareholder wealth in the post‐announcement period and that the probability of bid hostility increases with the target's size, decreases with the target's performance and is unrelated to the size of the premium offered by the bidder. We also find that bid hostility decreases the probability of bid success, increases the probability of bid revision and has no effect on the probability of competing bidders entering the market.
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ItemNarratives in managers' corporate finance decisions(WILEY, 2010-09)Abstract This article uses the extended case method to explore senior executives’ corporate finance decisions. We quantified firm’s finance practices using a mail survey, and then – to resolve puzzles in managers’ decision processes – conducted face‐to‐face interviews with chief finance officers of large listed firms. The interviews identified six themes as consistent influences on finance decisions: pressures imposed by clienteles; constraints on resources; risk management; heuristics; real options; and sustainability. We conclude that managers are logical and rational in their decisions, but employ a wider range of criteria than assumed in conventional finance theories.
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