Where is the ethical knowledge in the knowledge economy?: Power and potential in the emergence of ethical knowledge as a component of intellectual capital

There is a growing discussion of intellectual capital and the knowledge economy more generally within the accounting literature. This literature, however, has focused narrowly on the considerable discrepancy between book and market values and the inability of traditional accounting concepts and methods to deal with the intangible nature of key sources of corporate competitive advantage. This essay contributes to this literature by providing a broadly poststructuralist reading of the emergence of ethical knowledge as a component of intellectual capital, a category of asset that has almost been completely overlooked within the extant accountant literature on the knowledge economy. The paper does three things. Firstly, it draws on a broad review of the accounting literature to explore how intellectual capital is being defined and constructed within that literature. Secondly, it provides a poststructural analysis of the way ethical knowledge emerged within the intellectual capital statements of an early innovator in Intellectual Capital reporting. Finally, the paper tentatively hints towards the moral and civic potential of alternative conceptualisations of ethical knowledge networks at the margins of the knowledge economy and considers some areas for further research in this regard.     

How the enterprise risk management function influences decision-making in the organization – A field study of a large,global oil and gas company

Risk management has been a discipline for decades. However, organizations have only recently begun to introduce a separate enterprise risk management (ERM) function. The aim of this study is to examine the transformation of the ERM function's influence in a company over time. We use a historical case study informed by social theory on how to influence others to investigate this phenomenon. The findings show that the construction of risk technologies over time triggers a change in the ERM function's influence on decision-making. Two processes of influence are used by the ERM function: selling new ideas and managing knowledge across boundaries. In the first process, the ERM function attempts to vertically influence top management's decisions regarding acceptance of new risk management technologies. In the second process, the ERM function attempts to horizontally influence decision makers to use risk knowledge in decision processes. Theoretically, our findings contribute to our understanding of how the ERM function influences decision-making in organizations over time.     

What's in a Name? An Experimental Examination of Investment Behavior

A fundamental unresolved issue is whether information asymmetries underlie investors predisposition to invest close to home (i.e., domestically or locally). We conduct experiments in the United States and Canada to investigate agents portfolio allocation decisions, controlling for the availability of information. Providing participants with information about a firms home base, without disclosing its specific identity, is not sufficient to change investment behavior. Rather, participants need to know a firms name and home base. Additional evidence indicates that participants have a greater perceived familiarity with local and domestic securities and, in turn, invest more in such securities.The authors thank Ann Gillette, Josef Zechner (the editor), and two anonymous referees for helpful comments and acknowledge the financial support of the Federal Reserve Bank of Atlanta, Georgia Tech, and Social Sciences and Humanities Research Council of Canada. The views expressed here are those of the authors and not necessarily those of the Federal Reserve Bank of Atlanta or the Federal Reserve System.     

Who is afraid of the Ebola outbreak? The influence of discrete emotions on risk perception

The appraisal tendency framework (ATF) suggests that discrete emotions mediate the relationship between cognitive appraisals and behaviors. Based on the ATF, this study analyzed and found that fear, anger, anxiety, disgust, and sadness were positively related to the US public’s risk perception about the Ebola outbreak. Fear was also found to inhibit the degree to which systematic processing of the relevant risk information influenced participants’ support for institutional mitigation measures such as sending more health professionals to help countries in West Africa deal with the Ebola outbreak. The result partially confirms the ATF and offers important practical implications in regard to the communication of emergent public health crises.     

Organisational risk perception and transformations in India’s nuclear establishment

The discourse on nuclear power and risk has shifted over the last few decades from security concerns emanating from nuclear weapons to threats to public safety in the event of industrial nuclear accidents. While the main focus of existing scholarship has been on public risk perceptions, comparatively little is known about organisational risk perceptions and the factors that influence organisations’ willingness to accept the incalculable risks of nuclear power. This paper provides insights into how the nuclear establishment in India thinks about risk. Drawing on interviews with the senior management of nuclear organisations, the analysis shows that organisational risk perception is not merely a human construct or the outcome of simple technical cost-benefit rationalities. It is the result of interactions between material and ideational conditions of risk. These conditions are expressed through three core organisational narratives: (1) the growth imperative, (2) technological nationalism and (3) faith in systems and technology. While there is generally a strong consensus on these narratives within and among the nuclear organisations in India, the data also show that organisations are not homogenous entities. Instances of self-critique and reflexivity exist which could open new spaces for change towards a more inclusive organisational discourse on nuclear risk in India.     

Participant‐focused analysis: explanatory power of the classic psychometric paradigm in risk perception

Typical psychometric paradigm factors appear to have greater explanatory power for individual participants than previously envisaged. It is possible to acquire interpretable information about single participants using two factors (catastrophic potential and social and personal exposure) from aggregated participant‐focused data. Our results suggest that the classical psychometric model originated by Fischhoff and Slovic in the early 1980s to explain differences among hazards may also be capable of accounting for differences among participants. While socio‐demographic conditions on their own do not have substantial explanatory power, they are statistically significant and appear to dictate the position of participants within the factor space obtained using a participant‐focused analysis. One of the principal criticisms of the psychometric paradigm has been its lack of interpretability when using disaggregated data, but incorporating socio‐demographic variables overcomes this limitation.     

Are regime-shift sources of risk priced in the market?

In this paper we develop a discrete-time pricing model for European options where the log-return of the underlying asset is subject to discontinuous regime shifts in its mean and/or volatility which follow a Markov chain. The model allows for multiple regime shifts whose risk cannot be hedge out and thus must be priced in option market. The paper provides estimates of the price of regime-shift risk coefficients based on a joint estimation procedure of the Markov regime-switching process of the underlying stock and the suggested option pricing model. The results of the paper indicate that bull-to-bear and bear-to-crash regime shifts carry substantial prices of risk. Risk averse investors in the markets price these regime shifts by assigning higher transition (switching) probabilities to them under the risk neutral probability measure than under the physical. Ignoring these sources of risk will lead to substantial option pricing errors. In addition, the paper shows that investors also price reverse regime shifts, like the crash-to-bear and bear-to-bull ones, by assigning smaller transition probabilities under the risk neutral measure than the physical. Finally, the paper evaluates the pricing performance of the model and indicates that it can be successfully employed, in practice, to price European options.     

Does being a jerk work? Examining the effect of aggressive risk communication in the context of science blogs

Understanding aggressive risk communication is important because many scientists use this approach and we know little about its effects. Two studies were conducted to assess the effect of exposure to aggressive risk communication by a scientist on respondents’ perceptions of risk communication quality, supportive behavior (i.e. forwarding the communication), risk communicator likability, and overall views about scientists. Perceived aggressiveness (studies 1–2) and expectation violation (study 2) were considered as mediators. Analyses suggest both direct and indirect negative effects of aggressive risk communication in the case of likability but potentially positive effects in terms of evaluating the message quality. Moreover, expectation violation provided one possible explanation for the effect of aggression.     

What is the risk of European sovereign debt defaults? Fiscal space,CDS spreads and market pricing of risk

We estimate the pricing of sovereign risk for fifty countries based on fiscal space (debt/tax; deficits/tax) and other economic fundamentals over 2005–10. We focus in particular on five countries in the South-West Eurozone Periphery, Greece, Ireland, Italy, Portugal and Spain. Dynamic panel estimates show that fiscal space and other macroeconomic factors are statistically and economically important determinants of sovereign risk. However, risk-pricing of the Eurozone Periphery countries is not predicted accurately either in-sample or out-of-sample: unpredicted high spreads are evident during global crisis period, especially in 2010 when the sovereign debt crisis swept over the periphery area. We match the periphery group with five middle income countries outside Europe that were closest in terms of fiscal space during the European fiscal crisis. Eurozone Periphery default risk is priced much higher than the matched countries in 2010, even allowing for differences in fundamentals. One interpretation is that these economies switched to a “pessimistic” self-fulfilling expectational equilibrium. An alternative interpretation is that the market prices not on current but future fundamentals, expecting adjustment challenges in the Eurozone periphery to be more difficult for than the matched group of middle-income countries because of exchange rate and monetary constraints.     

Investigating explanatory theories on laypeople’s risk perception of personal economic collapse in a bank crisis – the Cyprus case

We investigate the explanatory power of decision, psychometric, and trust theory to describe laypeople’s risk perception of personal economic collapse in a bank crisis. The aim of this investigation is to improve the understanding of the effects of national initiatives for crisis fighting taken to prevent systemic risk. Using a stratified sample of 738 Cypriote citizens, we conducted an investigation in Cyprus in the spring of 2013 when the country was facing a bank crisis. At that point in time, the Cypriote Government had imposed capital controls to prevent a bank run. We find that decision theory variables alone have low explanatory value on laypeople’s risk perception, and that laypeople’s risk perception in this situation is affected primarily by psychometric variables. Further, confidence in one’s own bank also explains risk perception. Our findings contribute novel knowledge about risk perceptions in a financial crisis, with practical crisis management implications for regulators.     

Differences in the strengths of evidence matters in risk–risk trade-offs

Making decisions between alternatives are challenging when there is weak or unreliable knowledge about the risks and benefits of the alternatives. This requires a trade-off between risks (and benefits). Here, we comment on a recent paper on risk–risk trade-offs and highlight the difficulties of making such trade-offs when the available evidence is of different strength. One current example of a risk–risk trade-off under weak evidence is the restriction and reevaluation of the risks of neonicotinoid insecticides to bees conducted by the European Food Safety Authority (EFSA). We argue that a risk–risk trade-off is essential in this context. Although considerable research efforts have been focused at determining the risks of neonicotinoids to bees, the evidence base is still limited. However, focus on strengthening evidence on impacts of one substance may lead policy-makers and public to believe that its substitutes are less harmful, when in fact evidence is weak on the impacts of these substitutes as well. We argue that a broader management of uncertainty is needed and that the difference in uncertainty underlying evidence of risk for different alternatives needs to be communicated to policy-makers. We suggest that this can be done, for example, using measures of uncertainty, which take into account strength in evidence, and combine these with principles to guide decision-making.     

Political–security risk in the oil and gas industry: the impact of terrorism on risk management and mitigation

Oil and gas companies are experiencing an increase in terrorist attacks. The industry became a legitimate target for terrorist groups in the 1990s and the number of attacks have increased yearly, with a spike after the 9/11 attacks. In today’s interconnected world, political risk is not only about the relationship between the host government and the company. Oil and gas companies may experience risks on a transnational, national and human security level. The success of new investments often depends on the successful utilization of risk management strategies. This study focuses on the importance of political–security risk in the oil and gas industry. In January 2013, the oil and gas industry experienced one of its deadliest attacks at the In Amenas gas facility in Algeria, forcing firms to reconsider its focus on security management. Statoil undertook a thorough analysis of security at the site as well as of the company′s corporate security risk management. The report revealed a lack of focus on political–security risk. This study argues that political–security risk has not been used to its full potential in the oil and gas industry. The oil and gas industry has always focused on site security, but a broader more holistic approach to risk management has been lacking. As a result of the In Amenas incident, the industry has become more willing to have a new discussion on security and this has resulted in changes in the way companies operate.     

The role of investors’ objective financial knowledge on the assessment of risk disclosures in mutual fund advertisements

This study examined the role of investors’ objective financial knowledge in processing risk disclosures in mutual-fund advertisements. Investors were exposed to a mutual fund advertisement containing either a disclaimer mandated by regulatory bodies or a strongly worded warning label. Overall, the results showed that mandated disclaimers were ineffective in reducing investors’ return expectations and attitudes toward the advertised fund, regardless of the investors’ level of financial knowledge. However, strongly worded warning labels effectively impacted the return expectations and attitudes of low-knowledge investors, but not high-knowledge investors. That is, the impact of warning labels was dependent on the level of an investors’ financial knowledge; specifically, high-knowledge investors failed to discount past performance as a heuristic cue in their judgments. Importantly, this behavior of high-knowledge investors was not due to a familiarity effect; the risk disclosures were properly encoded and processed by knowledgeable investors. These results suggest that high-knowledge investors either possessed strongly held beliefs (for example, the ‘hot hand’ effect) that persevered even when exposed to the strongly worded warning, or they were overconfident in their judgments.     

Post-truth or agnogenesis? Theorizing risk and uncertainty in a neoliberal nature

In the aftermath of the great recession, many have investigated the characteristics of life in a ‘neoliberal nature’. In more recent months, we have also seen an apparent erosion of truth, the ‘post-truth’ moment. This paper argues that there are important and undertheorized links between the risk centrality of life in neoliberal nature and the post-truth moment. We begin by reviewing some treatments of risk from different fields, coming to the general conclusion that neoliberal nature is a place characterized primarily by its heightened risk(s). We then undertake a Foucauldian interpretation of neoliberal governmentality to demonstrate that the strategy of recasting society as atomized agents of risk is the source of a great deal of alienation and discontent, manifesting in an apparently post-truth citizen/society relationship. Next, we relate each of these concepts to the study of culturally induced ignorance, or ‘agnotology,’ to demonstrate that neoliberal governmentality in fact requires the systemic production of ignorance. We then propose an extension of agnotology to argue that a seemingly innocuous post-truth moment is better understood as an outgrowth of the deliberate production of targeted ignorance, especially in the context of environmental injustices. Finally, to provide an illustration of the trends described in this paper, we conclude with a section on the historic use of leaded gasoline in the U.S.     

Information about bank intangibles,analyst information intermediation,and the role of knowledge and social forces in the ‘market for information’

Although developments in the sell-side analyst literature have revealed the role of intellectual capital (IC) in analysts’ work, the whole information intermediation progress of IC remains a “black box”. This paper develops an analyst information intermediation model, illustrating how ‘soft’ information changes through analyst acquisition, processing and disclosure of information. Bourdieu’s ideas of habitus, field and capital are used to develop our explanation of the analyst information intermediation model. We argue that the combination of empirical evidence and theoretical explanation provides a new and more comprehensive way to improve understanding of the role of analysts within knowledge and social contexts.     

Do the stock and CDS markets price credit risk equally in the long-run?

In this paper, we examine the existence and stability of the long-run equilibrium relation between the price of credit risk in the stock and CDS markets for a sample of non-financial iTraxx Europe companies during the 2004–2017 period. We show that standard cointegration tests with no breaks frequently fail to detect cointegration. Once we formally account for the breaks in the cointegrating vector, we are able to detect cointegration over the entire sample period for the vast majority of the companies considered. An application of these results to CDS-equity trading shows that the profitability of traditional trading strategies crucially depends on the presence of cointegration and on the stability of the cointegrating vector. Finally, we find that CDS illiquidity factors decrease the likelihood of the stock and CDS market cointegration.     

Experiencing risk: the effect of the experiential life-skills centre ‘Warning Zone’ on children’s risk perception

This study examined the psychological effects of the Warning Zone experiential life-skills centre on risk perception. The aim of Warning Zone is to educate children about dangers and risks they may encounter in everyday life, with a view to preventing injury. To evaluate changes in risk perception, a quasi-experimental study was undertaken in which children’s risk perception was measured before, after, and one month after the Warning Zone experience. This research also examined children from different types of schools, in order to assess socio-economic factors. Children’s risk perception increased significantly after Warning Zone, and this significant increase was retained one month later. Differential effects of Warning Zone were found between children from different school types, as were pre-existing differences in risk perception between these groups. Children from more deprived backgrounds had better understanding of risks prior to their visit to Warning Zone and a month later had better retained the message of Warning Zone about risks. We conclude that Warning Zone is effective at raising children’s perceptions of risk.     

The Olympic Games and the Development of Social undertakings

Sociologically, the Olympic Games belongs to the entire society where every citizen should be a beneficiary from the Olympic economy. The humanistic themes and