Determinants of risk behaviour: effects of perceived risks and risk attitude on farmer’s adoption of risk management strategies

The importance of risk perception and risk attitude for understanding individual’s risk behaviour are independently well described in literature, but rarely combined in an integrated approach. In this study, we propose a model assuming the choice to implement certain risk management strategies to be directly driven by both perceptions of risks and risk attitude. Other determinants influence the intention to apply different risk strategies mainly indirectly, mediated by risk perception and risk attitude. This conceptual model is empirically tested, using structural equation modelling, for understanding the intention of farmers to implement different common risk management strategies at their farms. Data are gathered in a survey completed by 500 farmers from the Flanders region in Belgium, investigating attitudes towards farming, perceived past exposure to risk, socio-demographic characteristics, farm size, perceptions of the major sources of farm business risk, risk attitudes and the intention to apply common risk management strategies. Our major findings are: (i) perception of major farm business risks have no significant impact on the intention of applying any of the risk strategies under study, (ii) risk attitude does have a significant impact. Therefore, rather than objective risk faced and the subjective interpretation thereof, it is the general risk attitude that influence intended risk strategies to be implemented. A distinction can be made between farmers willing to take risk, who are more inclined to apply ex-ante risk management strategies and risk averse farmers who are less inclined to implement ex-ante risk management strategies but rather cope with the consequences and diminish their effects ex-post when risks have occurred.     

Improving operational performance by influencing shopfloor behavior via performance management practices

It is generally believed that companies applying performance management practices outperform those that do not measure and manage their performance. Studies examining the link between performance management and performance improvement implicitly assume that performance management affects behavior of individuals in an organization, which then facilitates the achievement of organizational goals. This study takes a step towards understanding this implicit assumption. We investigate how performance management practices relate to improvement in performance by influencing behavior of individuals. We focus on operational performance management, i.e. the definition and use of performance measures on the shopfloor in production and distribution. We use a survey among 102 companies to identify the relations between performance management practices, shopfloor behavior and improvement in performance. We identified three independent clusters of operator behavior that positively correlate with performance improvement: “Understanding”, “Motivation” and “Focus on Improvement”. We show that 17 out of the 20 performance management practices found in literature have a significant and positive relation with one or more clusters of operator behavior. We furthermore found that there is a positive correlation between the number of performance management practices applied and performance improvement, suggesting that it is not only which practices are applied but also how many. Recommendations emerging from this study enable managers to identify which behavioral changes are desired to improve performance and to select those performance management practices that positively influence the desired behavior.     

Some Remarks on Modified FDH

One of the tools in theoretical and empirical work on the measurement of productive efficiency is the socalled Free Disposal Hull (FDH) method. As a result of its very generous character, many of the observations belonging to an evaluated dataset are labeled efficient by this method. Modified FDH, similar in spirit as Andersen and Petersen's modified Data Envelopment Analysis, may thus be used to discriminate between FDH-efficient units. We aim to show why particularly for FDH this method seems quite apt and may be called for as a valuable complementary tool to standard FDH analysis.     

THE EFFECT OF THE SEC'S ORDER-HANDLING RULES ON NASDAQ

We study the effect of the implementation of new Securities and Exchange Commission order-handling rules—the Limit Order Display Rule, the Quote Rule, and the Actual Size Rule—on NASDAQ's quoting and trading behavior. We find that the number of reported quotes increases and the bid-ask spread decreases following the implementation of the new rules. The decreased quoted depth associated with placement of individual investors' limit orders—the Limit Order Display Rule—outweighs the increased quoted depth associated with displaying institutional quotes—the Quote Rule. Further, the number of trade executions increases while the average trade size decreases. The volatility of trade-to-trade and midpoint returns decreases for the initial group of stocks subject to the rules, but not for the two subsequent groups.     

绩效奖励的陷阱

物质性奖励并非多多益善。实际上，绩效奖励的负效应与其使用强度相应成比例。     

Accounting for stochastic interest rates,stochastic volatility and a general correlation structure in the valuation of forward starting options

A quantitative analysis on the pricing of forward starting options under stochastic volatility and stochastic interest rates is performed. The main finding is that forward starting options not only depend on future smiles, but also directly on the evolution of the interest rates as well as the dependency structures among the underlying asset, the interest rates, and the stochastic volatility: compared to vanilla options, dynamic structures such as forward starting options are much more sensitive to model specifications such as volatility, interest rate, and correlation movements. We conclude that it is of crucial importance to take all these factors explicitly into account for a proper valuation and risk management of these securities. The performed analysis is facilitated by deriving closed‐form formulas for the valuation of forward starting options, hereby taking the stochastic volatility, stochastic interest rates as well the dependency structure between all these processes explicitly into account. The valuation framework is derived using a probabilistic approach, enabling a fast and efficient evaluation of the option price by Fourier inverting the forward starting characteristic functions. © 2010 Wiley Periodicals, Inc. Jrl Fut Mark 31:103–125, 2011     

Risk governance for infectious diseases: exploring the feasibility and added value of the IRGC-framework for Dutch infectious disease control

The quality of the Dutch system for control of infectious diseases is considered to be high. However, sometimes (e.g. during the Mexican flu and HPV vaccination in 2009, during the Q-fever outbreak from 2008 to 2011) the system encounters problems in terms of perceived effectiveness and public acceptance. This raises the question: Are other governance arrangements available that could contribute to a higher effectiveness and acceptance of infectious disease control? If so, how feasible are these arrangements in the light of the high time pressure in the case of an emergent outbreak of infectious diseases? In this paper, we explore the feasibility and added value of the International Risk Governance Council (IRGC)-framework. This framework aims to improve risk governance by tailoring the risk governance approach to the specific characteristics of the risk (the IRGC distinguishes between simple, complex, uncertain and ambiguous risks). Two recent infectious disease episodes – Q-fever and Schmallenberg virus (SBV) – were analysed. The actual risk governance approach was compared with a hypothesized situation, in which the IRGC-framework would have been applied. Data were collected by means of a review of literature, policy documents, newspaper articles and interviews with risk assessors and risk managers. This exploratory study revealed that Dutch infectious disease control incorporates many elements of the IRGC-approach, although some of these elements are used in an intuitive rather than in an explicit manner. Few elements are lacking. Incorporation of these elements (e.g. concern assessment) would have been both feasible and useful during the Q-fever epidemic (ambiguous risk), but not during the SBV outbreak (uncertain risk). We expect that primarily in cases of ambiguous infectious disease risks an explicit risk characterization and the further incorporation of concern assessment could strengthen Dutch infectious disease control. To assess whether a risk is (becoming) ambiguous remains a challenge to be operationalized.