Millionaire investors: financial advisors,attribution theory and gender differences

To date little attention has been paid to how social cognitive bias can influence how financial advisors interpret and respond to the needs of millionaire investors, and if this varies depending on the gender of the investor. This research investigates whether experienced professional financial advisors who work with millionaire investors make different attributions for the control and knowledge that investors have of their investments, and if they make different investment portfolio recommendations to equivalent male and female investors. Using methodology novel to finance, this vignette-based study that controls for gender finds evidence that professional financial advisors judge millionaire female investors to have less control over their investment portfolios relative to men. Empirical results also show that female advisors judge women to be less knowledgeable about investments than men. Despite such perceptual differences, advisors recommend equally risky portfolios to male and female investors. These results have implications for wealth management institutions and the monitoring of financial advisors for millionaire individuals.     

Auditors' Liability, Vague Due Care, and Auditing Standards

This paper expands the set of previously considered liability rules to include a negligence liability rule with a vague specification of due care. Auditors who are negligent in conducting their audit are liable for losses that result from reliance on misstated financial statements. However, what constitutes negligence for auditors is not clearly specified in the law. Consequently, courts often resort to Generally Accepted Auditing Standards (GAAS) and Statements on Auditing Standards (SAS) as benchmarks for determining due care. A liability regime that consists of a vague negligence rule supports and amplifies the credibility of auditing standards. While auditing standards alleviate some of the vagueness that is inherent in the legal standard, they also form a lower bound on due care, since an audit of a quality that is lower than the quality that auditing standards require would be considered negligent. Thus, the vague specification of due care enables auditors to commit to audit quality as pronounced in auditing standards. This paper explores this link between professional standards and auditors' legal liability. It establishes that the commitment to auditing standards could not have been as credible as it is, if auditors' liability was determined based on the strict liability rule, or based on a negligence rule with a clearly specified due care, since under these two liability rules courts would not need to refer to auditing standards to establish fault. The paper also demonstrates that a legal regime where audit standards are used as a benchmark to evaluate negligence is not the same as a legal regime where due care is defined clearly. Therefore, previous studies that assumed a negligence regime with clear due care may have overstated the effort level that is induced by legal liability.     

THE FUTURE OF STATE INSURANCE REGULATION: CAN IT SURVIVE?

Abstract: As Congress continues to debate the future of financial services affiliations, state insurance regulators are faced with blurred lines of regulatory authority and the opportunity of federal banking regulators to preempt their decisions and their enforcement of consumer protection statutes. This article attempts to remind readers of the history and significance of state insurance regulation and provide clear evidence of its continued importance in the future of the conglomerated financial services marketplace.     

Risk and adventure education

Fire, an ever present hazard in Australia, causes approximately 100 fatalities and over 3000 injuries per annum. Significant resources are allocated to mitigate the risk. In this study, we estimate the total cost of fire in Australia for 2005 at AUD$12,000 million or 1.3% of GDP. Comparable studies in the UK, USA, Canada, Denmark and New Zealand are reviewed and show that the cost in these countries ranges between 0.8 and 2% of GDP. Breaking the Australian total down into its component parts, we find that 57% relates to costs in anticipation of fire, 29% for response activities and that the remaining 14% results from the consequences of fire. This estimate shows that the investment in mitigation (86% of the total costs) is over five times the consequences (14%) and raises questions as to whether the current system adopted in Australia is economically efficient.     

Urban agriculture,gender and empowerment: An alternative view

Studies of urban agriculture (UA) in South Africa, and more broadly in southern Africa, have drawn on quantitative research methodologies to explain the involvement in UA of people from low-income households. Such studies tend to explain UA with reference to the direct economic and monetary gains that are made through agricultural activity. In Cape Town, the contribution of UA to income generation and expenditure substitution is limited. However, UA is important to women of low-income households in ways less directly related to monetary gain. Women use UA in processes of empowerment, to establish social networks, to symbolise a sense of security and to encourage community development. Policy-makers should extend their perception of UA's benefits beyond narrow economistic notions to include these positive social effects.     

Increasing correlations or just fat tails?

Increasing correlation during turbulent market conditions implies a reduction in portfolio diversification benefits. We investigate the robustness of recent empirical results that indicate a breakdown in the correlation structure by deriving theoretical truncated and exceedance correlations using alternative distributional assumptions. Analytical results show that the increase in conditional correlation could be a result of assuming conditional normality for the return distribution. When assuming a popular alternative distribution – the bivariate Student-t_r – we find significantly less support for an increase in conditional correlation and conclude that this is due to the presence of fat tails when assuming normality in the return distribution.     

Opportunities for Air Pollutant and Greenhouse Gas Emission Reduction through Local Transport Planning

This paper has three main objectives: firstly, to provide quantitative information on the potential greenhouse gas and air pollutant emissions reductions resulting from a number of future road transport scenarios; secondly, to illustrate the emission reduction measures available to local transport planners; and thirdly, to highlight the potential for these measures to be integrated into strategies that deliver other transport priorities. The results are drawn from a case study of Norfolk in the UK. We conclude that while technology can play a large part in reducing emissions of air pollutants, demand management is crucial to the delivery of long term greenhouse gas emission reduction and ultimately of air pollutant emissions too.     

Tourism and crime: A conference

This conference did not solve the problem of crime in tourist-recreation destination regions. It did, however, allow interested participants an opportunity to inventory and generalized the crime problems and prospects as they related to a few destination regions in the Southeast. Differing criminal laws, law enforcement, gun-control laws, sentencing practices, and jury selection leave little doubt as to the truth of the statement that punishment for a crime is dependent on where the crime takes place. ∠ Further study of deceptive crime statistics and criminal characteristics for rural America is a much needed research goal for the planning and design of more viable tourist-recreation destination regions.     

The Role of Hospital and Market Characteristics in Invasive Cardiac Service Diffusion

Little is known about how the adoption and diffusion of medical innovation is related to and influenced by market characteristics such as competition. The particular complications that are involved in investigating these relationships in the health care sector may explain the dearth of research. We examine three invasive cardiac services: diagnostic angiography, percutaneous coronary interventions, and coronary artery bypass grafting. We document the relationship between the adoption by hospitals of these three invasive cardiac services and the characteristics of the hospitals, their markets, and the interactions among them, from 1997 to 2014. The results show that the probability of hospitals’ adopting a new cardiac service depends on competition in two distinct ways: (1) hospitals are substantially more likely to adopt an invasive cardiac service if competitor hospitals also adopt new services; and (2) hospitals are less likely to adopt a new service if a larger fraction of the nearby population already has geographic access to the service at a nearby hospital. The first effect is stronger, leading to the net effect that hospitals duplicate rather than expand access to care. In addition, for-profit hospitals are considerably more likely to adopt these cardiac services than are either nonprofit or government-owned hospitals. Nonprofit hospitals in high-penetration, for-profit markets are also more likely to adopt them relative to other nonprofits. These results suggest that factors other than medical need—such as a medical arms race—partially explain technological adoption.