Capital structure construct: a new approach to behavioral finance
-
Author(s)Jose Anselmo Perez ReyesLink to ORCID Index: https://orcid.org/0000-0001-9977-4804
,
Montserrat Reyna MirandaLink to ORCID Index: https://orcid.org/0000-0002-2793-6365
,
Jorge Vera-MartínezLink to ORCID Index: https://orcid.org/0000-0002-5090-7829
-
DOIhttp://dx.doi.org/10.21511/imfi.16(4).2019.08
-
Article InfoVolume 16 2019, Issue #4, pp. 86-97
- Cited by
- 1149 Views
-
516 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
Within the framework of behavioral finance, this research shows that financial behavior can be assessed as a cognitive construct. Using certain variables, a multidimensional “cognitive finance” construct can thus be established. Through a technological – psychometric type design with descriptive data analysis, a factor analysis is presented to determine which latent variables tend to charge significantly in order to assess the validity of the dimensions comprising the construct of capital structure and explore its dimensions in relation to financial theory. A 44-item questionnaire is adapted and applied to a sample of chief financial officers from diverse public and nonpublic companies in Mexico. The analysis reveals the existence of four construct dimensions consistent with corporate financial theory. The model helps to explain how decision-makers react to uncertainty and environmental conditions, directly affecting the valuation of firm’s losses or earnings. As evidenced by the results, application of the Item Response Theory to the field of behavioral finance could open up new avenues to the study of cognitive biases, involved in the financial decision-making process. Thus, this implies that behavioral finance can also be treated as “cognitive finance.”
- Keywords
-
JEL Classification (Paper profile tab)C38, G40, G41
-
References29
-
Tables5
-
Figures0
-
- Table 1. Items
- Table 2. Rotated component matrix using the VARIMAX method. Cut level: 0.3
- Table 3. Reliability tests of the first instrument (Scale 1).
- Table 4. Reliability tests for the second instrument
- Table 5. Rotated component matrix with the VARIMAX method. Cut level: 0.3
-
- Arribas, M. (2004). Diseño y validación de cuestionarios. Matronas Profesión, 5, 23-29.
- Assaf, N. A. (2005). Finanças corporativas e valor. São Paulo: Atlas.
- Benton, T. (2013). An empirical assessment of Guttman’s lambda 4 reliability coefficient. Quantitative Psychology Research, 301-310.
- Bianchi, S., Pantanella, A., & Pianese, A. (2015). Efficient Markets and Behavioral Finance: A Comprehensive Multifractional Model. Advances in Complex Systems, 18(1).
- Bobko, P., Barelka, A., Hirshfield, L., & Lyons, J. (2014). Invited Article: The Construct of Suspicion and How It Can Benefit Theories and Models in Organizational Science. Journal of Business & Psychology, 29(3), 335-342.
- Bunge, M. (1973). La ciencia, su método y la filosofía. Buenos Aires: Siglo XX.
- Callender, J. C., & Osburn, H. G. (1979). An empirical comparison of coefficient alpha, GUTTMAN’S LAMBDA-2, and MSPLIT maximized split half reliability estimates. Journal of Educational Measurement, 16, 89-99.
- Cronbach, L. J. (1951). Coefficient alpha and the internal structure of tests. Psychometrika, 16(3), 297-334.
- Cronbach, L. J., & Meehl, P. E. (1955). Construct validity in psychological tests. Psychological Bulletin, 52, 281-302.
- De Bondt, W. F. M., & Thaler, R. H. (1985). Does the stock market overreact? Journal of Finance, 40, 793-805.
- Fama, E. F. (1970). Efficient capital markets: a review of theory and empirical work. The Journal of Finance, 25, 383-417.
- George, D., & Mallery, P. (2003). SPSS for Windows step by step: A simple guide and reference. Boston: Allyn & Bacon.
- Gómez, G. (2001). Costo de capital y sus efectos sobre la inversión.
- Graham, J. R., Leary, M. R., & Roberts, M. R. (2014). A century of capital structure: The leveraging of corporate America. Journal of financial economics, 118(3), 658-683.
- Graham, J. R., & Harvey, C. R. (2001). The theory and practice of corporate finance: evidence from the field. Journal of Financial Economics, 60(2-3), 187-243.
- Harris, M., & Raviv, A. (1991). The theory of capital structure. The Journal of Finance, 46(1), 297-355.
- Jensen, M., & Meckling, W. (1976). Theory of the firm: managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305-360.
- Johanson, G., & Brooks, G. (2010). Initial Scale Development: Sample Size for Pilot Studies. Educational and Psychological Measurement, 70, 394-400.
- Kerlinger, F., & Lee, H. (2002). Investigación del comportamiento: métodos de investigación en las ciencias sociales. McGraw-Hill.
- Mian, M. A., & Velez-Pareja, I. (2007). Applicability of the Classic WACC Concept in Practice. Latin American Business Review, 8(2), 19-40.
- Modigliani, F., & Miller, M. (1958). The cost of capital, corporation finance and the theory of investment. American Economic Association, 48(3), 261-297.
- Modigliani, F., & Miller, M. (1963). Corporate income, taxes and the cost of capital: a correction. American Economic Review, 53(3), 433-443.
- Stephen, A. R., Randolph, W. W., & Jeffrey, F. J. (2012). Finanzas corporativas. McGraw-Hill Interamericana Editores, S.A. de C.V.
- Thaler, R. H. (1999). The end of behavioral finance. Financial Analysts Journal, 55(6), 12-17.
- Thurstone, L. L. (1954). The Measurement of Values. Psychological Review, 61, 47-58.
- Tolman, E. C. (1951). Behavior and psychological man: essays in motivation and learning. Berkeley, Univ. of California Press.
- Torga, E. M. M. F., Barbosa, F. V., de Pádua Carrieri, A., Ferreira, B. P., & Yoshimatsu, H. M. (2018). Behavioral finance and games: simulations in the academic environment. Revista Contabilidade & Finanças, 29(77), 297-311.
- Vitting, A. J., & Nowak, A. (2013). An Introduction to Social-Finance. Springer.
- Weston, J. F., & Brigham, E. F. (1998). Fundamentos de administración financiera. McGraw-Hill Interamericana de México.
-
The effect of the ownership structure on earnings management practices
Sanaa Maswadeh
doi: http://dx.doi.org/10.21511/imfi.15(4).2018.04
Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 48-60 Views: 2274 Downloads: 290 TO CITE АНОТАЦІЯThe objective of this study is to investigate the effect of the ownership structure, which includes concentration ownership, institutional ownership and foreign ownership in the light of the debt ratio and company size as controlling variables in limiting the earnings management practices of the Jordanian industrial companies for the period 2012–2016. The hypotheses of the study were tested using the multiple regression models. Among the most prominent findings of the study are: the explanatory factor (R2) for the independent and control variables accounts for 38% of the change in the earnings management of the Jordanian industrial companies, moreover, a significant effect of the concentration ownership was found in the limitation of earnings management practices; while, there was no significant influence of institutional ownership and foreign ownership on the earnings management practices in Jordanian industrial companies. Major limitation to this study is the only considered listed industrial Jordanian firms. Thus, the generalization of the results to other sectors and diverse economic conditions and regulations may be constrained. Finally, Jordanian policymaker reform policies motivate companies to increase their interest on concentration ownership structure, as the study showed the significant effect of the concentration ownership in the limitation of earnings management practice.
-
Retraction: Leaders and decision making: a study of the drivers of courage
Rasoava Rijamampianina
doi: http://dx.doi.org/10.21511/ppm.16(1).2018.31
Problems and Perspectives in Management Volume 16, 2018 Issue #1 pp. 320-329 Views: 2088 Downloads: 195 TO CITE АНОТАЦІЯRetracted on the 15th of October, 2020 by the Journal’s Editor-in-Chief request dated October 12, 2020. The type of retraction – plagiarism.
The journal was asked to retract this article because of plagiarism. The request came from the author of the article. The author informed the journal that original idea published in this paper wasn’t his and asked to remove the article. -
Role of leaders in building organizational readiness to change – case study at public health centers in Indonesia
Ratna Dwi Wulandari ,
Stefanus Supriyanto ,
Mochammad Bagus Qomaruddin ,
Nyoman Anita Damayanti ,
Agung Dwi Laksono
doi: http://dx.doi.org/10.21511/ppm.18(3).2020.01
Problems and Perspectives in Management Volume 18, 2020 Issue #3 pp. 1-10 Views: 1997 Downloads: 681 TO CITE АНОТАЦІЯLeaders play a strategic role in the process of organizational change. Various studies were conducted to show the role of leaders in succeeding change. One famous concept of leaders’ role was the Mintzberg managerial role, which divides the role of the leader into three main roles: interpersonal, informational, and decisional. This research was conducted to explore the leaders’ role in creating organizational readiness to change. The study was conducted at 40 government-owned public health centers in Indonesia, involving 190 midwives as respondents. The study results show that all three leader’s roles were well implemented by the head of the public health center with the best score in the informational role. However, organizational readiness to change at public health centers is not on the same level. The linear regression test indicates that the decisional role has the largest contribution in building the organizational readiness to change. The successfully implemented role of entrepreneurs, disturbance handlers, resource allocators, and negotiators was the key to the successful implementation of changes. Therefore, the advice given was the need for leaders to improve their decision abilities so that the organizational readiness to change becomes better.
Acknowledgment
The researcher thanked the Ministry of Research, Technology and Higher Education, Republic of Indonesia, for funding this research.
