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Risk Management Risk Management with Default-Risky Forwards Korn, Olaf To study the impact of counter-party default risk of forward contracts on a firm’s production and hedging decisions, I use a model of a risk-averse competitive firm under price uncertainty. I find that if expected profits from forward contracts are zero, the hedge ratio is not affected by default risk under general preferences and general price distributions. My analysis shows that if the size of a firm’s forward position does not affect the counter-party’s default probability, default risk is no reason to reduce hedge ratios. However, a firm’s optimal output is negatively affected by default risk, and it is generally advisable to hedge default risk with credit derivatives. pp. 102 - 125 Financial Literacy Financial Literacy and Mutual Fund Investments: Who Buys Actively Managed Funds? Müller, Sebastian / Weber, Martin Previous research indicates that a lack of financial sophistication might explain the past strong growth in active management. We construct an objective financial literacy score and analyze the relation between financial literacy and mutual fund investment behavior. We show that there is a positive influence of financial literacy on the likelihood of investing in low-cost fund alternatives. However, we find that even the most sophisticated investors in our sample rely overwhelmingly on active funds. “Smart money” among smarter investors cannot explain this finding as there is only weak evidence of superior fund selection abilities among financially more literate investors. Our results indicate that the lack of financial literacy among most mutual fund customers cannot completely explain the past growth in actively managed funds. pp. 126 - 153 Necessity Entrepreneurship Necessity and Opportunity Entrepreneurs in Germany: Characteristics and Earnings Differentials Block, Jörn / Wagner, Marcus In this paper we discuss necessity and opportunity entrepreneurship. We use panel data to analyze how these two types of entrepreneurs differ in general, and in their ability to discover and exploit entrepreneurial opportunities. We find that the opportunities exploited by opportunity entrepreneurs are generally more profitable than are those exploited by necessity entrepreneurs. We also find that the determinants of success differ to a strong degree. Standard wage equations seem to work better for opportunity than for necessity entrepreneurs. Our findings indicate a need to distinguish between the two groups in entrepreneurship theory and practice. pp. 154 - 174 Entrepreneurial Orientation Entrepreneurial Orientation and Business Performance – A Replication Study Frank, Hermann / Kessler, Alexander / Fink, Matthias We examine the effect of entrepreneurial orientation (EO) and hypothesize that EO has a positive impact on business performance. We create a contingency model and a configuration model and compare their results to those derived from a main-effects model. The study replicates the work of Wiklund and Shepherd (2005) and tests the validity of their results in a different national context. Our analysis indicates a positive connection between EO and business performance only in cases in which a dynamic environment is combined with high access to financial capital and when a stable environment is combined with low access to financial capital. Our analysis also indicates that EO may have a negative effect on performance in certain configurations. pp. 175 - 198 |
Archiv 2010
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