scholarly journals Do Employee Share Owners Face Too Much Financial Risk?

ILR Review ◽  
2021 ◽  
pp. 001979392110073
Author(s):  
Douglas Kruse ◽  
Joseph Blasi ◽  
Dan Weltmann ◽  
Saehee Kang ◽  
Jung Ook Kim ◽  
...  
Keyword(s):  
Financial Risk ◽  
Risk Tolerance ◽  
Risk Theory ◽  
Financial Knowledge ◽  
Survey Of Consumer Finances ◽  
Small Minority ◽  
Share Ownership ◽  
Consumer Finances ◽  
Substantial Problem ◽  
Excessive Risk

A major theoretical objection against employee share ownership is that workers are exposed to excessive financial risk. Theory posits that 10 to 15% of a typical worker’s wealth portfolio can be prudently invested in employer stock. The authors analyze employee share ownership in US family portfolios using the 2004 to 2016 Survey of Consumer Finances. Overall, 15.3% of families with private-sector employees held employer stock in 2016, and one in six of these families exceeded the 15% threshold. Employee share ownership appears to generally add to, rather than substitute for, both pension and overall wealth. Employee share owners express higher risk tolerance and financial knowledge and greater understanding of the value of diversification. While financial risk does not appear to be a substantial problem for most employee share owners, a small minority may face excessive risk, and the authors suggest approaches to reduce such risk.

scholarly journals Inter-Observer Risk-Tolerance Agreement Between Husbands And Wives

2011 ◽  
Vol 9 (2) ◽  
Author(s):  
Joseph W. Goetz ◽  
John Gilliam ◽  
John E. Grable
Keyword(s):  
Null Hypothesis ◽  
Financial Risk ◽  
Married Couples ◽  
Risk Tolerance ◽  
Survey Of Consumer Finances ◽  
Chi Square ◽  
Consumer Finances ◽  
Chi Square Analysis ◽  
Financial Risk Tolerance ◽  
Level Of Agreement

<p class="MsoBodyText" style="text-align: justify; margin: 0in 0.5in 0pt; mso-pagination: none;"><span style="color: black; font-size: 10pt; mso-themecolor: text1;"><span style="font-family: Times New Roman;">The purpose of this research was to test the extent to which variability in husbands&rsquo; and wives&rsquo; self-assessed financial risk can be attributed to variation in risk tolerance or observer bias resulting from measurement error. Using a sample of 188 well-educated married couples, scores from the Survey of Consumer Finances single risk-assessment item were used to evaluate the following null hypothesis: Husbands and wives do not agree on their level of financial risk tolerance. The hypothesis was tested using a percentage agreement test, a Kappa coefficient test, and a chi-square analysis. Findings led to a rejection of the null hypothesis. That is, couples exhibited general agreement in their assessment of financial risk tolerance, although the level of agreement was rather modest. </span></span></p>

The Risk Tolerance Measure in the 2016 Survey of Consumer Finances: New, But Is It Improved?

2021 ◽  
pp. JFCP-19-00022
Author(s):  
Kyoung Tae Kim ◽  
Sherman D. Hanna ◽  
Dongyue Ying
Keyword(s):  
Negative Relationship ◽  
Risk Tolerance ◽  
Stock Ownership ◽  
Survey Of Consumer Finances ◽  
Consumer Finances ◽  
Two Measures ◽  
Complex Patterns ◽  
Relationship Of ◽  
The Relationship ◽  
Different Levels

The Survey of Consumer Finances (SCF) has included a 4-level risk tolerance measure since 1983. In 2016, the SCF also included an 11-level risk tolerance measure. We compare the two measures, and develop suggestions for using the new measure. While the new measure is seemingly simpler than the old measure, we demonstrate that it does not have a monotonic relationship with owning stock assets, with a pattern similar to the relationship of the old measure to stock ownership. We also identify complex patterns of factors related to different levels of the new measure, for instance education has a negative relationship at one level but positive at another level. Those using the new measure should consider the complex patterns we demonstrate.

Antecedents to responsible financial management behavior among young adults: moderating role of financial risk tolerance

2020 ◽  
Vol 38 (5) ◽  
pp. 1177-1194 ◽  
Author(s):  
Dhananjay Bapat
Keyword(s):  
Young Adults ◽  
Financial Management ◽  
Financial Risk ◽  
Risk Tolerance ◽  
Financial Knowledge ◽  
Financial Behavior ◽  
Management Behavior ◽  
Content Type ◽  
Financial Risk Tolerance

PurposeThe study examines the antecedents of responsible financial management behavior among young adults in India and explores the role of financial risk tolerance as a moderating variable.Design/methodology/approachThe sample includes young adults in the age group of 18–35. The analysis uses a two-step approach via standard partial least squares structural modeling (PLS-SEM) and ordinary least square (OLS) regression.FindingsStructural modeling results show that financial attitude fully mediates the relationship between financial knowledge and responsible financial management behavior, and locus of control influences responsible financial management behavior. Financial risk tolerance moderates the relationship. Among demographic factors, age and occupation influence responsible financial management behavior.Research limitations/implicationsThe financial knowledge used in the survey are based on self-reported responses. The future study can include participants from both developed and emerging countries to assess similarities and differences.Practical implicationsDespite the growing focus on improving financial literacy, there are growing concerns regarding responsible financial behavior. Since financial services is related to fiduciary responsibility, managers and policymakers need to ensure that financial knowledge results in improving financial attitude, which further leads to responsible financial behavior.Originality/valueThe present study from an emerging country will add value to the literature.

Household Expectations for Future Economy and Risk-Taking Attitudes

2016 ◽  
Vol 27 (1) ◽  
pp. 109-121 ◽  
Author(s):  
Tsung Huang ◽  
Xin Xu ◽  
Tsun-Feng Chiang
Keyword(s):  
Risk Taking ◽  
Financial Risk ◽  
Financial Risks ◽  
Survey Of Consumer Finances ◽  
Logit Regression ◽  
Consumer Finances ◽  
Multinomial Logit Regression ◽  
Working People ◽  
New Finding ◽  
Financial Issues

The purpose of this study is to examine factors associated with households’ willingness to take financial risks, particularly the effect of households’ expectations. The data used in this study are the Survey of Consumer Finances 2007 by which researchers can examine the household financial issues before the financial crisis. By employing multinomial logit regression, the new finding of this study is that when the households expect that the future economy will be better, they are not willing to take either no or substantial financial risk. This study uses the uncertainty theory with the timing of the survey to interpret this seemingly unintuitive result. Other findings are that age, more working people in a household, male, education, and majority race are household characteristics positively affecting the probability of the household’s willingness to take average and above average financial risks.

scholarly journals Financial Risk Tolerance: The Case of Older Chinese in Klang Valley, Malaysia 2020

2021 ◽  
Vol 12 (2) ◽  
pp. 1
Author(s):  
Shyue Chuan Chong ◽  
Han Kok Heng ◽  
Siok Jin Lim ◽  
Vejaratnam Navaratnam ◽  
Andaeus Zun Khan Neoh
Keyword(s):  
Financial Management ◽  
Financial Risk ◽  
Risk Tolerance ◽  
Financial Knowledge ◽  
Financial Satisfaction ◽  
Retirement Plans ◽  
Short Period ◽  
Retirement Funds ◽  
The Impact ◽  
Malaysian Chinese

Ageing demographic profiles pose challenges to the nation as policymakers are concerned about the health, public pension and the financial management of the society. In Malaysia, retirees are mostly dependent on savings from the Employees Provident Fund (EPF), a government agency that manages savings and retirement plans for private-sector employees and non-pensionable public servants. Many Malaysians aged past the targeted retirement age of 60 years old chose to remain in the workforce, mainly due to insufficient retirement funds or has depleted their retirement funds in a short period. To ensure sufficient funds to attain an ideal retirement life, Malaysians resort to invest or seek business opportunities. Thus, this paper studies the impact of demographic characteristics (sex, age, and educational level) and finance characteristics (financial knowledge and financial satisfaction) on the risk tolerance among older Malaysian Chinese in the year 2020. The results of this study showed that the older Malaysian Chinese risk tolerance is highly influenced by sex, age, education level, financial knowledge and financial satisfaction.

scholarly journals Invest As I Say, Not As I Do? Gender Dif-ferences In Financial Risk Preferences

2011 ◽  
Vol 1 (1) ◽  
Author(s):  
Nancy Ammon Jianakoplos
Keyword(s):  
Gender Differences ◽  
Asset Allocation ◽  
Financial Risk ◽  
Risk Preferences ◽  
Financial Risks ◽  
Financial Assets ◽  
Survey Of Consumer Finances ◽  
Risky Assets ◽  
Consumer Finances ◽  
Using Data

This paper examines gender differences in stated versus observed financial risk preferences. The responses of women versus men to a question regarding financial risk preferences are compared to the proportion of risky assets held in their portfolios using data from the 1995 Survey of Consumer Finances. The data show that women are more likely to express an unwillingness to take financial risks. Stated financial risk preferences are found to be consistent with observed risk preferences at the ordinal, but not the quantitative, level. Contradicting their stated risk preferences, risky assets constitute, on average, one-third of the financial assets of households that indicate they are unwilling to take any financial risks. Financial planners and advisers frequently use a clients expressed willingness to take on risk as an important determinant in asset allocation recommendations. Consistent gender differences in these responses, in addition to inconsistencies between the clients stated risk preferences and observed portfolio allocation, may lead advisers to make inappropriate recommendations.

scholarly journals Impact of Financial Knowledge and Investment Experience on Investment Decision Making with and without Risk Tolerance Mediation

2020 ◽  
Vol 6 (1) ◽  
pp. 1
Author(s):  
Muhammad Aslam ◽  
Muhammad Faisal Gulzar ◽  
Muhammad Aamir Shahzad ◽  
Muarif Maqbool ◽  
Muhammad Hassan Chaudhary
Keyword(s):  
Decision Making ◽  
Financial Risk ◽  
Statistical Tests ◽  
Investment Decision ◽  
Risk Tolerance ◽  
Financial Knowledge ◽  
Investment Decision Making ◽  
Investment Experience ◽  
The Impact ◽  
Financial Risk Tolerance

This research will explore the relationship between financial knowledge, investment experience, and investment decision making. The primary dataset was obtained from the investors in Pakistan stock exchange located in the city of Lahore, Punjab, Pakistan. The random sampling technique was used for the respondent selection. The comprehensive questionnaire contains the nominal, ordinal categorical scales for a survey response. The normality & reliability of the data were further verified by the statistical tests. The results estimated using the multiple regression analysis will be revealed in this study. This research will study the impact of the financial knowledge on investment decision making with and without the financial risk tolerance. Financial risk tolerance plays a mediating role during the process.

scholarly journals Overconfidence in financial knowledge associated with financial risk tolerance in older adults

2020 ◽  
Author(s):  
Gregory Russell Samanez-Larkin ◽  
Gary Mottola ◽  
Darby Heflin ◽  
Lei Yu ◽  
Patricia Boyle
Keyword(s):  
Older Adults ◽  
Cognitive Impairment ◽  
Risk Aversion ◽  
Risk Taking ◽  
Financial Literacy ◽  
Financial Risk ◽  
Risk Tolerance ◽  
Older Age ◽  
Financial Knowledge ◽  
Financial Risk Tolerance

Taking excessive financial risk in older age can have harmful, far-reaching consequences as opportunities to recover lost wealth are limited. Better understanding the mechanisms of financial risk taking in older age is critically important for both identifying vulnerabilities in certain older adults and for developing interventions to empower aging investors to make wise financial choices into the most advanced ages. The goals of the present study were to identify age differences in financial literacy, confidence in financial knowledge, and risk taking and how literacy and confidence were related to financial risk taking across older adults with and without cognitive impairment (ages 58–101). Using cross-sectional data from the Rush Memory and Aging Project, analyses revealed that risk aversion was higher and self-reported willingness to take financial risks was lower at older ages. Financial literacy was similar across the sixties and seventies but lower at the oldest ages. However, confidence in financial knowledge was not associated with age when controlling for financial literacy. In exploratory analyses, a measure of overconfidence in financial knowledge was positively associated with self-reported financial risk tolerance but not a behavioral measure of risk aversion. The overconfidence effect on risk tolerance did not vary across individuals with no cognitive impairment or Mild Cognitive Impairment (MCI). Overconfidence accounted for about 6% of the variance in financial risk tolerance. The present results suggest that overconfidence may contribute to risky financial behavior. Calibration of confidence levels to actual literacy is a potential target for future interventions aimed at protecting senior investors.

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