The Portuguese economy has experienced a recent economic recession that forced firms to look for different ways to finance themselves in order to be able to respond and overcome the crisis. This study investigates whether the capital structure of new ventures differ as a response to the crisis. Drawing on a panel of 75,826 Portuguese new ventures (241,284 venture-year observations) established between 2006 and 2015 and followed until 2017, the results show that new ventures capital structure responds to economic downturns. New ventures founded during the crisis have higher values of debt-ratio, for both total and short-term debt ratio, higher profitability, higher growth, and lower tangibility. Furthermore, ventures that are financed mainly with equity resort to less short-term debt have higher profitability and liquidity but experience lower growth. This study informs managers, practitioners, and policymakers that new ventures' capital structure is responsive to an economic downturn and has implications for the establishment of ventures during recessionary periods.
This paper analyzes the joint association of emotions and knowledge in decision-making under uncertainty on a TV game show setting. The objective of this research is to understand the impact of emotions and knowledge on the preference for uncertainty (PU), which have mostly been investigated separately in Economics and Psychology until now. We examine the preference for uncertainty, proxied by a preference for gambling against a sure payoff, in 59 contestants in the TV game show “JOKER”. The data used contain individuals’ characteristics, as well as the decisions regarding the game, including the choice to carry on playing or accept a sure payoff, the level of knowledge of the topic, and the emotions experienced by the contestant. The methodology adopted includes a bivariate association between PU and knowledge and emotions, respectively. Additionally, we test a multivariate association using a Classification and Regression Tree (CART) method, which is suited for a complex nonlinear decision process that robustly mimics human decision-making. We find that preference for uncertainty increases when the contestants have a full domain or total absence of knowledge. Our results suggest, also, that emotions are the factor that only determines the preference for uncertainty when contestants have a restricted level of knowledge. Our results are robust across different proxies for knowledge and emotions and for different methodological thresholds. Results matter for investors, regulators, and policymakers, since it provides novel insights about the relative impact of knowledge and emotional status on risk behavior in general.
This paper presents an incentivized experiment analyzing the role of demographic characteristics in individual decision-making under uncertainty. Reactions to a natural source of uncertainty, payoffs in a TV game show, were measured using Fuzzy-set Qualitative Comparative Analysis (fsQCA), allowing us to identify multiple configurations of causal conditions that are sufficient for individuals to prefer an uncertain payoff to a sure gain, and, thus, lower risk aversion. This paper found evidence of preference for uncertainty, measured as willingness to play for an uncertain payoff, in individuals with characteristics most commonly present in the literature: being male; young; childless; with studies in finance or similar areas. This paper also shows that conditions that would not justify the preference for uncertainty according to the literature (an older individual or having children), when combined with other conditions, change contestants’ behavior regarding preference for uncertainty. Individuals that are both older and single, and individuals that have children combined with education in finance, show an inverse effect on preference for uncertainty.
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