Using Behavioral Economics to Show the Power and Efficiency of Corporate Law as Regulatory Tool

Greenfield, Kent

doi:10.2139/ssrn.276168

Cited by 11 publications

(5 citation statements)

References 9 publications

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“…This achieved result, pertaining to the field of management, affirms the observation of Greenfield (2002) regarding the difficulty met by the internal administrators. Blair et al (2000), postulate that these administrators cannot behave against the interests of their leader or their superiors.…”

Section: Hypothesissupporting

confidence: 83%

“…More exactly, most of concerned studies have shows that a well emotionally intelligent leader having a higher emotional intelligence is an effective one. This achieved result, pertaining to the field of management, affirms the observation of Greenfield (2002) regarding the difficulty met by the internal administrators. Blair et al (2000), postulate that these administrators cannot behave against the interests of their leader or their superiors.…”

Section: Hypothesissupporting

confidence: 83%

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CEO emotional intelligence and board of directors' efficiency

Azouzi

Jarboui

2013

Corporate Governance: The International Journal of Business in Society

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Purpose -This paper deals with the relationship existing between the emotional aspect and decision-making processes. More specifically, it examines the links between emotional intelligence, decision biases and effectiveness of the governance mechanisms. The primary purposes of this paper are to: consider emotional intelligence as new research ideas that make important contributions to society; offer suggestions for improving manuscripts submitted to Consortium for Research on Emotional Intelligence in Organizations; and discuss methods for enhancing the validity of inferences made from research.Design/methodology/approach -The paper explains that the main cause of organization's problems is CEO emotional intelligence level. The authors use three models (linear regression and logistic binary regression) to examine this relation: every model treats the relationship between emotional intelligence and one of efficiency criteria of the board. Emotional intelligence has been measured according to Schutte et al.'s Shutte Self Report Emotional Intelligence Scale (SSREI), with a high internal validity level. The four cognitive biases have been measured by means of a questionnaire comprising several items and the selected sample was composed of some180 Tunisian executives (belonging to 60 firms).Findings -The results revealed that the presence of a high emotional intelligence rate is not always positively correlated with the executives' suggestibility with respect to behavioural biases. They have also affirmed the existence of a complementarity relationship between emotional intelligence and the directors' board. Authors need to consider that emotion which minimizes CEO emotional biases and provides director's board effectiveness.Research limitations/implications -This article has implications for the development of CEO emotional intelligence capacity. Also, some psychological aspects of a theoretical nature could not be wholly approached in a complete empirical way.Practical implications -The paper pushes organizations to select managers based on their levels of emotional intelligence (apply tests of emotional intelligence in place psychometric tests). Also, it increases the validity of inferences made from research in the field.Social implications -This paper incites governments to establish training programs aimed at the development of learning of emotional intelligence. Thus, it has important implications for enhancing the well-being of individuals, organizations and society as a whole.Originality/value -Actually, for the sake improving the explanatory power of a legal-financial approach of governance, the behavioural dimension has been integrated for a more thorough analysis of the directors' board role. The authors' goal consists in highlighting the role played by emotional intelligence as a skill or tool available for the manager or controller to minimize the behavioural biases (bias of loss aversion, optimism, over-confidence and lack of cognitive flexibility), and achieves an effective control.

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Section: Hypothesissupporting

confidence: 83%

Section: Hypothesissupporting

confidence: 83%

CEO emotional intelligence and board of directors' efficiency

Azouzi

Jarboui

2013

Corporate Governance: The International Journal of Business in Society

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“…Le contenu de la loi sur les sociétés peut également être réinterprété en ce sens, en particulier pour les aspects touchant à la protection des investisseurs financiers. (Langevoort, 2002 ;Loke, 2002) ou à la conception du droit des sociétés (Greenfield, 2002 12 La notion de perte résiduelle n'intervient pas car, dans l'approche de la remédiabilité, on ne se positionne pas par rapport à une situation idéale dans l'absolu (efficience de premier rang), mais dans une perspective comparative avec la meilleure alternative réalisable. S'il y avait une perte résiduelle par rapport à cette dernière, cela signifierait que la situation serait dominée par l'alternative, donc qu'elle serait inefficiente.…”

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Pour une gouvernance d'entreprise « comportementale ». Une réflexion exploratoire...

Charreaux

2005

Revue française de gestion

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L'objectif de cet article est de montrer l'intérêt des approches comportementales, notamment de la finance comportementale, pour construire une théorie de la gouvernance permettant de remédier aux nombreuses lacunes de la théorie juridico-financière dominante. La réflexion entreprise montre les problèmes soulevés par la notion de biais comportemental et son intégration dans la théorie de la gouvernance.

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“…and Rachlinski (2003) have examined existing legally-oriented work on bounded rationality, devoting extensive attention to both judgment errors and departures from expected utility theory. 5 The present section, by contrast, focuses on a limited number of applications of 5 While work on bounded willpower and bounded self-interest within behavioral law and economics has not recently been surveyed, examples of behavioral law and economics work on bounded willpower include Weiss (1991), Jolls (1997), and Camerer, Issacharoff, Loewenstein, O'Donoghue and Rabin (2003), while examples of behavioral law and economics work on bounded self-interest include Greenfield (2002), Jolls (2002), and Bar-Gill and Ben-Shahar (2004).…”

Section: Illustrative Applications Of Behavioral Law and Economicsmentioning

confidence: 99%

Behavioral Law and Economics

Jolls¹

2012

Behavioral Economics and Its Applications

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Behavioral economics has been a growing force in many fields of applied economics, including public economics, labor economics, health economics, and law and economics. This paper describes and assesses the current state of behavioral law and economics. Law and economics had a critical (though underrecognized) early point of contact with behavioral economics through the foundational debate in both fields over the Coase theorem and the endowment effect. In law and economics today, both the endowment effect and other features of behavioral economics feature prominently and have been applied in many important legal domains. The paper concludes with reference to a new emphasis in behavioral law and economics on "debiasing through law"-using existing or proposed legal structures in an attempt to reduce people's departures from the traditional economic assumption of unbounded rationality.

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Using Behavioral Economics to Show the Power and Efficiency of Corporate Law as Regulatory Tool

Cited by 11 publications

References 9 publications

CEO emotional intelligence and board of directors' efficiency

CEO emotional intelligence and board of directors' efficiency

Pour une gouvernance d'entreprise « comportementale ». Une réflexion exploratoire...

Behavioral Law and Economics

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