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Journal cover: Managerial Finance

Managerial Finance

ISSN: 0307-4358

Online from: 1975

Subject Area: Accounting and Finance

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Managerial “irrationality” in financial decision making

Document Information:
Title:Managerial “irrationality” in financial decision making
Author(s):C.V. Helliar, (Department of Accountancy & Business Finance, University of Dundee, Scotland, DD1 4HN), D.M.Power, (Department of Accountancy & Business Finance, University of Dundee, Scotland, DD1 4HN), C.D. Sinclair, (Department of Accountancy & Business Finance, University of Dundee, Scotland, DD1 4HN)
Citation:C.V. Helliar, D.M.Power, C.D. Sinclair, (2005) "Managerial “irrationality” in financial decision making", Managerial Finance, Vol. 31 Iss: 4, pp.1 - 11
Keywords:Financial decision making, Probability estimates, Risk
Article type:Research paper
DOI:10.1108/03074350510769587 (Permanent URL)
Publisher:Emerald Group Publishing Limited
Abstract:This paper examines managerial attitudes to risk in the UK to see whether managers are apparently “irrational” and focus on simple heuristics rather than concentrating on statistical outcomes in their decision-making processes. The findings reported here are based on a large postal questionnaire survey of UK managers in different functional areas. The results suggest that managers exhibit many of the biases that have been documented for executives in other countries. A focus on the framing of a decision, an emphasis on the magnitude of negative outcomes and an insensitivity to the probability estimates are all characteristics of the responses to the scenario cases provided.

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