This paper proposes and tests a new risk model that explains how investors perceive financial risks. The model combines conventional decision theory variables - probabilities and outcomes - with variables from psychology research by Slovic (1987). The latter includes variables such as the extent...

Psychologists have studied human behavior for over a century and, as a result, have developed a robust set of theories regarding how people behave. Most financial accounting issues deal with matters of human behavior, such as the judgments and decisions of managers, investors, analysts, and...

How do investors evaluate managers who choose to use or not use derivatives once the outcomes of those decisions become known? Competing theories make different predictions, and we test these in three experiments. Results show that even when outcomes are held constant, investors are more...

In this paper, we draw on judgment and decision making research to examine the behavioral implications of the SEC's Financial Reporting Release No. 48 on derivative and market risk disclosures. While these disclosures have been examined from an empirical point of view, no research has...

In this paper, we draw on judgment and decision making research to examine the behavioral implications of the SEC's Financial Reporting Release No. 48 on market risk disclosures. While these disclosures have been examined using archival data, no research has investigated how these disclosures...