Language:

Risk Propensity and Firm Performance: A Study of the Petroleum Exploration Industry

Management science, 1996-07, Vol.42 (7), p.1004-1021 [Peer Reviewed Journal]

Copyright 1996 Institute for Operations Research and the Management Sciences ;1996 INIST-CNRS ;Copyright Institute of Management Sciences Jul 1996 ;ISSN: 0025-1909 ;EISSN: 1526-5501 ;DOI: 10.1287/mnsc.42.7.1004 ;CODEN: MSCIAM

Full text available

Actions
1. Add to My Research
2. Remove from My Research
3. E-mail
4. Print
5. Permalink
6. Citation
7. EasyBib
8. EndNote
9. RefWorks
10. Delicious
11. Export RIS
12. Export BibTeX

Title:
Risk Propensity and Firm Performance: A Study of the Petroleum Exploration Industry
Author: Walls, Michael R ; Dyer, James S
Subjects: Applied sciences ; Business risks ; business strategy ; Business structures ; certainty equivalents ; Comparative studies ; Decision analysis ; Decision making ; Decision theory. Utility theory ; Economic performance ; Exact sciences and technology ; Expected values ; exponential utility ; firm performance ; Industrial management ; Industry ; Investigations ; Investment risk ; Management decisions ; Management science ; Net present value ; Oil exploration ; Oil industry ; Operational research and scientific management ; Operational research. Management science ; Operations research ; Petroleum ; Petroleum industry ; Risk ; Risk aversion ; Risk management ; risk tolerance ; Size of enterprise ; Statistical variance ; Strategic management ; Utility functions
Is Part Of: Management science, 1996-07, Vol.42 (7), p.1004-1021
Description: This paper explores the differences in observed risk propensity among petroleum firms and their impact on firm performance. In this work, we (1) develop a decision theoretic model which measures a firm's risk propensity in the form of an "implied" utility function; (2) investigate changes in corporate risk propensity with respect to changes in firm size; and (3) examine the relationships between firms' risk propensities and alternative dimensions of economic performance, including ex post risk and return measures. We also develop a new risk propensity measure, the Risk Tolerance Ratio (RTR), which controls for firm size and allows firms to be differentiated in terms of relative risk propensity. The motivation for this work is managerial concerns regarding appropriate risk-taking behavior and the effect of risky choice on firm performance. This methodology has importance business strategy implications in that we are able to make strong inferences about causal relationships between ex ante risk-taking and performance. Our findings are compelling in that corporate risk propensity seems to matter, and that decisions about corporate risk policy have a significant impact on the petroleum firm's economic performance.
Publisher: Linthicum, MD: INFORMS
Language: English
Identifier: ISSN: 0025-1909
EISSN: 1526-5501
DOI: 10.1287/mnsc.42.7.1004
CODEN: MSCIAM
Source: ProQuest One Psychology
RePEc
ProQuest Central

Back to results list


INSPIRE LIBRARY - TON DUC THANG UNIVERSITY	(84-028) 37 755 057	Feedback
19 Nguyen Huu Tho St. Dist.7, HCM	thuvien@tdtu.edu.vn	Feedback

Risk Propensity and Firm Performance: A Study of the Petroleum Exploration Industry

Copyright 1996 Institute for Operations Research and the Management Sciences ;1996 INIST-CNRS ;Copyright Institute of Management Sciences Jul 1996 ;ISSN: 0025-1909 ;EISSN: 1526-5501 ;DOI: 10.1287/mnsc.42.7.1004 ;CODEN: MSCIAM

Searching Remote Databases, Please Wait