Classic corporate finance literature often emphasizes executive incentives, such as stock options, as a way to encourage risk-averse executives to adopt more risk-neutral stances. Behavioral finance studies also note the potential impact of personality variables. In a further step, the current study suggests the relevance of human biology, in the form of hormones, for predicting risk-taking. Experimental results affirm that stock-options contracts drive risk-neutral behavior, mainly due to a shift in focus from losses to gains. Among women, lower testosterone levels and higher cortisol levels encourage greater risk-taking; for men, the findings indicate an inverted U-shaped relationship between testosterone and risk-taking. These impacts are comparable in degree to the effects of contracts, for both their predictive power and economic effect. By establishing the impact of biological variables on risk-taking, this study emphasizes the need for a comprehensive behavioral approach to contract setting.

The incentives banks face, such as the Basel Capital Accords, motivate them to favor lending with collateralized assets, rather than lending to Small-Medium Enterprises (SMEs), with associated profound economic consequences for society. Since the 1970s there has not been any direct oversight of whether or not credit contributes to GDP. We need a macroeconomic policy tool that can discriminate among different categories of credit extended to curb speculation in existing assets (non-GDP) and promote new business investment (GDP). Government money creation and private credit growth are often presumed the only two ways to enhance nominal demand, yet the Swiss Economic Circle (Wirtschaftsring-Genossenschaft or WIR) is a Swiss Bank whose creation of purchasing power for SMEs has counter-cyclically stabilized the Swiss economy for over 80 years. The Financial Stability Board (FSB) should create localized credit-creation architectures utilizing a Swiss-WIR type currency to funnel credit that reflects systemic and macroeconomic risks that individually will never be rational for banks left to themselves.

Extreme risk taking by agents has been the subject of intense scrutiny since the 2007 financial crisis. Many have alleged that investing for a firm led to preferences for more risk taking. To test this claim, we submitted a questionnaire to a sample of 715 business school students, testing for investment preferences when investing for self and for a firm over the first four moments of the distribution of returns. We find evidence of standard deviation aversion, skewness seeking, and kurtosis seeking when investing for self. The overall kurtosis seeking of our sample as a whole is mainly driven by standard deviation lovers, skewness seekers, and males. When investing for a firm, we do not see more risk taking but rather a shift toward neutrality of preferences for standard deviation and kurtosis, which is congruent with the risk-as-feelings hypothesis. Our study also underlines the impact of financial expertise in the reduction of risk taking, both when investing for self and for the firm.

This paper examines whether by adopting the Stakeholder Theory Corporate Social Responsibility (CSR) adds value to corporate performance in the pharmaceutical industry. In designing and executing their CSR programs, this research reveals most pharmaceutical companies have embraced the Stakeholder Theory. To evaluate whether CSR, by adopting Stakeholder Theory, contributes to company performance, the authors developed a survey tool and surveyed pharmaceutical industry practitioners and sustainability professionals. The authors present a literature review which served as the basis to develop key hypotheses that were tested through the survey. The perception survey finds responders agree positively that CSR adds value, and the key reason for its positive effect is the result of enhanced stakeholder management. Survey results also indicate that one can view CSR as an investment where the benefits are long term. This paper also reveals potential managerial implications that may help pharmaceutical companies manage scarce resources more effectively. The authors contend that pharmaceutical companies should implement CSR programs by engaging key stakeholders in order to ensure a successful program that adds value to company bottom line. However, alignment with corporate strategy and integration into company culture are key success factors. A limitation of this study is that it focused on pharmaceutical company managers ' perceptions. In order to triangulate and further refine the findings, the authors intend to compare the survey results against secondary data. Another area to probe would be examining if certain stakeholder groups have greater influence than others in company CSR strategy formulation.