Advertisement

Should the Financial Decisions Be Made As Group Decisions?

  • Anna Motylska-KuzmaEmail author
Chapter
Part of the Lecture Notes in Computer Science book series (LNCS, volume 11290)

Abstract

Objective: The aim of the article is to verify the effectiveness of financial decision making as group decisions.

Methodology: The research consisted of a simple simulation game conducted with a group of students. There were 540 single games analysed, taking into account the decisions and their effectiveness with regard to the size of the decision group. The ANOVA, the dependent paired samples test as well as the independent samples test were used to verify hypothesis.

Results: The studies show that simple decisions about production and price are almost the same, regardless of size of the group but the capital structure differ significantly between the groups and between the individuals and the group. The analysis results also indicate differences in effectiveness of the decision making.

Originality/Value: The findings of research can be used to enhance the performance of the decision making process in companies, especially within the scope of finance.

Keywords

Group decisions Finance Effectiveness 

References

  1. 1.
    Autukaite, R., Molay, E.: Cash holdings, working capital and firm value: evidence from France. Bankers Markets Investors 132, 53–62 (2014)Google Scholar
  2. 2.
    Bae, S.C., Chang, K., Kang, E.: Culture, corporate governance, and dividend policy: international evidence. J. Financ. Res. 35(2), 289–316 (2012)CrossRefGoogle Scholar
  3. 3.
    Bancel, F., Bhattacharyya, N., Mittoo, U.R., Baker, H.K.: Cross‐country determinants of payout policy: European firms. In: Baker, H.K. (ed.) Dividends and Dividend Policy, Kolb Series in Finance, pp. 71–93. Wiley, Hoboken (2009)CrossRefGoogle Scholar
  4. 4.
    Boyett, J.H., Conn, H.P.: Workplace 2000: The Revolution Reshaping the American Business. Dutton, New York (1992)Google Scholar
  5. 5.
    Copeland, T.E., Weston, J.F., Shastri, K.: Financial Theory and Corporate Policy, vol. 3. Addison-Wesley, Boston (1983)Google Scholar
  6. 6.
    Deloof, M.: Does working capital management affect profitability of Belgian firms? J. Bus. Financ. Account. 30(3–4), 573–588 (2003)CrossRefGoogle Scholar
  7. 7.
    Denis, D.J., Osobov, I.: Why do firms pay dividends? International evidence on the determinants of dividend policy. J. Financ. Econ. 89(1), 62–82 (2008)CrossRefGoogle Scholar
  8. 8.
    Gill, A.: Financial policy and the value of family businesses in Canada. Int. J. Entrep. Small Bus. 20(3), 310–325 (2013)CrossRefGoogle Scholar
  9. 9.
    Gruenfeld, D.H., Mannix, E.A., Williams, K.Y., Neal, M.A.: Group composition and decision making: how member familiarity and information distribution affect process and performance. Organ. Hum. Decis. Process. 67(1), 1–15 (1996)CrossRefGoogle Scholar
  10. 10.
    Harrison, E.F.: The Managerial Decision – Making Process. Houghton Mifflin Company, New York (1999)Google Scholar
  11. 11.
    Harvey, C.R., Lins, K.V., Roper, A.H.: The effect of capital structure when expected agency costs are extreme. J. Financ. Econ. 74(1), 3–30 (2004)CrossRefGoogle Scholar
  12. 12.
    Heck, R.K.Z.: A commentary on entrepreneurship in family vs. non-family firms: a resource-based analysis of the effect of organizational culture. Entrep. Theory Pract. 28(4), 383–389 (2004)CrossRefGoogle Scholar
  13. 13.
    Jackson, S.: Team composition in organisations. In: Worchel, S., Wood, W., Simpson, J. (eds.) Group Process and Productivity, pp. 138–176. Sage, London (1992)Google Scholar
  14. 14.
    Jensen, M.C.: Value maximization, stakeholder theory, and the corporate objective function. J. Appl. Corp. Financ. 22(1), 32–42 (2010)CrossRefGoogle Scholar
  15. 15.
    Kahneman, D., Tversky, A.: Choices, values and frames. Am. Psychol. 39, 341–350 (1984)CrossRefGoogle Scholar
  16. 16.
    Katzenbach, J.R., Smith, D.K.: The Wisdom of Teams. Harvard Business School Press, Cambridge (1993)Google Scholar
  17. 17.
    Keasey, K., Martinez, B., Pindado, J.: Young family firms: financing decisions and the willingness to dilute control. J. Corp. Financ. 34, 47–63 (2015)CrossRefGoogle Scholar
  18. 18.
    Kerr, N.L., MacCoun, R.J., Kramer, G.P.: When are N heads better (or worse) than one? Biased judgment in individuals versus groups. In: Witte, E., Davis, J.H. (eds.) Understanding Group Behavior: Consensual Action by Small Groups, vol. 1, pp. 105–136. Lawrence Erlbaum, Mahwah (1996)Google Scholar
  19. 19.
    Kerr, N.L., Tindale, R.S.: Group performance and decision making. Annu. Rev. Psychol. 55, 623–655 (2004)CrossRefGoogle Scholar
  20. 20.
    Kerr, N.L.: The most neglected moderator in group research. Group Process. Intergroup Relations 20(5), 681–692 (2017).  https://doi.org/10.1177/1368430217712050CrossRefGoogle Scholar
  21. 21.
    La Porta, R., Lopez-de-Silanes, F., Shleifer, A., Vishny, R.W.: Agency problems and dividend policies around the world. J. Financ. 55(1), 1–33 (2000)CrossRefGoogle Scholar
  22. 22.
    Liu, Q., Tian, G.: Controlling shareholder, expropriations and firm’s leverage decision: evidence from Chinese non-tradable share reform. J. Corp. Financ. 18(4), 782–803 (2012)CrossRefGoogle Scholar
  23. 23.
    Laughlin, P.R., Hatch, E.C., Silver, J.S., Boh, L.: Groups perform better than the best individuals on letters-to-numbers problems: effects of group size. J. Pers. Soc. Psychol. 90(4), 644–651 (2006)CrossRefGoogle Scholar
  24. 24.
    Laughlin, P.R.: Group Problem Solving. Princeton University Press, Princeton and Oxford (2011)Google Scholar
  25. 25.
    Mahérault, L.: Is there any specific equity route for small and medium-sized family businesses? The french experience. Fam. Bus. Rev. 17(3), 221–235 (2004)CrossRefGoogle Scholar
  26. 26.
    Modigliani, F., Miller, M.H.: The cost of capital, corporation finance and the theory of investment. Am. Econ. Rev. 53, 261–297 (1958)Google Scholar
  27. 27.
    Morellec, E., Smith, C.W.: Agency conflicts and risk management. Rev. Financ. 11(1), 1–23 (2007)CrossRefGoogle Scholar
  28. 28.
    Morgan, P.M., Tindale, R.S.: Group vs. individual performance in mixed motive situations: exploring an inconsistency. Organ. Behav. Hum. Decis. Process. 87, 44–65 (2002)CrossRefGoogle Scholar
  29. 29.
    Myers, S.C., Majluf, N.S.: Corporate financing and investment decisions when firms have information that investors do not have. J. Financ. Econ. 13(2), 187–221 (1984)CrossRefGoogle Scholar
  30. 30.
    Raheman, A., Nasr, M.: Working capital management and profitability–case of Pakistani firms. Int. Rev. Bus. Res. Pap. 3(1), 279–300 (2007)Google Scholar
  31. 31.
    Tindale, R.S., Kameda, T., Hinsz, V.B.: Group decision making. In: Sage Handbook of Social Psychology, pp. 381–403 (2003)Google Scholar
  32. 32.
    Tindale, R.S., Talbot, M., Martinez, R.: Decision making. In: Group Processes, pp. 165–192 (2013)Google Scholar
  33. 33.
    Tyler, T.R., Smith, H.J.: Social justice and social movements. In: Gilbert, D.T., Fiske, S.T., Lindsey, G. (eds.) The Handbook of Social Psychology, 4th ed., vol. 2, pp. 595–629. McGraw Hill, Boston (1998)Google Scholar
  34. 34.
    Thompson, L., Peterson, E., Brodt, S.E.: Team negotiation: an examination of integrative and distributive bargaining. J. Pers. Soc. Pers. 70, 66–78 (1996)CrossRefGoogle Scholar
  35. 35.
    Van Auken, H.E.: A model of small firm capital acquisition decisions. Int. Entrep. Manag. J. 1(3), 335–352 (2005)CrossRefGoogle Scholar
  36. 36.
    Van Auken, H.E., Kaufmann, J., Herrmann, P.: An empirical analysis of the relationship between capital acquisition and bankruptcy laws. J. Small Bus. Manage. 47(1), 23–37 (2009)CrossRefGoogle Scholar
  37. 37.
    Wegner, D.M.: Transactive memory: a contemporary analysis of the group mind. In: Mullen, J.B., Goethals, G.R. (eds.) Theories of Group Behaviour. Springer, New York (1987).  https://doi.org/10.1007/978-1-4612-4634-3_9CrossRefGoogle Scholar

Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2018

Authors and Affiliations

  1. 1.WSB University in WroclawWroclawPoland

Personalised recommendations