Happiness, Corporate Investment and Innovation: Evidence across Countries

Heo, Yuna; Hou, Fangfang; Park, Seongkyu Gilbert

doi:10.2139/ssrn.3368666

Cited by 1 publication

(2 citation statements)

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“…Our main independent variable is the happiness index across countries. Following Tofallis (2020) and Heo et al (2018), we first use five indicators of the happiness index from the World Happiness Report as measures of happiness, namely, LIFE LADDER, SOCIAL SUPPORT, FREEDOM DECISIONS, GENEROSITY, and CORRUPTION PERCEPTIONS. A higher score for these variables (except CORRUPTION PERCEPTIONS ) indicates higher perceived happiness for people in the host country.…”

Section: Methodsmentioning

confidence: 99%

“…This study contributes to the broad literature on the determinants of corporate risk-taking (Nguyen, 2011b; Huang and Wang, 2015; Gupta and Krishnamurti, 2018; Chatjuthamard et al , 2020) and the growing literature on the role of sentiment in investment decisions (Guven and Hoxha, 2015; Kaplanski et al , 2015; Lane, 2017). Heo et al (2018) examined the influence of happiness on investment decisions, as measured by capital expenditures and spending on research and development. Guven and Hoxha (2015) used shine as a measure for investors' happiness and documented that happier people are likely to be more risk-averse in financial decisions and that they tend to choose safer investments to reduce risk.…”

Section: Introductionmentioning

confidence: 99%

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Which formula for corporate risk-taking around the world? Exploring happiness as the “black box”

Tran

2021

JABES

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PurposeThis paper examines how the degree of happiness affects corporate risk-taking and the moderating influence of family ownership of firms on this relationship.Design/methodology/approachThe authors use an international sample of 17,654 firm-year observations from 24 countries around the world from 2008 to 2016.FindingsUsing the happiness index from the World Happiness Report developed by the United Nations Sustainable Development Solutions Network, the authors show that a country's overall happiness is negatively correlated with risk-taking behavior by firms. The findings are robust to an alternative measure of risk-taking by firms. Further analyses document that the negative influence of happiness on firm risk-taking is more pronounced for family-owned firms.Practical implicationsThe paper is consistent with the notion that happier people are likely to be more risk-averse in making financial decisions, which, in turn, reduces corporate risk-taking.Originality/valueThis study contributes to the broad literature on the determinants of corporate risk-taking and the growing literature on the role of sentiment on investment decisions. The authors contribute to the current debate about family-owned firms by demonstrating that the presence of family trust strengthens the negative influence of happiness on corporate risk-taking, a topic that has been unexplored in previous studies.

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Section: Methodsmentioning

confidence: 99%