Time orientations and emotion-rules in finance

Abstract

This article explores how Anglo-American financial firms since the 1980s have operated and acted in an increasingly deregulated, risky, and uncertain arena. I look at these firms and their actions with a particular focus on "temporality" and requisite "emotion-rules," where variations in emotion-rules correspond with organizational definitions of uncertainty. Firms impose specific emotion-rules, depending on national policies, official duties, and interpretations of each risk. In finance, caveat emptor (i.e., buyer or lender distrust) is an emotion-rule set in screening policies and data collection for credit risks and risks of fraud by personnel, and it gives rise to actual emotions. I argue that three time-orientations are significant in creating emotion-rules. If a past, present, or a long-term future is deployed to construct a future, that creates and frames an institution's attempts to manage uncertainty. Looking exclusively at Anglo-American corporate finance policies and strategies (often deemed the international "one best way"), six modes of certainty constructions are presented. Each is assessed against the dispositions and emotional strategies required in highly-skilled careers, in specific organizational settings. The relative influence of individual perspectives, institutional rules and general typologies of social action is assessed and found to comprise one past view, three present views, and one future-oriented perspective towards the future. Implications are outlined for emotion-rules relevant to financial careers and office.

The Sociology of Finance

“…People trading on the Paris Stock Exchange in the late 1990s routinely displayed the full range of human emotions (Hassoun 2006), an ethnographic observation consistent with the psychological evidence of Lo et al's (2005) analysis of day traders and Lo & Repin's (2002) physiological evidence. According to Pixley (2009), financial organizations operate with emotion rules that stipulate appropriate attitudes and comportment for personnel (including the supreme self-confidence noted by Ho 2009). Abolafia (2005) analyzed the transcripts of the meetings of the Federal Open Market Committee (FOMC), the chief policymaking body of the Federal Reserve System.…”

Governing by emotions in financial education

“…As in previous research on finance and emotions (see, e.g. Pixley [2009]; Shapiro [2012]), trust is explicitly stated to be of paramount importance in OECD arguments for the necessity of financial education. According to the OECD (2013, 11), financial education is "critical to restore trust and confidence in the financial system, promote financial stability and provide the necessary public backing to financial reforms."…”

“…In addition, emotions convey information that humans would be unable to gather or assess through their cognitive faculties alone (Morton 2010); they motivate, direct, and orient attention and action in complex dialectics between thinking, feeling, and doing. As argued by Barbalet (2001, 60), there is no such thing as non-emotional actioneven instrumental rationality relies on "particular facilitating emotions which function to motivate instrumental action, such as pride in one's expertise and skill, satisfaction in one's work, distaste for waste of material and time" (Barbalet 2001;Pixley 2009). In the financial sphere, for example, Pixley's (2004Pixley's ( , 2009Pixley's ( , 2012 research has shown that firms rely on emotions of trust and distrust to make decisions while facing future complexity and uncertainty.…”

“…As argued by Barbalet (2001, 60), there is no such thing as non-emotional actioneven instrumental rationality relies on "particular facilitating emotions which function to motivate instrumental action, such as pride in one's expertise and skill, satisfaction in one's work, distaste for waste of material and time" (Barbalet 2001;Pixley 2009). In the financial sphere, for example, Pixley's (2004Pixley's ( , 2009Pixley's ( , 2012 research has shown that firms rely on emotions of trust and distrust to make decisions while facing future complexity and uncertainty. When these firms are hit by failure, trust is replaced by fear (cf.…”

A New Financial Infrastructure to Recover the Loss of Trust?

“…Certainly since credit ‘froze’, more people admit something approximating my thesis that emotions like trust provide stability to fraught decisions that are invariably leaps into the unknown. Indeed, rationalisations before and after in organisational forms are often more deceptive and destabilising than emotions, and thus ‘rational choice’ is implausible in facing uncertainty, and so is the idea of irrational anomalies (see Pixley 2004, 2009).…”