International Journal of Management, Economics and Social Sciences

76 – 98

Authors: Abdullah Alam; Syed Zulfiqar Ali Shah

The aim of this research is to explore the relationship of corporate governance with firm risk. This study establishes a link between corporate governance variables and firm risk for a sample of 106 Pakistani firms over a time of six years (2005-2010). Based on the estimation results, family control and bank control have negative impact on the firm risk whereas ownership structure and chairman/CEO duality posit positive relationship with risk. This provides a direction for firms to introduce more non-family control to the board of directors and not allow banks to have majority shareholding in their stocks. Also, directors should be asked to have a reasonable ownership in the stocks of the firm so that they can decide in the best interest of the firm and for the increase of their stock value. Chief executive should also hold the chair in order to have unity of command and a better decision-making influence.

129 – 150

Authors: Angela Ambrosino

This paper investigates two different approaches to the analysis of institutions using game theory and discusses their methodological and theoretical implications for further research. Starting from von Neumann and Morgenstern's theory, we investigate, how Schotter and Schelling's approaches to the analysis of economic institutions contribute to develop a proper cognitive method to investigate institutions as the unplanned outcome of self- interested individual behavior? While the game theory model developed by Schotter does not allow to encompass the complexity of decision-making processes leading to the emergence of institutions, Schelling's empirical approach contributes to the cognitive inquiry into economic institutions and it opens the way to an interdisciplinary research method in which pure theory, empirical research and insight coming from different research fields work together. Starting form Schelling's work it is possible to draw the progress achieved by the cognitive economics of institutions and to suggest the need of further experimental and empirical research to better understand the cognitive dynamics that shape human behavior and influence the emergence of economic institutions.