Topics: Regression analysis, Statistics, Linear regression Pages: 10 (3420 words) Published: October 9, 2013
Executive Summary
The purpose of the research being undertaken is to fill a void in the literature surrounding organisations’ attitudes towards risk. The report will focus on the recent failure of the large Swiss Bank UBS; whereby an analysis of data of attitudes towards risk before and after the scandal, will give an indication on the effects the UBS bank scandal has had on financial organisations’ attitudes towards risk. In addition, through the use of correlation coefficient and regression analysis whether or not there is a correlation between the risk attitude of companies and their volatilitywill be assessed, and if so to measure this effect. Both primary and secondary research has been used in gathering the data. The primary research was conducted by distributing a questionnaire to the CEOs; questioning how they consider their attitudes was towards risk. The question ranged from 1 to 30; where 1 is being the most conservative and 30 being the most risky. This primary research displays the financial organisations’ attitudes towards risk after the UBS scandal. For the Primary research to be conducted a sample was collected consisting of 100 CEOs from various financial organisations’. These CEOs were taken from a list of the 100 largest companies in the City of London. As the CEOs were only chosen from the city of London the data collection only represents this area; therefore cannot be used as a benchmark for other financial organisations in other regions. The financial times newspaper was used in selecting these large organisations. The financial times being a newspaper holds the possibility that they could report without critically thinking; therefore, possessing the risk of biasness. In addition, it must be noted that the CEOs being chosen from only the largest institutes does not allow for variation, which may result to a bias result. Conducting an analysis on just the large organisations (measured in terms of workforce) does not necessarily fill the void in the literature as there is a primary focus on large organisations without taking smaller organisations into account. Moreover, the size of an organisation is categorised by the size of a workforce which is not necessarily linked to wealth. For example, hedge funds do not necessarily have a large workforce but generate large profits. Furthermore, selecting CEOs (the public face) rather than those lower down in the hierarchy could endanger the reliability of the data. If the CEOs were taking more risks with stakeholder funds after such a large scandal, would they state it? This is questionable; therefore selecting CEOs may open the door to bias. In addition, if the data proves that there was a change of attitudes towards risk, could we say that it is down to the UBS scandal or could it be linked to other factors; such as the Barclays scandal in 2012 or the recession. The secondary data collected was drawn from two published articles. These two articles use the same organisations as a case study; one in 2007 and one in 2009. Using this source of data solely as a representation of the risk before the UBS scandal is not sufficient. Indeed, the fact that the same organisations being chosen allows for comparison; however, an article is formed on the perceptions of the author. Therefore the way in which the data is collected may be in support of their argument. Although an article goes through more moderation to be published than the financial times article, it could still consist of errors being the only source. In addition, as the data is collected in separate years 2007 and 2009 this may have an effect on the comparison aspects of the analysis. For example, as the Northern Rock financial meltdown occurred in the year 2007 this may have an impact on the results of the 2009 article, showing a higher attitude towards risk. Moreover, the CEO of an organisation could have changed after the UBS scandal; this could affect the data considerably as the attitude towards...
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