 How Do Entrepreneurs Hedge?Yosef Bonaparte, Frank J. Fabozzi and David Koslowsky Journal of Behavioral Finance, 2025, vol. 26, issue 3, 380-390 Abstract: The article provides an in-depth analysis of how entrepreneurs strategically construct their investment portfolios to hedge against risks associated with their business ventures. It delves into the different types of investment assets, both risky and riskless, that entrepreneurs incorporate into their portfolios. The focus is on understanding the balance between diversifying risks through a variety of investments and limiting overall risk exposure by including more stable, riskless assets. This approach aids entrepreneurs in safeguarding their personal financial status against the uncertainties inherent in their businesses. It explores two hypotheses: 'diversify risks’, where entrepreneurs invest in a variety of risky assets for risk diversification, and 'limiting risk’, where investments in riskless assets aim to reduce overall risk. The analysis addresses the endogeneity of being an entrepreneur by using parental background as an instrumental variable and finds a preference among entrepreneurs for the risk diversification approach to mitigate their business risks. Date: 2025 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:hbhfxx:v:26:y:2025:i:3:p:380-390 Ordering information: This journal article can be ordered from DOI: 10.1080/15427560.2024.2333364 Access Statistics for this article Journal of Behavioral Finance is currently edited by Brian Bruce More articles in Journal of Behavioral Finance from Taylor & Francis Journals |
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