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Positivism in finance and its implication for the diversification finance research

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  • Schinckus, Christophe

Abstract

This paper is a complementary comment to the article recently published in IRFA by Thomas Lagoarde-Segot on the necessity of diversification of modelling in finance. In his claim, the author explained that financial concepts used by the mainstream are not neutral because they refer to a particular ethical judgement mainly focused on the shareholders' interest. In this comment, I explain that this ethical judgement historically results from the role playing by the Gaussian distribution in finance: while this statistical framework gave the first scientific foundations to finance in the 1960s, its symmetrical configuration implies that negative changes occur with the same probability than positive ones. In this context, all potential intervention (regulation) could only interfere (disturb) this “ethically fair situation” within the only perturbing element is the shareholder whose behaviours are likely to influence the market. After having explained that this reasoning is based on an a priori statement about observational facts (in opposition with positivism), I present this situation as an opportunity for current researchers in finance to clarify their implicit assumptions; which would open the door to a diversification of modelling in finance as Lagoarde-Segot promoted it in his IRFA article.

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  • Schinckus, Christophe, 2015. "Positivism in finance and its implication for the diversification finance research," International Review of Financial Analysis, Elsevier, vol. 40(C), pages 103-106.
    • Handle: RePEc:eee:finana:v:40:y:2015:i:c:p:103-106
    DOI: 10.1016/j.irfa.2015.04.002
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    Cited by:

    1. Lagoarde-Segot, Thomas, 2019. "Sustainable finance. A critical realist perspective," Research in International Business and Finance, Elsevier, vol. 47(C), pages 1-9.
    2. Amalia Rodrigo-González & Alfredo Grau-Grau & Inmaculada Bel-Oms, 2021. "Circular Economy and Value Creation: Sustainable Finance with a Real Options Approach," Sustainability, MDPI, vol. 13(14), pages 1-30, July.
    3. Lagoarde-Segot, Thomas, 2017. "Financialization: Towards a new research agenda," International Review of Financial Analysis, Elsevier, vol. 51(C), pages 113-123.
    4. Lagoarde-Segot, Thomas, 2015. "Diversifying financial research: Final remarks," International Review of Financial Analysis, Elsevier, vol. 41(C), pages 28-30.
    5. Schinckus, Christophe, 2018. "Pataphysics of finance: An essay of visual epistemology," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 52(C), pages 57-68.
    6. Mario La Torre & Helen Chiappini (ed.), 2020. "Contemporary Issues in Sustainable Finance," Palgrave Studies in Impact Finance, Palgrave Macmillan, number 978-3-030-40248-8, June.

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    Keywords

    Finance; Epistemology; Methodology;
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    JEL classification:

    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology
    • G00 - Financial Economics - - General - - - General

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