Dr. Soga Ewedemi, professor of finance and the MBA director for the past two years until July 1 of this year at Clarion University, has propounded another theory of accidents which he refers to as Extremist (non-Moderation) Theory of Accidents.
He presented the theory for the first time at the Asia-Pacific Risk and Insurance Association (formerly Asia-Pacific Risk Theory Scholars Association) annual conference held in Sydney, Australia, July 6-9. His co-author is Dr. Wondon Lee, associate professor at Daegu University in South Korea. Lee spent his sabbatical leave during the 2006-7 academic year as a Research Fellow in the Clarion University Department of Finance.
The Extremist Theory of Accidents is developed from the observation, which abounds in financial theories and concepts where the extremes of a continuum are undesirable, and optimal performance is associated with a moderate stance, somewhere in the middle of two extremes. This concept of non-extremism or moderation in financial theory such as liquidity vs. profitability, debt vs. equity, the dilemma of prosperity, and risk-return tradeoff is utilized in combination with a body of literature on extremism and moderation theories to develop a theory of accidents.
Inter alia, the theory asserts that the probability of the occurrence of mishaps, accidents and catastrophes increases when extremism or uncompromising stance is maintained thereby impeding attainment of optimality that may result from moderation. The theory has a wide and general applicability including in finance, business, politics, and culture.
Ewedemi contends that Aristotle’s ethics and Confucius’s moderation lend credence to the theory. He acknowledges the research conducted by Joseph Fiedor, his graduate assistant, who received his MBA degree from Clarion University in May 2008 with a 4.0 GPA, and is currently seeking another graduate degree in biology at Clarion University.
Several years ago, Ewedemi propounded his first theory, “Information Theory of Accidents” (ITA). The theory was developed from the bifurcation of total risk in finance into systematic and unsystematic risks. ITA stipulates that many occurrences referred to as accidents are not accidental, but mishaps which are culminations of antecedents. In effect, they are preventable. He indicated that most of the colleagues attending his presentation and discussing the Extremist Theory in Sydney were very familiar with the first theory.