Economics Insights @ CBS

This article provides a comprehensive analysis of a new and increasingly important phenomenon: the simultaneous holding of both equity and debt claims of the same company by non-commercial banking institutions ("dual holders"). The presence of dual holders offers a unique opportunity to assess the existence and magnitude of shareholder-creditor conflicts. We find that syndicated loans with dual holder participation have loan yield spreads that are 18–32 bps lower than those without. The difference remains economically significant after controlling for the selection effect.

We document the first systematic evidence on the characteristics and economic consequences of firms subject to employee allegations of corporate financial misdeeds. First, compared to a control group that avoided public whistle-blowing allegations, firms subject to whistle-blowing allegations were characterized by unique firm-specific factors that led employees to expose alleged financial misdeeds.

Why do affective forecasting errors persist in the face of repeated disconfirming evidence? Six studies indicate that people fail to perceive the extent of their forecasting error because they do not accurately remember their forecast. In the context of a Super Bowl loss (Study 1), a presidential election (Studies 2A, 2B, and 3), an important purchase (Study 4), and the consumption of a sequence of candies (Study 5), individuals mispredicted their affective reactions to these experiences, but subsequently misremembered their predictions as more accurate than they had actually been.

Previous research has identified four sources of brand equity: (1) biased perceptions; (2) image associations; (3) incremental value, a component that that is not related to product attributes or benefits; and (4) inertia value. This article develops a utility model that captures all these sources of brand equity; in particular, the model provides estimates of consumer-level brand equity at different levels of aggregation and also estimates firm-level brand equity.