Measuring consumer-based brand authenticity

Postmodern consumers use brands to create an authentic self and to reconnect to place, time, culture and others. Although previous research has identified that consumers draw on a range of cues in order to attribute authenticity to branded objects, no scales exist to measure the construct of brand authenticity. Building on the existing literature, this paper uses quantitative methods to develop a psychometrically robust measure of brand authenticity from a consumer's perspective. Findings demonstrate convergent, discriminant and predictive validity, whereby 14 items represent three interrelated first order factors labeled quality commitment, sincerity and heritage that correspond with a higher order brand authenticity construct. This study extends our understanding of the consumption of authenticity. Moreover, it provides a tool by which firms can evaluate the effectiveness of strategic decisions designed to deliver an authentic brand offering to consumers. Limitations and directions for future research are discussed.     

Personal Bankruptcy Law and New Business Formation

Using a panel of all 50 U.S. states and the District of Columbia from 1990 to 1999, we report a nonlinear relation between state bankruptcy exemptions and new business formation. The rate of new business formation first increases as exemptions increase, but it then decreases. This result reflects the fact that bankruptcy exemptions tend to affect both demand for and supply of external financing to potential entrepreneurs.     

Further results on forecasting and model selection under asymmetric loss

We make three related contributions. First, we propose a new technique for solving prediction problems under asymmetric loss using piecewise-linear approximations to the loss function, and we establish existence and uniqueness of the optimal predictor. Second, we provide a detailed application to optimal prediction of a conditionally heteroscedastic process under asymmetric loss, the insights gained from which are broadly applicable. Finally, we incorporate our results into a general framework for recursive prediction-based model selection under the relevant loss function.     

Differences in beliefs and currency risk premiums

This paper studies the importance of heterogeneous beliefs for the dynamics of asset prices. We focus on currency markets, where the absence of short-selling constraints allows us to perform sharper tests of theoretical predictions. Using a unique data set with detailed information on foreign-exchange forecasts, we construct an empirical proxy for differences in beliefs. We show that this proxy has a strong effect on the implied volatility of currency options beyond the volatility of macroeconomic fundamentals. We document that differences in beliefs impact also on the shape of the implied volatility smile, on the volatility risk-premiums, and on future currency returns.     

A network perspective of the stock market

Complex networks are constructed to study correlations between the closing prices for all US stocks that were traded over two periods of time (from July 2005 to August 2007; and from June 2007 to May 2009). The nodes are the stocks, and the connections are determined by cross correlations of the variations of the stock prices, price returns and trading volumes within a chosen period of time. Specifically, a winner-take-all approach is used to determine if two nodes are connected by an edge. So far, no previous work has attempted to construct a full network of US stock prices that gives full information about their interdependence. We report that all networks based on connecting stocks of highly correlated stock prices, price returns and trading volumes, display a scalefree degree distribution. The results from this work clearly suggest that the variation of stock prices are strongly influenced by a relatively small number of stocks. We propose a new approach for selecting stocks for inclusion in a stock index and compare it with existing indexes. From the composition of the highly connected stocks, it can be concluded that the market is heavily dominated by stocks in the financial sector.     

Whose wages do unions raise? A dynamic model of unionism and wage rate determination for young men

We estimate the union premium for young men over a period of declining unionization (1980–87) through a procedure which identifies the alternative sources of the endogeneity of union status. While we estimate the average increase in wages resulting from union employment to be in excess of 20% we find that the return to unobserved heterogeneity operating through union status is substantial and that the union premium is highly variable. We also find that the premium is sensitive to the form of sorting allowed in estimation. Moreover, the data are consistent with comparative advantage sorting. Our results suggest that the unobserved heterogeneity which positively contributes to the likelihood of union membership is associated with higher wages. We are unable, however, to determine whether this is due to the ability of these workers to extract monopoly rents or whether it reflects the more demanding hiring standards of employers faced by union wages. © 1998 John Wiley & Sons, Ltd.     

Dodd–Frank's impact on community-bank investment models: A Bayesian structural time series analysis

We use Bayesian structural time series (BSTS) methodology to test whether the Wall Street Reform and Consumer Protection Act of 2010 (DF) caused changes in community bank business models. The BSTS methodology uses the pre-DF period to create synthetic counterfactuals for community-bank dependent variables of interest. In the post-DF period, the counterfactuals become predictions of the dependent variables had DF not been enacted. Comparing post-DF predicted versus actual dependent variables allows us to estimate the causal impact of DF on these variables of interest. We find that relative to assets, community banks significantly reduce their lending activities and significantly increase investment in securities and excess reserves.