MINIMIZING TOTAL COSTS OF APPAREL,HOUSING AND HEATING IN MAINTAINING THERMAL COMFORT INDOORS

Increasing energy costs have directed attention to improved insulation of buildings and clothing of personnel as alternatives to further expenditure on interior temperature control. For a climate representing much of Europe and North America, an analysis is performed to determine the minimum total expenditure on insulation, heating/cooling, and apparel consistent with thermal comfort. The analysis is applied to some typical scenarios and indicates a need for improving insulation and lowering temperatures as energy costs rise.     

THE CONSUMERS' COUNCIL 1918–1921

A Consumers' Council was established in the closing months of the Great War. Its work seems to have been overlooked, but it was an important body with achievements to its credit and a notable membership. The Council deserves a new look in the decade when a new National Consumer Council has been created.     

The Role of Bank Reputation in “Certifying” Future Performance Implications of Borrowers’ Accounting Numbers

We investigate the role played by the reputation of lead arrangers of syndicated loans in mitigating information asymmetries between borrowers and lenders. We hypothesize that syndications by more reputable arrangers are indicative of higher borrower quality at loan inception and more rigorous monitoring during the term of the loan. We investigate whether borrowers with more reputable lead arrangers realize superior performance subsequent to loan origination relative to borrowers with less reputable arrangers. We further examine whether certification by high‐reputation lead banks extends to the quality of borrowers’ reported accounting numbers. Controlling for endogenous matching of borrowers and lead banks, we find that higher bank reputation is associated with higher profitability and credit quality in the three years subsequent to loan initiation. We also show that bank reputation is associated with long‐run sustainability of earnings via higher earnings persistence, and debt contracting value of accounting via a stronger connection between pre‐loan profitability and future credit quality. We further document that the enhanced earnings sustainability associated with higher reputation lead banks reflects both superior fundamentals and accruals more closely linked with future cash flows.     

Quand les analystes ajustent‐ils leurs évaluations en fonction du biais des annonces de résultats prévisionnels ? Conséquences de la feuille de route des entreprises en ce qui a trait à la publication de résultats prévisionnels et enjeux motivant les analystes

Les études précédentes indiquent que les analystes n’ajustent pas totalement leurs évaluations en fonction du biais général à la baisse des annonces de résultats prévisionnels faites par les directions d’entreprises. Les auteurs rapportent les résultats de deux expériences visant à déterminer comment la feuille de route des entreprises en ce qui a trait à la publication de résultats prévisionnels et les enjeux motivant les analystes expliquent de concert la mesure dans laquelle ces derniers ajustent leurs évaluations en fonction du biais des annonces de résultats prévisionnels. Ces résultats d’expérience semblent indiquer que les analystes pour qui l’enjeu est celui de l’exactitude ajustent leurs évaluations selon la feuille de route de la direction en ce qui a trait à la publication de résultats prévisionnels biaisés à la baisse lorsque le biais est relativement modeste (un cent), mais que les analystes pour qui l’enjeu est celui de leur relation avec la direction s’en abstiennent. Au surplus, la différence dans l’ajustement est plus importante lorsque la feuille de route de l’entreprise en matière de biais est irrégulière que lorsqu’elle est régulière. Aussi, lorsque le biais des annonces de résultats prévisionnels est plus important que moins (deux cents par rapport à un cent), les analystes pour qui l’enjeu est celui de la relation avec la direction procèdent à un ajustement partiel, paraissant ainsi rechercher un équilibre entre exactitude et volonté de plaire à la direction. Ces constatations ont des répercussions pour les investisseurs, les autorités de réglementation et l’interprétation des études précédentes.     

Relationship Incentives and the Optimistic/Pessimistic Pattern in Analysts' Forecasts

We examine whether analysts' incentives to maintain good relationships with management contribute to the optimistic/pessimistic within‐period time trend in analysts' forecasts. In our experiments, 81 experienced sell‐side analysts from two brokerage firms predict earnings based on historical information and management guidance. Analysts' forecasts exhibit an optimistic/pessimistic pattern across the two timing conditions (early and late in the quarter), and the effect is significantly stronger when the analysts have a good relationship with management than when their only incentive is to be accurate. Debriefing results indicate that analysts are aware of this pattern of forecasts, and believe that this benefits their future relationships with management and with brokerage clients. The analysts most frequently cite favored conference call participation and information access when describing benefits from maintaining good relationships with management. Our results suggest the following: The optimistic/pessimistic pattern in forecasts is in part a conscious response to relationship incentives, information access is perceived to be a major benefit of management relationships, and recent regulatory changes may have lessened but have not eliminated this conflict of interest source.     

On Freezing Depositor Funds at Financially Distressed Banks: An Experimental Analysis

This article reports an experiment conducted to evaluate the effects of alterations in the terms of repayments to depositors following a liquidity suspension, as well as the effect of alterations in the publicity of information about withdrawal behavior on the fragility of distressed banks. Results indicate that a “tough” renegotiation stance of protecting depositors who maintain their money in the bank, can quite effectively promote stability. Information provided to depositors regarding past withdrawal behavior weakens the effectiveness of a tough renegotiation policy but reduces fragility somewhat for a more lenient rescheduling condition.