Conceptual metaphor theory promotes the view that metaphors are first cognitive, then expressed in language. In this study, an analysis of the conceptual metaphors of four bank executives from Bank of America, Goldman Sachs, JP Morgan Chase, and Morgan Stanley was conducted. Specifically, this investigation looked at how these executives framed their roles in the financial system. Particular attention was placed on how the bank executives delivered their facework public personas) during a period of politically charged and challenging events at two separate hearings: the Congressional Committee on Financial Services Hearing: TARP Accountability: Use of Federal Assistance by the First TARP Recipients held on February 11, 2009 and The Financial Crisis Inquiry Commission: First Public Hearing, Day 1 held on January 13, 2010. The research methodology developed was a combination of Lakoff and Johnsons conceptual metaphor analysis, Charteris-Blacks critical metaphor analysis, and Rohrers method of conceptual domain mapping. The resulting research method helped to minimize the subjective nature of conceptual metaphor analysis and provided a systematic approach to metaphor identification to mitigate the risk of researcher bias. An inter-rater reliability study was also incorporated into the methodology. The analysis revealed a system of metaphors that was quite consistent across speakers and across hearings. The identified metaphorical system was a complex interrelationship among four different conceptual metaphors and conceptual keys: ECONOMIC BUILDING, FINANCIAL PROBLEMS ARE NATURAL DISASTERS, TARP IS A TEMPORARY SHELTER, and KNOWING IS SEEING. The metaphorical system proposed implies that bank executives deflected any blame for the 2008–2009 financial crisis through the use of the metaphor of an ACT OF GOD. The findings of this research present a better understanding of linguistic strategies that executives used to position their companies while under public scrutiny. Keywords: conceptual metaphors, critical metaphor analysis, financial crisis, TARP, House Committee on Financial Services, Financial Crisis Inquiry Commission, bank executives
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Contextual influences on the efficacy of price incentives to induce consumer behavior
The Weber-Fechner Law applied to pricing Monroe 1971b) includes the proposition that the relative, rather than absolute, discount size influences consumers reaction to price incentives is largely influenced by relative, rather than absolute, discount size. For example, shoppers value a $10 discount when its relative size is large, in comparison to the products original price e.g., $10 off $25), whereas, small relative discounts e.g., $10 off $125) are not seen as attractive； even though absolute dollars gained is identical. Researchers argue that consumers use a form of mental accounting to frame decisions in relation to the product price topical) and not in relation to the absolute wealth gain pure) or the costs associated with obtaining a given discount minimal). While research documents consumers use of mental accounts and the psychophysical effects of price judgments, most findings have involved a traditional brick-and-mortar shopping environment. Few studies explore whether these findings hold true in an online shopping situation. This dissertation explores the influence of contextual factors, such as shopping environment, on consumers reaction to price promotions and attempts to understand whether a) contextual factors influence by the relative size of price promotions online to the same extent as traditional promotions； b) shoppers use a different form of mental accounting to evaluate online shopping decisions； and c) lower price incentives offered in an online environment gain the same level of consumer response as larger discounts in a traditional brick and mortar environment. Results from three studies show that, for a given relative price discount, online price promotions were more efficacious compared to traditional promotions. Furthermore, respondents indicated a willingness to spend more time obtaining online discounts. Small relative and absolute online discounts were as efficacious as larger traditional discounts. In contrast to Kahneman and Tverskys 1981) seminal findings, respondents demonstrate fewer preference reversals and are more likely to accept relatively small price discounts online. Qualitative data reveal that consumers used minimal account framing, comparing discounts to value of their time online. Their ability to multi-task while shopping online contributed to their willingness to spend more time pursuing smaller price promotions. The managerial implications of findings suggest that marketers can gain the same level of behavioral response using smaller price incentives online compared to larger promotions in a traditional shopping situation.
The Economic Substance of Convertible Debt, Market Participants’ Assessments, and Debt Contracting
U.S. GAAP currently mandates that convertible debt be reported as a liability in its entirety, despite the hybrid nature of convertibles. I examine the degree to which financial reporting for convertible debt is consistent with the views of market participants, and effects debt contracting outcomes. In the first essay I use market measures to determine whether three different approaches to convertible debt accounting correspond with views of shareholders and creditors: 1) liability measured at fair value FV), 2) the debt component measured as comparable non-convertible debt and the incremental conversion option value as equity FC), and 3) debt and equity components measured using probability-weighted discounted debt and equity settlement values PB). My tests relating leverage to credit risk suggest that creditors view convertible debt consistent with the FC method. In contrast, my tests linking leverage to systematic equity risk suggest the PB method corresponds best with shareholder perceptions. My results suggest that neither creditors nor shareholders view convertible debt as a homogeneous liability. Instead, investors recognize the debt and equity components of convertible debt differently according to their different purposes for distinguishing liabilities and equity. The evidence suggests supplemental disclosures can improve convertible debt accounting by helping investors more accurately and efficiently estimate the debt and equity components of convertible debt. Current reporting requirements for convertible debt assign the value of the conversion option to debt, and as a result distort both the firms cost of debt and measures of debt and equity. In the second essay, I test whether these distortions affect two aspects of debt contracting: pricing and covenant selection. I analyze a large sample of private debt contracts and find that after controlling for firm, issue, and macroeconomic risk factors, interest rates for borrowers with outstanding convertible debt are lower than those for borrowers with no convertible debt. The result is stronger for high credit risk firms, and firms that rely more heavily on convertible debt financing. Also, the results hold after controlling for the higher growth options, lower cash interest payments, and lower relative seniority generally associated with convertible debt issuance. These findings are consistent with creditors taking into account the equity characteristics of convertible debt when determining loan pricing. Lastly, I analyze the effects of post-loan-issuance increases in covenant slack caused by conversion, and find that loans to firms with convertible debt at loan issuance have more financial covenants, specifically those covenants that rely on debt and equity measures. Overall, I find that lenders do not rely solely on financial reports, but rather incorporate additional information when measuring firm credit risk, and designing loan contracts for borrowers with convertible debt.
Three essays on switching costs in banking, the lending channel and entry in the banking industry
My dissertation examines the magnitude of switching costs for bank-dependent borrowers, their relationship to macro-financial variables and their impacts on the effect of monetary policy. I also investigate the implication of bank entry and bank product differentiation on social welfare. The first essay explores the magnitude of bank-dependent borrowers switching costs arising from informational asymmetries and their relationship to macro-financial variables. I estimate the magnitude of borrowers switching costs in the banking sector across a large set of countries. I find switching costs are significant in the banking sector for all 31 countries under investigation and the magnitude of the costs for borrowers is systematically higher in developing countries than in developed countries. My results also show the indicators of informational asymmetries, such as bank penetration and market concentration in the banking sector, have strong impacts on switching costs. These costs are also likely to increase during a debt crisis. The second essay studies the relationship between switching costs for bank-dependent borrowers and the effectiveness of monetary policy through the bank lending channel. I apply the model of Kim, Kliger and Vale 2003) to provide structural estimates of switching costs in the market for bank credit in the United States and show that these costs have an important effect on the environment in which monetary policy is conducted, and that this effect is independent from that of financial constraints of the banking industry itself. Specifically, the higher switching costs, the larger the impact of monetary policy shocks on the real side of the economy. The third essay empirically quantifies the welfare implication of bank entry between 2000 and 2008. A distinctive feature of my framework is to predict the operating decision of single-market and multi-market banks using an equilibrium product type choice model. My estimates suggest firms entering the wrong location in the product space to be the major source of welfare loss. But product differentiation greatly improves social welfare in general. Without differentiation, the loss in consumer surplus is 27%–28% in 2000 and 20%–38% in 2008, and the loss in bank profit is 18–59% between 2000 and 2008.
Arima models for bank failures: Prediction and comparison
The number of bank failures has increased dramatically over the last twenty-two years. A common notion in economics is that some banks can become “too big to fail.” Is this still a true statement? What is the relationship, if any, between bank sizes and bank failures? In this thesis, the proposed modeling techniques are applied to real bank failure data from the FDIC. In particular, quarterly data from 1989:Q1 to 2010:Q4 are used in the data analysis, which includes three major parts: (1) pairwise bank failure rate comparisons using the conditional test (Przyborowski and Wilenski, 1940)； (2) development of the empirical recurrence rate (Ho, 2008) and the empirical recurrence rates ratio time series； and (3) the Autoregressive Integrated Moving Average (ARIMA) model selection, validation, and forecasting for the bank failures classified by the total assets.
Correcting decision outcomes in a revenue sharing contract
In this paper, we study methods that could improve the performance of a coordinating supply chain contract. Past studies indicate that such contracts as revenue sharing do not necessarily coordinate a supply chain in practice. We propose an approach which could possibly correct this inefficiency by incentivizing the retailer to improve supply chain outcomes. Experimental studies on human subjects are used as the basis to verify our framework in modeling decisions outcomes. Our results show that a revenue sharing contract can still coordinate a supply chain if the retailer is offered additional incentives. We also discuss limitations of our analysis and provide suggestions for further research on how coordinating contracts could be designed to deliver consistent optimal performance.
Job motivation, satisfaction and performance among bank employees: A correlational study
Past research has offered differing results as to the effects of job motivation and job satisfaction on job performance. Using a correlational research design, this quantitative study examined the relationship among these variables in order to determine the effects of job motivation and job satisfaction on job performance in bank employees. A convenience sample of 70 bank employees participated in the study. Participants completed the demographic questionnaire and three Likert-like questionnaires, the Ray-Lynn Motivation Instrument, the Job Satisfaction Instrument, and the BANKSERV Customer Service Instrument. Collected data was analyzed using both Pearson r and multiple regression techniques. The results of the study showed a positive correlation between job motivation and job performance in bank employees, r (68) ＝ .43, p <； .01, and a positive correlation between job satisfaction and job performance in bank employees, r (68) ＝ .29, p <； .05. Additionally, the combination of job motivation and job satisfaction was found to significantly predict job performance in bank employees, R2 ＝ .18, F (2, 67) ＝ 7.62, p <； .01. Other factors tested did not have a significant relationship to job performance, including gender r (68) ＝ -.28, p ＞ .05, age r (68) ＝ -.01, p ＞ .05, salary r (68) ＝ .26, p ＞ .05, and stress r (68) ＝ -.03, p ＞ .05. These results suggest that by applying managerial strategies to increase job motivation and job satisfaction, job performance can be potentially improved in bank employees. Future research is needed to re-test whether such correlations can be found in other types of business in the interest of finding industry specific variance.
Essays on joint optimization of pricing and capacity decisions with customer behavior modeling
My dissertation is about joint optimization of firms operations and marketing decisions with explicit modelling of customer behavior. It includes three essays: The first essay, “Advance Selling—The Effect of Capacity and Consumer Valuation Interdependence,” considers a seller who can offer a product twice, in advance and in spot markets. Customers strategically choose when to purchase the product. Customers valuations may be inter-dependent and the seller decides on whether, when, and how to sell in advance. I show that customer valuation interdependence dramatically influences firms strategy. For example, when customers preferences are diverse, firms typically quote discounted price, but may limit the capacity available in advance. In contrast, when customers preferences are highly correlated, firms with limited capacity can charge premium price in advance. The second essay, “Rationing Capacity in Advance to Signal Quality,” extends the analysis of advance selling to incorporate asymmetric information regarding product quality: firms usually have better information about products quality in advance than customers do. I characterize firms strategy in equilibrium and find that the asymmetry in information always hurts high-quality firms. These firms need to sacrifice some of their potential profit, by lowering price and/or limiting capacity in advance, to signal to customers their high quality. The third essay, “Demand Shaping and Product Overselling to Better Match Supply and Demand for Assemble-to-Order Firms,” focuses on jointly producing and marketing multiple products for assemble-to-order firms, where assembly of final products occurs only after demand arrives and takes negligible time. The key question is how to match final product demand with limited on-hand component inventory. By incorporating customers price-based demand substitution into firms decisions, I propose two control strategies, demand shaping and product overselling. I characterize the optimal pricing and order-acceptance policies, and evaluate the benefits of these two strategies both individually and jointly.
Contestants or collaborators? How pay disparity and social comparison in the top management team influence firm performance
The small amount of research completed on executive pay disparity provides contradictory results as to the relationship with firm performance. To reconcile disparate findings, I utilize behavioral and economic rationale to illuminate the conflicting incentive and collaborative components of large pay disparity between the top management team and the chief executive officer, proposing a nonlinear relationship. Additionally, I address how similarity of the top management team to the chief executive officer amplifies both positive and negative reactions to exorbitant pay disparity, creating a more acute relationship.
