Risk Reporting and Bank Runs
Susanne Homölle
Increasing risk disclosure of banks, e.g., via risk reporting in their annual accounts, is high on the agenda. In this paper, I analyze whether risk reporting of banks shows only favorable effects, as regulatory authorities suppose, or whether there are also undesired effects. Following other studies on deposit contracts and bank runs, I concentrate on the impact on depositors’ withdrawal decisions and banks’ insolvency risk. My analysis shows mixed results: risk reporting does not generally lead to a decrease in banks’ risk exposure and the probability of bank runs, respectively. Instead, it induces higher insolvency risk under certain conditions, which I identify, and may even lower welfare.
p.2-39
Beyond Just Being Dissatisfied: How Angry and Helpless Customers React to Failures When Using Self-Service Technologies
Katja Gelbrich
Failures in the use of self-service technology are not only a source of dissatisfaction; of-ten, they also trigger negative emotions of anger and helplessness. Drawing on the appraisal theories of emotion, I argue that these emotions have distinct effects on customers’ post-purchase reactions (customer loyalty, frequency of use), both directly and indirectly, by reducing customer satisfaction. I test and largely confirm these assumptions in an experimental study with 138 undergraduate students and in a representative field survey with 375 mobile phone users. My results indicate that technology-based service providers should provide instrumental support for customers who feel helpless and a combination of instrumental and emotional support for customers who are angry.
p.40-59
Is Simple Better? A Conjoint Analysis of the Effects of Tax Complexity on Employee Preferences Concerning Company Pension Plans
Kay Blaufus/Renate Ortlieb
We theoretically and empirically analyze the in?uence of tax complexity on the employee’s decision concerning company pension plans. Our model also considers employer signaling and information intermediation by various actors. The main result of our empirical analysis is that if tax complexity is high, then only a small proportion of the study participants bases their decision on their after-tax return. This proportion increases signi?cantly if tax complexity is low. However, even in a simple tax system, many people do not base their decisions on after-tax returns, but instead follow the advice of an independent product rating agency or a works council representative.
p.60-83
Equity Offerings in Financial Distress – Evidence from German Restructurings
Philipp Jostarndt
For a sample of 267 financially distressed German corporations, I analyze firms’ decision to recapitalize by raising fresh equity. I find evidence consistent with the hypothesis that wealth transfers from owners to creditors, which result from a costly debt overhang present a potential impediment to a successful private restructuring. Firms with high leverage and low future growth potential have troubles raising new funds. However, lending banks frequently accompany offerings with generous debt-concessions, which suggests that firms are able to overcome a debt-overhang in private bargains. Evidence from stock returns around equity offering announcements indicates that high wealth transfers do reduce shareholder wealth. Yet, overall announcement returns are significantly positive, indicating that the market considers equity offerings an effective measure for tackling distress out of court.
p.84-111
