Scant research exists about explanation in negative messages. An important cause of this is the lack in extant literature of theory or conceptualization of explanation. This commentary provides two conceptual frameworks for thinking about explanation in negative messages: opportunity cost, from economic theory, and attribution, from marketing theory. Both frameworks help define the situations in which explanations for rejection should be provided to the targets of bad news. When applications are solicited, for instance, opportunity costs incurred by targets of bad news should be offset by senders with an offer to provide explanation. The construct of attribution is adapted here to suggest that senders of negative messages can benefit by supplying reasons for their denial of requests because, in the absence of the reasons, the rejectees will attribute motives and create reasons, thus depriving the senders of their control over the explanation portion of the messages.

Less widely appreciated is that even companies whose profits move up and down with inflation face considerable risk from fluctuations in interest rates. Conventional wisdom holds that floating-rate debt hedges this risk. But this article argues that floating-rate debt still leaves a company exposed to increases in real interest rates.

Inflation-sensitive companies such as utilities can use corporate inflation-protected securities (CIPS) to hedge their real interest rate risk as well as inflation risk. In addition to its hedging benefits, CIPS also have the potential to reduce borrowing costs by satisfying growing investor demand for high-quality securities that provide inflation protection (including demand sources like the recent restoration of French savings accounts to inflation).