This paper examines how financial reporting regulations affect, and respond to, macroeconomic cycles by exploring a positive framework in which regulators subject to political pressures respond to cyclical demands by borrowers and lenders. We establish that, as economic conditions initially...

Most new industries feature a shakeout, i.e. a short burst of entry soon followed by rapid exit of most early entrants. Yet, the speed, magnitude and timing of shakeouts are somewhat puzzling from the perspective of conventional entry models. In this paper, we argue that shakeouts are likely to...

This paper examines the demand for disclosure rules by informed managers interested in increasing the market price of their firms. Within a model of political influence, a majority of managers chooses disclosure rules with which all firms must comply. In equilibrium, disclosure rules are...