We find that Sarbanes-Oxley (SOX) had two significant effects on the audit market for nonpublic entities. The first short-run effect stems from inelastic labor supply coupled with an audit demand shock from public companies. As a result, private companies reduced their use of attested financial...

This study uses a comprehensive panel of tax returns to examine the financial reporting choices of medium-to-large private U.S. firms, a setting which controls over $9 trillion in capital, vastly out-numbers public U.S. firms across all industries, yet has no financial reporting mandates. We...

Traders operating in informal economies rarely use financial information in their credit allocation decisions. Using a combination of survey questions and a hypothetical choice experiment, we study the frictions impeding traders’ financial information use in a bazaar economy. Based on...

The audit market's unique combination of features - its role in capital market transparency, mandated demand, and concentrated supply - means it receives considerable attention from policymakers. We explore the effects of two market scenarios that have been the focus of policy discussions:...

We estimate the firm-level rate at which working capital accruals convert into future cash flows. These conversion rates determine the expected cash value of a dollar of working capital accruals. For firms whose accrual innovations reverse within one year, we find that, on average, a one dollar...

We investigate the extent to which hedge fund managers smooth self‐reported returns. In contrast with prior research on the “anomalous” properties of hedge fund returns, we observe the mechanisms used to price the fund's investment positions and report the fund's performance to investors,...

We use a long time-series from Australia to investigate the determinants and (to a lesser extent) consequences of audit market concentration. We show that increasing skewness in the size of public companies is associated with increased audit market concentration, and that the growth of the large...

Asset pricing models implicitly assume that firm characteristics are context-free. At the same time, companies provide a substantial narrative context that helps investors to put numeric information in perspective. Management may discuss non-quantitative factors that influence performance, such...

Generative AI tools such as ChatGPT can fundamentally change the way investors process information. We probe the economic usefulness of these tools in summarizing complex corporate disclosures using the stock market as a laboratory. The unconstrained summaries are dramatically shorter, often by...

We utilize branch-level data on deposits of commercial banks in India to study heterogeneity in depositors' responses to the disclosure of significant regulatory penalties. We find that men respond to such monetary penalties by withdrawing their deposits, whereas women do not. However, relative...