We study how information disclosure affects financial intermediation when the payoff to the long-term investment is risky. The analysis is based on a business-cycle version of the bank run model wherein a bank provides risk sharing to demand depositors who experience unobservable shocks to their...

We study how investors' use of machine learning methods affects corporate financial reporting decisions. Our model consists of a representative investor who employs a regularized regression (e.g., lasso) to infer value from earnings reports, along with a firm manager who may bias earnings...

We consider a dynamic model featuring two firms that test a regulator’s enforcement propensity through their misconduct and a regulator that disciplines them to build a reputation for strict enforcement. We show that when the regulator has full discretion over the enforcement criterion, peer...