This paper examines the consequences of powerful political connections for local governments. We find that governments located within the constituencies of, and thus connected to, powerful congressional members reduce their stewardship over public resources. Using plausibly-exogenous declines in...

This paper examines the consequences of powerful political connections for local governments. We find that governments located within the constituencies of, and thus connected to, powerful congressional members reduce their stewardship over public resources. Using plausibly-exogenous declines in...

Do firms strategically use advertising campaigns when subject to the threat of political costs? Communication via advertising can assuage public concerns, which, in turn, reduces the pressure on elected officials to impose political costs on the industry. We identify expected political costs...

Theories of congressional dominance contend that regulatory agencies can be captured by the politicians that oversee them. We examine whether control systems and transparency constrain such capture. Using the United States Patent and Trademark Office (USPTO) as a setting, we begin by providing...

Bertrand and Mullainathan (2003) find that managers shielded from the threat of takeovers exert less effort to maximize firm value, consistent with a 'quiet life' hypothesis. I study whether the governance role of financial reporting can mitigate adverse effects arising from managerial...

Antitrust regulators play a critical role in protecting market competition. We examine whether the political process affects antitrust reviews of merger transactions. We find that acquirers and targets located in the political districts of powerful U.S. congressional members who serve on...

We document that corporate financial misconduct has significant consequences for politicians' election outcomes and, in particular, those politicians that serve on U.S. congressional committees with SEC-relevant oversight responsibilities (“SEC-relevant politicians”). These politicians...

We investigate whether corporate insiders attempt to circumvent insider trading restrictions by using their private information to facilitate trading in economically-linked firms, a phenomenon we call “shadow trading.” Using measures of informed trading to proxy for shadow trading, we find...

Our study reports evidence on the dynamic effects of client switches on auditor reputations and fee premia. Offices of large accounting firms that lose (gain) major industry clients experience a reputation shock leading to more same-industry client losses (gains) over the next two years. There...

Does human discretion improve or diminish lending outcomes? We assess this question in the context of a randomized, controlled experiment using a large group of lenders that rely on machine-generated credit scoring models provided by a third party to make monthly credit decisions. Working with...