We propose a theoretical framework, supplemented by empirical evidence, to study how household financial leverage affects labor skills acquisition and labor supply. Unlike labor income, acquired skills are inseparable from individuals and do not accrue to creditors at default, thus making them...

Credit analysts often leave rating agencies to work at firms they rate. We use benchmark rating agencies as counterfactuals to measure rating inflation in a difference-in-differences framework and find that transitioning analysts award inflated ratings to their future employers before switching...

It is increasingly common that institutional investors hold the equity of both industrial and financial firms. These cross-industry holdings link borrowers to banks that they have not borrowed from, creating “bank-firm ownership linkages.” We show that such linkages significantly lower...

Unlike labor income, human capital is inseparable from individuals and does not accrue to creditors at default. As a consequence, human capital investment should be more resilient to “debt overhang” than labor supply. We develop a dynamic model displaying this important difference. We find...

We examine effects on productivity, employment, and debt outcomes among college students whose parents reside in areas that experience disastrous climate events. After disruptions, treated students exhibit poorer academic performance, withdraw from more courses and enroll in fewer STEM courses....

Using a difference-in-differences (DiD) setting that leverages the staggered adoption of R&D tax credits across the U.S. states, we show that after a firm receives the tax credits, products of its peers become significantly more similar to the recipient firm. Such product convergence is...

This paper provides evidence that the conflict of interest caused by the issuer-pays rating model leads to inflated corporate credit ratings. Comparing the ratings issued by Standard & Poor's Ratings Services (S&P) which follows this business model to those issued by the Egan-Jones Rating...

This paper develops a dynamic rational expectations model of the credit rating process, incorporating three critical elements of this industry: (i) the rating agencies' ability to misreport the issuer's credit quality, (ii) their ability to issue unsolicited ratings, and (iii) their reputational...

This paper examines how the information quality of ratings from an issuer-paid rating agency (Standard and Poor's) responds to the entry of an investor-paid rating agency, the Egan-Jones Rating Company (EJR). By comparing S&P's ratings quality before and after EJR initiates coverage of each...