Using the SEC’s 2004 decision to begin publicly disclosing its comment letters, we study the consequences of increased regulatory transparency on the banking industry. Because the SEC only issues comment letters to public banks, we exploit a difference-in-differences design to examine the...

We explore whether managers’ strong desire for good performance distorts their expectations and, consequently, corporate investment efficiency. We find that managers overweight favorable information and underweight unfavorable information, resulting in optimistic earnings guidance. We...