We use a regression discontinuity design to study ex-post discretion in lender's contractual enforcement of restrictive covenant violations. At pre-set thresholds, we find that lenders enforce contractual breaches at an 11% rate, varying between 5% and 18% and peaking when credit conditions are...

We examine the effect of political uncertainty on corporate transparency and market quality using gubernatorial elections as a source of plausibly exogenous variation in uncertainty. Despite real activity falling in the years leading up to a close election, voluntary disclosure, measured by the...

We exploit rich, cross-occupation employment data and quasi-experimental variation in IPO completion to quantify the direct labor compliance costs of being a public company. We precisely estimate a small, positive effect of public listings on local employment for compliance occupations that...

Yes. We construct a novel revealed preference measure of financial statement verification based on matching among lenders, borrowers, and auditors. When borrowers use their lenders' preferred auditors, they borrow larger amounts and at lower rates and contracts depend more on accounting...

Internal capital markets are important determinants of investment and economic growth in the modern economy. We exploit a regulatory experiment on short selling restrictions and microdata on multinationals' foreign operations to test whether external governance pressure from short selling...

To meet short-term benchmarks, lenders may alter their monitoring behavior, providing a channel for short-termism incentives to spill over into the corporate sector. We find that lenders with short-termism incentives enforce material covenant violations at higher rates. Further, they target...

Two well-known stylized facts on earnings management are that the earnings surprise distribution has a discontinuity at zero, and that positive earnings surprises are associated with positive abnormal returns. We link these two facts in a model of the earnings management decision in which the...

We investigate private borrowers incentives to publicly disclose financial information in loan agreements in anticipation of public equity or debt issuance. Voluntary disclosure of sales and key financial ratios reduces lender hold-up, reduces financing costs and increases public bond and equity...

By allowing investors to efficiently allocate capital, developed financial markets promote economic growth. We revisit a key component of financial market development, namely financial reporting standards, to identify a channel underpinning this link. We focus on introductions of new financial...

We investigate bias in the Federal Reserve's stress test disclosures for the Comprehensive Capital Analysis and Reviews (CCAR) between 2012 and 2017. Using the market response to the report, we develop and implement a model of biased disclosure that incorporates a regulator's trade-off between...