Corporate Governance

We follow a representative panel of millions of consumers in the U.S. from 2007 to 2017 and document several facts on the long-term effects of the Great Recession. There were about six million foreclosures in the ten-year period after Lehman's collapse. Owners of multiple homes accounted for 25% of these foreclosures, while comprising only 13% of the market. Foreclosures displaced homeowners, with most of them moving at least once. Only a quarter of foreclosed households regained homeownership, taking an average four years to do so.

An historical review of managers' corporate renewal decisions reveals an evolving pattern away from using operating turnarounds in favor of making changes in corporate scope via transactions. One explanation for this progression away from operations is that financial valuation considerations supplant other inputs to managers' strategic logics — a reflection of the rising influence of financial institutions as activist owners.

We predict and find that regulated firms' mandatory disclosures crowd out unregulated firms' voluntary disclosures. Consistent with information spillovers from regulated to unregulated firms, we document that unregulated firms reduce their own disclosures in the presence of regulated firms' disclosures. We further find that unregulated firms reduce their disclosures more the greater the strength of the regulatory information spillovers.

We explore the landscape of public company auditing around the introduction of the Securities and Exchange Commission (SEC) in 1934. Using a broad sample of historical annual reports spanning several decades, we document that most public companies obtained audits even before the SEC’s audit mandate, which limited the mandate’s impact on audit rates. We further document that these companies selected their auditors based on characteristics reflecting independence and competence, even before the SEC’s mandate.

We construct a new measure of voluntary disclosure based on firms’ websites. Using the Wayback Machine, we create a standardized measure of disclosure capturing the quantity of information on firms’ websites. We validate our measure by documenting that it is positively associated with established measures of firms’ voluntary disclosure and liquidity. Importantly, we document that our measure, while correlated with established disclosure measures, is not subsumed by those measures. It complements existing measures in three important ways.

Despite a recent surge in corporate activism, with firm leaders communicating about social-political issues unrelated to their core businesses, we know little about its strategic implications. This paper examines the effect of an employer communicating a stance about a social-political issue on employee motivation, using a two-phase, pre-registered field experiment in an online labor market platform. Results demonstrate an asymmetric treatment effect of taking a stance depending on whether the employee agrees or disagrees with that stance.

We evaluate the impacts of tax policy on asset returns using the U.S. municipal bond market. In theory, tax-induced ownership segmentation limits risk-sharing, creating downward-sloping regions of the aggregate demand curve for the asset. In the data, cross-state variation in tax privilege policies predicts differences in in-state ownership of local municipal bonds; the policies create incentives for concentrated local ownership. High tax privilege states have muni-bond yields that are more sensitive to variations in supply and local idiosyncratic risk.