Knowledge that Transforms

We study the transmission of macroprudential policy to loan issuance by banks and nonbank financial intermediaries, and the associated real effects on firm-level outcomes including mergers and acquisitions. We use loan-level data from the global syndicated credit market, information on the type of participating lenders between banks and nonbanks, and shocks to regulatory limits to the banks’ ratio on loans-to-deposits (LTD) to document that a LTD policy tightening reduces credit supply by banks and simultaneously shifts financial intermediation to nonbanks. We show that this credit migration is driven by banks facing high pre-regulation LTD ratios and by nonbanks that are less regulated and free from leading the loan arrangements when issuing term loans. We also find evidence that in response to tighter LTD, borrowing firms with stronger nonbank relationships are shielded more by the decline in bank credit with ensuing relative increases in corporate debt, assets, and capital investment. Finally, firms in countries with better access to nonbank credit differentially increase the number of acquisitions they undertake when LTD policy intensifies.

This paper explores the interplay between female representation in mutual funds’ management teams and their voting behavior. We find that women-led mutual funds are more likely to support environmental and social (ES) proposals, but not governance ones. This result is robust to excluding sustainable funds, alleviating concerns that the findings are driven by the self-selection of female fund managers into sustainable funds. While women-led mutual funds are also more likely to vote with management in firms headed by female CEOs, this does not conflict with their greater support for ES shareholder proposals. Overall, our results suggest that female representation in fund management teams is related to their voting behavior on ES issues.

We show that suppliers adopt climate action policies in line with their customers’ emission-reduction commitments. These spillovers reflect bargaining dynamics rather than supply chain reconfiguration. Suppliers’ policy adoption does not translate into real abatement, capital investment, or green innovation unless the supplier has high gross margins. Our results suggest that economic frictions create the gap between announced climate ambitions and realized outcomes. Strengthening commercial terms — through better pricing, or shared investment frameworks — can reduce this gap.

This paper examines how bank loans evolve following unexpected deposit flows. Using bank-level U.S. commercial banks' data, we show that while large banks' lending is largely unaffected, loans at small banks significantly change after deposit shocks. Furthermore, the extent of this change among small banks depends on their exposure to off-balance-sheet liquidity risk, proxied by the level of unused commitments. Small banks with higher off-balance sheet exposures tend to extend fewer new loans following positive deposit shocks, suggesting that liquidity absorbed from the failure of other banks or market disruptions might not as easily be lent again to borrowers. Overall, these findings emphasize how off-balance-sheet risks can constrain the credit supply channel, even in the presence of liquidity surpluses.

We examine how variation in trade distortions across countries and industries is associated with the investment behavior of private equity funds, taking explicit account of their country and industry mandates. We use a sample of 9142 transactions across 60 countries and 52 industries completed by 1623 PE funds during 2010–2020. Overall, we find a negative and statistically significant association between trade policies that restrict imports in a given country-industry combination and the odds of a PE fund investment in that market. This association differs by trade policy instrument. We observe a positive and statistically significant link between tariffs and the likelihood of investment in the affected country-industry combination. In contrast, subsidies to import-competing firms are negatively associated with investment.

We examine how corporate misconduct affects merger and acquisition (M&A) activity of non-prosecuted peer firms. We find that exposure to peer misconduct increases the propensity to participate in M&A transactions, both as an acquirer and as a target. Firms exposed to peer misconduct experience adverse financial and valuation pressures, creating opportunities for financially stronger firms to acquire distressed rivals at discounted prices. We show that acquisitions involving targets exposed to peer misconduct are characterized by lower takeover premiums, a higher fraction of stock payment, higher acquirer announcement returns, and greater deal synergies. Overall, the evidence supports the view that misconduct spillovers disproportionately affect targets through heightened regulatory pressures and compliance costs, shifting bargaining power toward acquirers in M&A transactions.

Firms’ green technology investments are increasingly important for competitive positioning, yet their impact on long-run performance remains unclear. Using electricity capacity data for global utility firms, we construct a unique structural measure of technological greenness based on renewable versus fossil fuel physical infrastructure. We find that adopting sustainable technologies is followed by a long-run improvement in corporate fundamentals that is only partially reflected in stock prices, yielding superior returns over a multi-year horizon. These results partly reflect higher revenue growth in liberalized retail markets rather than investor sentiment, revealing a consumer-based mechanism that likely extends to competitive downstream sectors.

We survey 153 empirical studies of family firms and document 192 operational definitions representing 25 distinct definition types. These definitions can be decomposed into five recurring, codable dimensions: ownership, management, board representation, embeddedness, and succession. We relate these dimensions to economic mechanisms including agency conflicts, residual control rights, transaction costs, and dynastic control. Alternative definitions select systematically different populations and yield materially different estimates of firm performance and innovation. Definition choice is largely unrelated to the research question, except in succession studies. Ownership thresholds track private enforcement of self-dealing rules, but not statutory shareholder rights or rule of law. We conclude that the family firm is a family of related constructs rather than a single latent construct. Definitions should therefore match the family-firm construct implied by the research question, and results should be reported across alternative classification rules.

We consider an informed large shareholder who can choose between making a takeover bid herself and initiating a sale to another acquirer. Such takeover activism complements direct takeovers because the very choice mitigates the asymmetric information problem, thereby improving efficiency. As more investors enter the market for corporate control, takeover activism increasingly replaces direct takeovers as the prevailing mode of disciplinary control change, matching the evolution in practice. Our model shows how this evolution, characterized by a symbiotic relationship between investor activism and private equity, arises to overcome asymmetric information and collective action problems through intermediated transactions.

The recent inflation surge brought inflation back on people's minds. I quantify when and how much attention to inflation changes and derive the macroeconomic implications of these attention changes. I estimate an attention threshold at an inflation rate of 4 percent, that attention doubles when inflation exceeds this threshold, and that supply shocks have stronger and more persistent effects on inflation in times of high attention. Developing a model featuring the attention threshold, I show that attention changes offer a joint explanation for inflation surges, inflation's co-movement with inflation expectations, and a long last mile of disinflation.