Knowledge that Transforms

Despite increasing attention paid by local stakeholders to corporate social responsibility (CSR), little is known about whether and how firms respond to this attention. To address this gap, in this paper I examine the impact of local stakeholders’ CSR attention, measured using the state-level Google Search Volume Index (SVI) for “corporate social responsibility,” on firms’ CSR activities. I find that firms increase their CSR commitments, particularly in the community, employee, and environmental dimensions, and improve the quality of their CSR reports in response to an increase in local stakeholder attention. This effect is more pronounced among larger and more visible firms, as well as those with larger boards and higher levels of board independence, female board representation, and CEO compensation. In contrast, I find no evidence that local stakeholder attention affects firms’ other investment activities. Finally, I show that firms’ active responses to local stakeholders’ CSR attention are associated with an increase in future firm value, consistent with stakeholder theory. Together, these findings highlight the key influence of local stakeholder attention on firms’ CSR strategies and outcomes.

This paper contributes to a long-standing debate in the audit literature about the place of professional judgement within the constraints of the formal audit process. Responding to recent calls for deeper exploration, we examine how auditors exercise judgement when facing a practical challenge they perceive as novel, for which they are unable to easily deploy prior understandings and judgement scripts. Drawing on semi-structured interviews with practicing auditors and the Routine Dynamics (RD) perspective, emphasising patterns of routine action as having internal dynamics, we provide a nuanced account of how auditors progress from the position of relative epistemic obscurity to being comfortable enough to form a conclusion. Our findings show how auditors performed routines to establish social , temporal, and spatial relationalities within and beyond the present audit context, enabling them to nuance their interpretations and grow confident in their judgements. We reveal how auditor judgement is continuously present but fluctuates in intensity, depending on the auditors’ reflexive intent during individual routine performances, resulting in the augmentation or curtailment of opportunities for inference. We also show how auditors accrue comfort in their judgements in a progressive manner along a continuum, spanning from largely ritualistic performances to the more effortful, inferentially intensive ones that together shape how auditors grapple with novelty.

Companies increasingly disclose human capital initiatives, such as diversity, equity, and inclusion (DEI) and non-DEI initiatives. Yet, DEI initiatives have become a focal point of debate, raising questions about whether investors view them as appropriate uses of company resources. Across two experiments, we examine how nonprofessional investors perceive DEI versus non-DEI initiatives. Drawing on equity theory, we propose that investors' fairness-based perceptions of an initiative's appropriateness depend on their underlying preferences for what companies should prioritize, and that these perceptions influence their investment willingness. Experiment 1 finds that investors perceive DEI (versus non-DEI) initiatives as less appropriate, and this difference is exacerbated when investors are more shareholder-oriented than stakeholder-oriented. Furthermore, the mediating effect of perceived appropriateness on investment willingness is stronger when company financial performance is unfavorable than when it is favorable. Building on these findings, Experiment 2 tests a boundary condition of our theory by examining whether explicitly stating merit-based selection criteria attenuates shareholder-oriented investors' stronger negative perceptions of DEI initiatives. We find that when DEI initiatives are explicitly presented as merit-based, investors' negative perceptions of appropriateness of DEI (versus non-DEI) initiatives are attenuated, and the exacerbating moderating effect of shareholder (versus stakeholder) investor orientation also diminishes. Our findings demonstrate how investors' fairness-based perceptions of appropriateness can explain divergent responses to DEI disclosures, offering timely implications for companies and regulators concerned with human capital reporting.

Unlike gender or race, class background is rarely a focus of research on career progression, or of DEI efforts in elite occupations. Should it be? In this paper, we document a large class gap in career progression in one occupation—U.S. tenure‐track academia—using parental education to proxy for class background. First‐generation college graduates are 10% less likely to be tenured at an R1, are tenured at institutions ranked 11% lower, earn 3% less, and report 5% lower job satisfaction, than their former PhD classmates (from the same institution and field) with a parent with a non‐PhD graduate degree. Neither selection out of academia nor different preferences explain this gap; differential research productivity also plays little role. Instead, likely drivers are differences in cultural and social capital. We also find a class gap in career progression for PhDs who work in industry, suggesting this phenomenon generalizes outside academia.

I document that the right tail of the firm size distribution systematically thickens with economic development. To rationalize this fact, I develop a parsimonious idea search model in which both aggregate growth and the firm size distribution are endogenously determined. The model features an asymptotic balanced growth path along which Gibrat's law holds at each date, and the right tail of the firm size distribution thickens monotonically toward Zipf's law. The model also implies that policies favoring large firms can improve welfare by better utilizing the diffusion externalities arising from idea search.

We study instrumental variables models characterized by: (i) Unobserved heterogeneity consisting of potential outcomes and response types that describe how the instrument determines treatment choice; (ii) Conditional independence of the instrument and the unobserved heterogeneity; and (iii) Convex restrictions on the distribution of unobserved heterogeneity. We show certain causal parameters are identified in these models if and only if a version of the kappa of Abadie (2003) exists. Our identification results are constructive in yielding estimating moment conditions. Focusing on a leading special case, we develop asymptotically normal estimators based on a doubly robust version of these moment conditions.

This paper develops a macroeconomic model that combines an incomplete‐markets overlapping‐generations economy with a job ladder featuring sequential wage bargaining, endogenous search effort of employed and non‐employed workers, and differences in match quality. With these ingredients, our model provides a joint microfoundation for the three main inputs in aggregate production: capital, employment, and labor efficiency. The calibrated model offers a good fit to the empirical age profiles of search activity, job‐finding rates, wages, and savings. We use the model to analyze the impact of tax and transfer policies for labor market dynamics and aggregate economic activity via capital, employment, and labor efficiency channels. Lower unemployment benefits and a less progressive tax schedule bring about welfare losses for a newborn worker which are mainly driven by higher consumption risk and costlier search effort; both policies have differential effects along the age, income, and wealth dimensions.