Using the staggered adoption of U.S. state-level pay transparency laws that improve pay transparency, we find that the probability of high-wage workers becoming entrepreneurs significantly increases following the adoption of such laws. Moreover, the salaries of high-wage workers significantly increase following the laws’ passage. These findings are consistent with theory suggesting that improved pay transparency increases the relative return of entrepreneurship for high-wage workers.

Exploiting the staggered adoption of U.S. state-level labor protection laws, we find that household mortgage debt increases following the passage of these laws. Our findings are consistent with theories predicting that better employment protection reduces households’ layoff risk, making lenders less concerned about borrowers’ ability to repay their debts and more inclined to offer them mortgage loans. Supporting this channel, we find that the loan approval rate increases following the adoption of labor protection laws and that the effect of the laws’ adoption on mortgage debt is concentrated in old households.

Economic policy uncertainty (EPU) raises firms' incentives to lobby policymakers to access policy information and influence policy outcomes. Surprisingly, we find that non-lobbying firms are less likely to initiate lobbying during periods of heightened EPU. The evidence is consistent with our time-varying barriers hypothesis that entry barriers to lobbying increase with EPU. We verify that the negative effect of EPU on lobbying initiation arises through the channels of lobbying entry expenses and returns to experience. Furthermore, lobbying entry expenses are not large, implying that the returns to experience channel is likely a more serious barrier preventing non-lobbying firms from initiating lobbying. We also find that facing high lobbying entry barriers, non-lobbying firms go for alternative political activities, such as hiring politically connected directors.

We propose that firms use stock splits as a means of attracting attention and inducing information production to correct price distortion caused by investors’ 52-week high anchoring bias. Our analysis shows that firms are more likely to split stocks when their prices are near 52-week highs, especially if they are highly profitable and undervalued. After splits, undervaluation gradually disappears. Moreover, these splits are associated with a slower market reaction and a more positive post-split drift, consistent with the notion that investors’ anchoring bias hinders price adjustment, leading to a gradual price correction. In addition, the likelihood of such splits increases with CEO wealth-performance sensitivity, and investment-price sensitivity increases following splits. Our evidence suggests that firms utilize stock splits to correct mispricing induced by investors’ 52-week high anchoring bias.

Foreign workers have been an important part of the labor force in public accounting firms over the past two decades. In this paper, we investigate whether and why foreign workers influence audit quality. We find that audit offices with more newly hired foreign labor have a lower mean absolute value of discretionary accruals and a smaller rate of restatements for their clients. The effect is more pronounced for audit offices that face more resource constraints or require greater foreign expertise. The results of improved audit quality are robust to alternative measures of immigrant intensity and audit quality, alternative samples, and using different ways to address endogeneity concerns. Overall, our paper contributes to the literature by showing the impact of foreign labor in the auditing profession and provides public policy implications for the recent H‐1B visa debate.