I examine how credit reporting affects where firms access credit and how lenders contract with them. I use within firm-time and lender-time tests that exploit lenders joining a credit bureau and sharing information in a staggered pattern. I find information sharing reduces relationship-switching costs, particularly for firms that are young, small, or have had no defaults. After sharing, lenders transition away from relationship contracting, in two ways: contract maturities in new relationships are shorter, and lenders are less willing to provide financing to their delinquent borrowers. My results highlight the mixed effects of transparency-improving financial technologies on credit availability.

Costello, Down, and Mehta (2020) trace their slider intervention to deviations from the credit line amount recommended by a credit scoring model. The deviations are followed by larger delinquency declines and bigger sales orders, and Costello et al. interpret these results using discretion-based theories. However, incremental deviations are concentrated on newer clients rather than those the lender has accumulated soft information about. Deviations also appear larger for public than private borrowers. My discussion evaluates whether these results align with discretion-based theories, and explores alternative interpretations based on salience and unique aspects of the trade credit setting. Differences in interpretation aside, the evidence is informative about technological advances in commercial lending. I conclude with an overview of several recent advances and discuss the implications for lending research.

Lending concentration features prominently in models of information acquisition by banks, but empirical evidence on its role is limited. Using bank-level loan exposures, we find banks are less likely to collect audited financial statements from firms in industries and regions in which they have more exposure. These findings are stronger in settings in which adverse selection is acute and muted when the bank lacks experience with an exposure. Our results offer novel evidence on how bank characteristics are related to the type of financial information they use and support theoretical predictions suggesting portfolio concentration reveals a bank's relative expertise.

We review the empirical accounting literature on private firms. Recent advances in data gathering provide new openings to examine private firms which, despite driving half of private sector economic activity, have historically been challenging to study. We provide a conceptual framework to organize the literature, centering on information production, information verification, and information dissemination. Four key takeaways emerge from our review. First, private firm settings offer unique advantages for understanding the economic role of accounting. Because private firms face less regulation than public firms, their accounting choices can shed light on economic tradeoffs that public firm choices cannot. Second, there is limited descriptive evidence on many fundamental accounting choices, including the extent to which private firms follow US GAAP, obtain an audit, or use various management accounting practices. Third, studies jointly modeling private and public firms provide more complete, robust analyses of the economy, regulation in particular. Fourth, private and public firms differ on many central dimensions, which raises difficulties related to conducting empirical analysis and assessing generalizability.

Using a dataset covering 3 million commercial borrower financial statements, we document a substantial, nearly monotonic decline in banks’ use of attested financial statements (AFS) in lending over the past two decades. Two market forces help explain this trend. First, technological advances provide lenders with access to a growing array of borrower information sources that can substitute for AFS. Second, banks are increasingly competing with nonbank lenders that rely less on AFS in screening and monitoring. Our results illustrate how technology adoption and changes in credit market structure can render AFS less efficient than alternative information sources for screening and monitoring.

We study the role of reputation in auditor-client matching. Using 1.2 million employment records from US broker-dealers, we find that broker-dealer clients of the same auditor have similar financial adviser misconduct profiles. Our estimates indicate that variation in client misconduct behavior is nearly half as important as variation in client size in explaining matches. Auditors adjust their portfolios when presented with new information about client behavior, and those with the most significant reputation concerns are least likely to deal with high misconduct clients. Finally, we find that an auditor's reputation for accepting high misconduct clients predicts their new clients' future misconduct. Together, our results present new evidence on how reputation affects audit relationships, and the consequences of auditors' reputation concerns for client behavior. Our results also indicate an unintended consequence of audit mandates: non-discerning auditors emerge to serve clients with low endogenous demand for auditing.