This paper exploits changes in financial subsidy programs to investigate their effect on female employment and firm performance. The identification strategy uses a quasi-experiment from a government policy change that eliminated financial support for exporting plants in the Chilean manufacturing industry. The difference-in-differences methodology shows that the policy change increased the share of total female employment by 3.3%, driven mainly by an increase of female workers in blue-collar occupations. In comparison, male labor experienced a drop of 4.4% in white-collar occupations in the treated plants relative to those in the control group. Plant total factor productivity (TFP) decreased due to the policy change, but both total gross output and sales rose approximately 7% on average. The paper explores two possible mechanisms to explain these findings: the technology adoption channel and changes in the gender composition of labor in the presence of a gender pay gap. The findings are consistent with the international trade and corporate finance literature on firm behavior under high market fixed and sunk costs.

We identify a pecuniary externality arising from corporate tax avoidance. Firms share risk with the government via taxation. The lower the tax rate applied to a firm’s earnings, the more risk its shareholders bear. As more firms avoid taxes, the variance of the market’s after-tax cash flow increases. Consequently, the covariance of a firm’s cash flow with the market cash flow and thereby its cost of capital increases. This occurs regardless of a firm’s tax avoidance. Consistent with our prediction, we find that firms’ implied cost of capital relates positively to aggregate corporate tax avoidance regardless of a firm’s level of tax avoidance. As we predict, the pecuniary externality is stronger for firms whose cash flow covaries more with the market cash flow and is driven by tax avoidance strategies that reduce a firm’s marginal tax rate (e.g., income shifting of U.S. multinationals) as opposed to reducing its tax base.

How susceptible to contagion are bank deposits associated with financial inclusion? To assess this susceptibility, we analyze the behavior of deposits around three significant events of bank failure in the Philippines. We conduct the event studies with the advantage of a unique dataset that disaggregates deposits by size at the town level. We show that both small and large deposits are withdrawn up to 4–5 quarters before the bank’s closure. We take advantage of this distinction between small and large deposits to test for contagion. Applying difference-in-difference regressions, we find evidence of contagion: the closure of a large bank leads to withdrawals at banks in neighboring towns by depositors both large and small. This is the case for two of the three events, and when the data is taken collectively. That there is a market for information affects deposit insurance as a safety net for depositors and as a disciplining tool for banks. There are also liquidity considerations that banks need to consider. In any case, we consistently find the behavior of small depositors to be no different from that of large depositors. Hence, if financial inclusion is about access to bank deposits, it is not likely to heighten systemic risks nor mitigate them.

This paper develops a spatial general equilibrium job search model to study the effects of local and universal minimum wage policies on employment, wages, job postings, vacancies, migration, and welfare. Workers search for jobs locally and in neighboring areas, deciding whether to migrate or commute after receiving remote offers. The model, estimated using ACS and QWI data, reliably forecasts commuting responses to city minimum wage hikes. Simulations show that low-skill (noncollege) workers benefit from local wage increases up to $12.50. The greatest per capita welfare gain for all workers is achieved by a $15.25 universal minimum wage.

This paper shows that authorized participants’ (APs) regulatory constraints weakened the arbitrage relationship between bond ETFs’ primary market activity and their premia during the market turmoil triggered by the dash-for-cash episode in March 2020. Arbitrage activity weakened more severely when those APs with a history of creating or redeeming an ETF’s shares had low regulatory capital ratios, consistent with persistence in arbitrage activity. The results also reveal that the direction of prior arbitrage activity matters, and show that the decline in arbitrage intensity was especially pronounced for ETFs holding less liquid bonds, whose lead market makers had lower regulatory capital ratios, and for those associated with non-bank-affiliated APs. Finally, the paper provides a novel estimate of the elasticity of primary market activity to ETF premia, contributing to the literature on limits to arbitrage and intermediary frictions.

We investigate whether consistent non-GAAP reporting is associated with investment efficiency. Prior research finds a positive association between non-GAAP reporting and investment levels, concluding that it represents overinvestment. We corroborate this positive association, but additional tests are not consistent with the conclusion of inefficient overinvestment. Specifically, we explore the relation between investment and future cash flows as a proxy for the realization of investments in positive net present value projects. We find that the investments of firms that consistently report non-GAAP metrics are associated with similar or higher future cash flows than the investments of firms reporting only GAAP earnings, which is consistent with efficient investment. We observe similar associations in multiple specifications, performance horizons, and outcome variables, including future returns and earnings. Given the prevalence of non-GAAP reporting and the SEC's ongoing concern with the consequences of non-GAAP disclosure, our analyses offer timely evidence relevant to this important discussion.

Foster care placement is strongly associated with crime—for example, close to one fifth of the prison population in the U.S. is comprised of former foster children—yet there is little evidence on whether this relationship is causal. Leveraging the quasi-random assignment of investigators and administrative data from Michigan, we show that placement substantially reduced the chances of adult arrests, convictions, and incarceration for children at the margin. Exploring mechanisms, we find evidence that children’s birth parents made positive changes following placement. We show that most children in our setting reunified with their parents after being in foster care for one to two years, and that parents themselves were less likely to have criminal justice contact after placement. Considering recent historic federal policy which prioritizes keeping children with their families, our analysis indicates that safely reducing foster care caseloads will require improving efforts to ensure child wellbeing in the home.

I exploit a Dutch reform in the regulatory discount curve that makes the liabilities of pension funds and insurance companies (P&Is) more sensitive to changes in 20-year interest rates but less so to longer maturity rates. Following the reform, P&Is reduced their longest maturity bond holdings but increased those with 20-year maturities, steepening the long end of the yield curve. Using the reform as a shock to identify price elasticities of demand at the sector level based on holdings across maturity buckets and time, I show that banks are more price elastic than other investors and absorb demand shocks.

Firms falling short of earnings expectations are more likely to cite stakeholder-focused objectives in their public communications following earnings announcements. This behavior is consistent with managers preferring to be evaluated by subjective stakeholder-based performance criteria when falling short on objective shareholder-based measures. This increased use of stakeholder language is most evident among firms narrowly missing earnings estimates and appears unrelated to a firm’s actual environmental, social, and governance (ESG)-related activity. Stakeholder language appears to influence the evaluation of CEOs; turnover–performance sensitivity is lower for managers citing stakeholder value. Collectively, our findings are consistent with concerns that stakeholder objectives reduce managerial accountability for poor performance.

There has been a call for caution regarding the standard procedure for Bayesian inference in set‐identified structural vector autoregressions on the grounds that the common practice of using a uniform prior over the set of orthogonal matrices induces a non‐uniform prior for individual impulse responses or other quantities of interest. This paper challenges this call by formally showing that when the focus is on joint inference, the uniform prior over the set of orthogonal matrices is not only sufficient but also necessary for inference based on a uniform joint prior distribution over the identified set for the vector of impulse responses. In addition, we show how to conduct inference based on a uniform joint prior distribution for the vector of impulse responses.