This study empirically examines the international effects of inflation targeting. Employing a variety of propensity score matching methods, we find strong evidence that inflation targeting has significantly different impacts on exchange rate volatility and international reserves in different country groups. It significantly increases real and nominal exchange rate stability and international reserves in developing countries but lowers them in industrial countries. On average, inflation targeting increases (lowers) reserves roughly by the size of 1.3 (1.8) months of imports values in developing (industrial) countries. The treatment effects on targeting countries' current accounts are found to be insignificant in both country groups.

Abstract Job applications have risen over time, yet job-finding rates remain unchanged. Meanwhile, separations have declined. We argue that increased applications raise the probability of a good match rather than the probability of job-finding. Using a search model with multiple applications and costly information, we show that when applications increase, firms invest in identifying good matches, reducing separations. Concurrently, increased congestion and selectivity over which offer to accept temper increases in job-finding rates. Our framework contains testable implications for changes in offers, acceptances, reservation wages, applicants per vacancy, and tenure, objects that enable it to generate the trends in unemployment flows.

We empirically explore a trade credit channel through which foreign direct investment (FDI) firms can propagate global liquidity shocks to the host country despite its tight controls on portfolio flows. In a large sample of Chinese manufacturing firms, we find robust evidence that FDI firms provide more trade credit than local firms during tight domestic credit periods and that a favorable global liquidity shock amplifies FDI firms’ advantage in trade credit provision. Moreover, the differential responses of FDI and local firms are stronger in financially more dependent industries or in Chinese provinces with less financial depth. Received August 12, 2016; editorial decision May 16, 2017 by Editor David Denis.

We provide evidence that U.S. firms have a significantly higher probability of acquiring targets in countries where their CEOs have studied or worked. This finding is robust to alternative measures of CEO country-specific experience, samples or model specifications, and to controlling for endogeneity and target country industry specialization. Moreover, deal-level evidence suggests a reassurance effect. CEO experience has no effect on announcement returns or long-run operating performance on average but is associated with significantly better performance in risky environments. We also provide additional evidence to disentangle alternative hypotheses and explore the role of corporate governance in determining deal outcomes.

ABSTRACT: This study investigates the role that a firm’s internal audit function (IAF) plays in the disclosure of material weaknesses reported under Section 404 of the Sarbanes-Oxley Act of 2002 (U.S. Congress 2002). Using data from 214 firms, we examine the relation between material weakness (MW) disclosures and various IAF attributes and activities. Our results indicate that MW disclosures are negatively associated with the education level of the IAF and the extent to which the IAF incorporates quality assurance techniques into fieldwork, audits activities related to financial reporting, and monitors the remediation of previously identified control problems. The timing of Section 404 work and the nature of follow-up monitoring suggests that these aspects of IAF quality help prevent MWs from occurring. We find that MW disclosures are positively associated with the IAF practice of grading audit engagements and external-internal auditor coordination, suggesting that these activities increase the effectiveness of Section 404 compliance processes.