After World War II, international capital flowed into slow-growing Latin America rather than fast-growing Asia. This is surprising as, everything else equal, fast growth should imply high capital returns. This paper develops a capital flow accounting framework to quantify the role of different factor market distortions in producing these patterns. Surprisingly, we find that distortions in labor markets, rather than domestic or international capital markets, account for the bulk of these flows. Labor market distortions that indirectly depress investment incentives by lowering equilibrium labor supply explain two-thirds of observed flows, while improvement in these distortions over time accounts for much of Asia's rapid growth.

The conventional wisdom is that African-Americans, Hispanics, and American Indians are underrepresented among faculty in postsecondary institutions because they are underrepresented among Ph.D. recipients. Thus, the putative solution to the problem of minority faculty underrepresentation is to increase the supply of minority Ph.D.’s. In our book, Faculty of Color in Academe: Bittersweet Success (Turner and Myers, 2000) we point out that the supply-side argument has several flaws. In this and a companion paper (Myers and Turner, 2003) we replicate and update the analysis performed in Chapter 7 of our book using more recent census data and a larger sample for 1990. Once again, we demonstrate that an autonomous increase in the Ph.D. supply, uniform across all groups, would leave the representation of African-American and Hispanic faculty largely unchanged. This conclusion challenges the view that the underrepresentation of minority faculty is solely a supply-side phenomenon that can be addressed primarily by increasing the pipeline for new minority Ph.D.’s. Although a strong case can be made for increasing the minority pipeline, the pipeline itself does not appear to be the central cause of the continued underrepresentation of minority faculty. I. The Problem: At every point in the educational pipeline from the Bachelor’s degree to the doctoral degree, African-Americans, Hispanics, and American Indians are substantially underrepresented.

As remote auditing remains widespread, the profession is concerned that decreased auditor-client interactions and remote supervision challenges can reduce audit quality. In response, some firms have increased supervisor monitoring of remote auditors. We experimentally examine how two key remote audit factors, the spatial distance between auditors and clients and the frequency of supervisor monitoring, influence auditors’ judgments in creative tasks. We predict and find that working remotely facilitates auditors’ higher-level cognition that enhances creative hypothesis generation and improves decision quality when uncovering a seeded error if monitored less frequently than more frequently. More frequent monitoring constrains auditors, which squashes effort and creativity, diminishing the benefits of working remotely. Working onsite at the client location reduces the sense of psychological distance, thereby diminishing the difference between monitoring frequencies. These findings have implications for audit practice as working remotely can enhance performance on creative problem-solving tasks, but only when monitored less frequently.

Most research on non-GAAP financial measures focuses on earnings or earnings per share, although non-GAAP revenue disclosure has recently attracted SEC scrutiny. It is unclear ex ante what non-GAAP adjustments could improve revenue's usefulness because, unlike earnings, revenue is a top-line number related primarily to core (i.e., persistent) business activities. We present the first archival analysis of non-GAAP revenues using a large, hand-collected sample of disclosures from 2015 to 2018. Approximately one in five earnings announcements contains a non-GAAP revenue disclosure, focused on revenue growth. Our evidence suggests that firms disclose non-GAAP revenue when GAAP revenue is incomparable with prior periods, and not to compensate for poor GAAP performance. Furthermore, non-GAAP revenue growth predicts future revenue growth better than GAAP revenue growth, and the market responds to this information. Overall, non-GAAP revenue disclosures are motivated by economic fundamentals rather than opportunism, on average, and they provide investors with relevant information.

We develop metrics to assess the complexity of a bank holding company (BHC), based on its ownership structure. Large BHCs have intricate ownership hierarchies involving hundreds or even thousands of legal entities that may contribute to increased operational risk and greater opacity. Our measures are mathematically grounded, intuitive, and easy to implement. They may be particularly useful in the context of resolution, where regulators often face significant time pressure and coordination challenges. We use regulatory filing data from the Federal Reserve to validate the measures, demonstrating that they provide a useful complement to balance sheet information in assessing BHC complexity. Notably, the proposed measures are highly correlated with existing complexity indicators that are not based on organizational structure and are less correlated with size than these existing complexity measures. We show that the proposed measures provide additional explanatory power for the regulatory indicators, even after controlling for size.

This paper studies how firms from developed and developing countries have used domestic and international corporate bond markets since the 1990s. We find that debt issues in domestic and international markets have different characteristics. International issues tend to be larger, of shorter maturity, denominated in foreign currency, include more fixed rate contracts, and entail lower yields. These patterns persist even when analyzing issues by firms from countries with more developed domestic markets and higher financial integration and when comparing issues conducted by the same firm in different markets. These findings are consistent with the existence of frictions that segment domestic and international corporate bond markets and with these markets providing distinct financial services.

Schools across the U.S. have sharply restricted student use of phones during the school day. We evaluate one type of restriction—lockable phone pouches—using nationwide data combining a large-scale teacher survey, GPS pings, standardized test scores, and school administrative records, along with sales records from the largest pouch provider. Using a staggered difference-in-differences design, we find that pouch adoption substantially reduces phone use as measured by GPS pings and teacher reports. In the first year after adoption, disciplinary incidents increase, and we find suggestive evidence that student subjective well-being falls, consistent with short-term disruption. However, disciplinary effects fade, while the estimated effects on well-being appear to recover and become positive in later years. For academic achievement, average effects on test scores are consistently close to zero. High schools see modest positive effects, particularly in math, while middle schools see small negative effects. We find little evidence of effects on school attendance and no clear evidence of improvements in self-reported classroom attention or perceived online bullying.

Trade credit is created whenever a supplier offers terms that allow the buyer to delay payment. In this paper we document the rich variation in interfirm credit terms and credit policies across industries. We examine empirically the firm's basic credit policy choices: whether to extend credit or to require cash payment; and, if credit is extended, whether to adopt simple net terms or terms with discounts for prompt payment. We also examine determinants of variations in two‐part terms. Results are supportive primarily of theories that explain credit terms as contractual solutions to information problems concerning product quality and buyer creditworthiness.

People make personal plans regarding whether, when, where, and how to undertake certain actions. We discuss three questions related to personal plans. First, what are the effects of plans on behavior? Second, when are plans formed? Third, how do plans deviate from optimality? For each of these questions, we (a) offer a brief overview of research that sheds light on the issue and (b) identify gaps in current knowledge. We emphasize connections to the growing theoretical literature that gives personal plans a substantive role, but we conclude that more research is needed, especially on the latter two questions we cover.

That the employment rate appears to respond to changes in trend growth is an enduring macroeconomic puzzle. This paper shows that, in the presence of a return to experience, a slowdown in productivity growth raises reservation wages, thereby lowering aggregate employment. The paper develops new evidence that shows this mechanism is important for explaining the growth-employment puzzle. The combined effects of changes in aggregate wage growth and returns to experience account for all the increase from 1968 to 2006 in nonemployment among low-skilled men and for approximately half the increase in nonemployment among all men.