This paper examines time-series variation in the relationship between aggregate earnings and GDP (AEG). Using quarterly data from 1979-2019, we document that aggregate earnings are positively associated with future real GDP after 2000 but not before. We further show that this variation does not result from an association between aggregate earnings and the corporate profits component of GDP. Instead, we discover that aggregate special items — not core earnings — drive the post-2000 AEG by conveying information about labor market outcomes. Specifically, aggregate special items relate to future GDP only when they predict wages and worker displacement. Our study contributes to the literature by documenting previously unexplored time variation in the AEG relationship and identifying its source, challenging conventional assumptions about how aggregate accounting measures signal future economic conditions.

We study the role of a relatively new type of external firm monitor, an on‐site government‐appointed Corporate Monitor, and assess whether such appointments reduce firms' propensity to violate laws. Using a sample of deferred and nonprosecution agreements, we first document the determinants of Monitor appointment. We find firms that voluntarily disclose wrongdoing and have more independent directors are less likely to have Corporate Monitors, whereas those with more severe infractions, mandated board changes, and increased cooperation requirements are more likely to have Monitors. We find such appointments are associated with an 18%–25% reduction in violations while the Monitor is on site, however, the effect does not persist after the Monitorship ends. Using a semisupervised machine learning method to measure changes in firms' ethics and compliance norms, we find that the reduction in violations is associated with changes in ethics and compliance that also do not persist. Finally, we document that firms under Monitorship experience a persistent reduction in innovation, highlighting a previously unexplored cost of these interventions. Overall, our results suggest that, although Corporate Monitors on site are associated with fewer violations, firms revert to previous levels of violations following Monitors' departure.