This article examines whether agency conflicts introduced by securitization affect servicers’ asset liquidation decisions. We find securitized loans are 25.4–28.5 percent less likely to be liquidated via short sales than portfolio loans. Securitized loan servicers’ bias against short sales does not represent an agency conflict if short sale and real estate owned (REO) liquidations are equally efficient. However, we find REOs have significantly lower average liquidation prices, higher average liquidation expenses, and longer average liquidation times than short sales. Although short sales benefit investors, securitized loan servicers have a financial incentive to pursue REOs.

Prior work documents that managers increase the quantity of earnings guidance provided after exogenously losing coverage from an equity analyst. I examine how analysts influence guidance quality. I find that following an exogenous reduction in analyst coverage, managers issue earnings guidance that is lower quality (i.e., it is less accurate). This result varies predictably based on managers’ incentives, features of the firm’s analyst coverage, and the presence of other intermediaries. Overall, my findings identify a situation in which guidance quantity and quality move in divergent directions and highlight that analysts can be an important determinant of voluntary disclosure quality.

We present evidence that the high estimated marginal propensities to consume (MPCs) from the leading household studies result in implausible macroeconomic counterfactuals. Using the 2008 tax rebate as a case study, we calibrate a standard macro model with the estimated micro MPCs to construct counterfactual macroeconomic consumption paths in the absence of a rebate. The counterfactual paths imply that consumption expenditures would have plummeted in spring and summer 2008 and mostly recovered in September 2008. We use narratives and forecasts to argue that these paths are implausible. We show that standard two-way fixed effect estimates of the micro MPCs are upward biased. When we correct for the biases, we estimate smaller micro MPCs using the CEX data than the previous literature. We show that realistic modifications of the model result in general equilibrium forces that dampen rather than amplify micro MPCs. The combination of smaller micro MPCs and dampening general equilibrium forces implies general equilibrium consumption multipliers that are below 0.2.

We study partially linear models when the outcome of interest and some of the covariates are observed in two different datasets that cannot be linked. This type of data combination problem arises very frequently in empirical microeconomics. Using recent tools from optimal transport theory, we derive a constructive characterization of the sharp identified set. We then build on this result and develop a novel inference method that exploits the specific geometric properties of the identified set. Our method exhibits good performances in finite samples, while remaining very tractable. We apply our approach to study intergenerational income mobility over the period 1850–1930 in the U.S. Our method allows us to relax the exclusion restrictions used in earlier work, while delivering confidence regions that are informative.

We provide evidence that similar price effects occur from new multifamily rental housing on surrounding owner-occupied property values regardless of whether the development was subsidized. These effects were on average negative in higherincome communities, but became either non-distinguishable from zero or positive in higher-income communities with sufficient population density. These results imply that previous opposition to all new rental housing by homeowners is misguided as developments could raise property values in some higher-income neighborhoods.

We examine the effects of local newspapers on firms’ information environments. With newspaper employment dropping precipitously in the last few decades, we posit that these changes will harm local firms’ information environments. Consistent with local news improving information environments, we find that volatility, spreads, and illiquidity increase as local newspaper intensity declines and that this is associated with firms’ importance in their local economy. We further find that for firms that are more important in their community, or have busy analysts, less local newspaper intensity is associated with significantly lower analyst accuracy and higher forecast dispersion. This is consistent with local newspapers improving information environments, even for sophisticated and likely remote information intermediaries. We also investigate how stakeholders respond to declines in local news and find that managers increase the amount of forward-looking disclosures while analysts increase coverage. These results provide insights into the methods by which stakeholders attempt to improve firms’ information environments when local news coverage fades.

We consider a procurement auction for the provision of a basic service to which an add-on must later be appended. Potential providers are symmetric, have private information on their cost for the basic service and the winning firm must also implement the add-on. To finance value-enhancing activities related to the add-on, this firm may need extra funding by outside financiers. Nonverifiable effort related to these activities creates a moral hazard problem which makes the firm’s payoff function for the second period concave in returns over the relevant range. Concavity has two effects. First, it makes it more attractive to backload payments to facilitate information revelation. Second, uncertainty on the cost of the add-on introduces a background risk which requires a risk premium. In this context, we characterize the optimal intertemporal structure of payments to the winning firm, equilibrium bidding behaviour and reserve prices for a first-price auction.

Research concludes that managers’ political orientation influences their decision-making and offers the political connections and risk tolerance hypotheses as explanations. We investigate partisan bias as an additional way political orientation may influence managers’ decisions. Partisan bias results in individuals whose partisan orientation aligns with that of the US president expressing more optimistic economic expectations. We examine whether partisan bias is present in managers’ annual earnings forecasts. We find that firms with CEOs whose partisanship aligns with that of the US president issue more optimistically biased annual earnings forecasts than firms with other CEOs. Higher-ability CEOs, however, are less susceptible to partisan bias. Additionally, we find that overestimating customer demand contributes to the forecast over-optimism of partisan-aligned CEOs and results in greater firm overinvestment. Furthermore, investors fail to discount the news in forecasts of partisan-aligned CEOs, and their firms’ post-forecast abnormal returns are lower.

We examine whether mutual fund managers overestimate carbon risk when they are exposed to local air pollution. We find that air pollution near fund managers induces them to underweight stocks of high-emission firms. The effects strengthen among environmentally conscious fund managers and among those likely to be surprised by air pollution—consistent with the idea that managers revise their beliefs about carbon risk following exposure to air pollution. A firm’s carbon-emissions disclosures and fund managers’ sophistication moderate these effects. Carbon-intensive stocks sold by fund managers who are exposed to local air pollution subsequently outperform stocks they buy, suggesting that such underweighting is costly to fund investors.

This paper investigates the impact of the first system-wide capital relief package adopted by euro area prudential authorities, to support bank lending to firms at the outbreak of the COVID-19 pandemic. By leveraging confidential supervisory and credit register data, we uncover two main findings. First, capital relief measures support banks’ capacity to supply credit to firms. Second, the type of relief matters. Banks increase their credit supply in response to measures that reduce binding capital requirements and affect banks’ ability to distribute dividends. By contrast, discretionary relief measures that do not affect dividend policy are met with limited success. Moreover, requirement releases are more effective for banks with ex-ante lower capital headroom and for lending to smaller firms. These findings provide novel insights on the design of effective bank capital requirement releases in crisis times and, more generally, of policies to support bank credit in times of economic distress.