This paper evaluates the presence of racial disparities in the issuance of consumer credit. Using a database of credit histories, I link location-based information on race with individual credit files. After controlling for place-specific factors such as housing vacancy rates and general population demographics, I find qualitatively large differences in the amount of credit offered to similarly qualified applicants living in black versus white areas. High data quality allows distinguishing between issuer-provision (supply) and utilization of credit (demand). Additional estimates using information on payday lending provide support for idea that issuers condition lending on location.

This paper employs a new empirical approach for identifying the impact of government spending on the private sector. Our key innovation is to use changes in congressional committee chairmanships as a source of exogenous variation in state-level federal expenditures. We show that fiscal spending shocks appear to significantly dampen corporate investment activity. This retrenchment occurs within large and small states and is most pronounced among geographically concentrated firms. The effects are economically meaningful, and the mechanism--entirely distinct from interest rate and tax channels--suggests new considerations in assessing the impact of government spending on private-sector economic activity.

ABSTRACT: We examine the information role of accounting disclosures on warranties, utilizing a database that became available due to the requirements of FIN 45. First, because firms use warranty policies as a business strategy to promote their products, a warranty reserve can serve two roles: an information signal regarding product quality, as well as a contingent liability. Consistent with this view, we find that the stock market recognizes that: (1) the warranty reserve contains information about firms’ future performance, and (2) the reserve is a liability. Second, because warranty accruals require estimation of future claims, they can be used as a tool of earnings management. Our evidence indicates that managers use warranty accruals to manage earnings opportunistically to meet earnings targets. Finally, we find that the stock market recognizes the understatement of warranty liabilities of firms that managed earnings.