This study examines the role of non-severe depression as a psychological anchor against overoptimism. Using earnings forecasts from Estimize, we find that an increase in the proportion of the U.S. population with depression is associated with improved forecast accuracy among users. This effect is concentrated among forecasts that are optimistic and analysts who take longer time to issue forecasts, highlighting reduced optimism and slow information processing as economic mechanisms that explain our results. We also show that this effect is distinct from the influence of temporary seasonal depression or other sentiment measures on decision-making. Overall, our research establishes a link between depression and crowdsourced financial evaluations

We study the impact of the U.S. money market fund reform implemented in October 2016 on global banks' funding supply and business activities. We show that the reform induced a large negative wholesale funding shock for global banks. In contrast to the conventional bank lending channel, the primary response of global banks to the reform was a cutback in arbitrage positions that relied on unsecured funding, rather than a reduction in loan provision. We discuss the role of postcrisis liquidity regulations and unconventional monetary policy in explaining our findings, and implications for banks' business models and deposit competition.

We investigate how a state's political corruption affects a resident firm's debt contracting and how a change in anti-corruption regulation alters the relation between corruption and loan contracting. Firms in more corrupt states are associated with significantly higher loan spreads and tighter loan covenants than firms in less corrupt states. Furthermore, the passage of the Dodd–Frank whistleblowing provision amplifies the conhcerns of banks about the detrimental impact of corruption due to the increased exposure of firms to whistleblowing threats. The detrimental impact of corruption is further amplified when a state has a higher level of whistleblowing involvement, when firms are located in more corrupt states or closer to the SEC office, and when the bank's state is less corrupt than the firm's state. In general, we document the externality of corruption in the debt financing of firms and the response of banks to changes in regulation.

This study examines whether and how voluntary news disclosure made by private firms affects investment sensitivities of public peer firms. Analyzing data from U.S. public firms from 1996 to 2018, we discover that public firms’ investment sensitivities intensify in industries with active private firm disclosures; a one standard deviation increase in private firm news disclosure raises public firms’ investment sensitivities by 14.5–17.6 percent. To mitigate endogeneity, we employ instrumental-variable methods, leveraging the staggered implementation of prudent investor rules and enforceability of noncompete agreements. Our results show that these effects are magnified in industries marked by the higher expected industry return volatility and less local newspaper coverage. We find that news from private firms significantly enhances public firms’ investment sensitivities, regardless of its sentiment. This research highlights the crucial role of private firm disclosures in influencing public firms’ investment decisions, enhancing our understanding of information spillovers in corporate disclosure.