We study how government regulation limiting the adoption of environmental, social, and governance (ESG) policies distorts financial market outcomes. The state of Texas enacted laws in 2021 that prohibit municipalities from contracting with banks that have certain ESG policies. This led to the...

We present a life-cycle model in which households can invest in short- or long-term assets to hedge against interest-rate risk. Our model matches important stylized facts. First, the share of long-term assets in households' wealth is hump-shaped over the life-cycle. Within cohorts, it increases...

What role do deposits play in the international transmission of US monetary policy shocks? We find that the US monetary shocks are transmitted internationally through banks' deposits. Specifically, we document that after a 1 p.p. unexpected increase in the policy rate, global banks increase...

Using survey forecasts, we find that subjective expectations of earnings growth and price growth account for over 90% of cross-sectional variation in stock price-earnings ratios. This is largely due to expected earnings growth, which is more volatile and more correlated with P/E ratios than...

We decompose firm-level corporate bond and equity index returns into (1) duration-matched government bond returns and (2) the excess return over and above this duration-matched counterfactual, what we term duration-adjusted returns. Our decomposition provides markedly different return patterns...

There is ongoing debate as to whether the practice known as “payment for order flow” (PFOF) causes price improvement for retail investors. In this paper, I use a randomized controlled trial to attempt to answer this question and measure the extent of price improvement. The trial involves...

We show that FOMC announcement surprises are predicted by preceding ECB monetary policy announcement surprises. Specifically, a 1 p.p. ECB monetary policy surprise predicts a subsequent 0.25 p.p. FOMC surprise. We find little evidence that this predictability is due to the Fed using the ECB to...

Using plausibly exogenous variation in the ability to short-sell, we provide evidence that public information is predominantly impounded into prices via trade. Studying the role of trade in the context of publicly-observed cash flow news, we find that only 6% of total price discovery is realized...

We provide the first large-sample evidence of foreign influence in US politics, showing that meetings between foreign countries and legislators affect government resource allocation directly for countries and indirectly for firms. To do so, we introduce a comprehensive dataset of date-stamped...

A large percentage of text in short-sell research reports pertains to accounting fraud and earnings mismanagement. Using survey cash-flow forecasts as a counterfactual, we find that investors underreact to the cash-flow news contained in short-sell reports. On average, target firms earn abnormal...