We use a regression discontinuity design to study ex-post discretion in lender's contractual enforcement of restrictive covenant violations. At pre-set thresholds, we find that lenders enforce contractual breaches at an 11% rate, varying between 5% and 18% and peaking when credit conditions are...

To estimate the expected cost of technical default for equityholders, we analyze the stock market reaction to changes in the ex-ante likelihood of technical default. Our large-sample, ex-ante estimates exceed five percent of equity value, which reflects material monetary and risk consequences of...

We propose and test a new channel through which fiscal policy changes affect the supply of intermediated credit and the real economy. Lenders that have greater exposure to firms expected to repatriate a significant amount of foreign income as a result of a 2004-2005 U.S. tax holiday subsequently...

Despite strong theoretical predictions based on disagreement, limited empirical evidence has linked short selling restrictions to higher prices. We test this relationship using quasi-experimental methods based on Rule 201, a threshold-based policy that restricts aggressive short selling when...

By allowing investors to efficiently allocate capital, developed financial markets promote economic growth. We revisit a key component of financial market development, namely financial reporting standards, to identify a channel underpinning this link. We focus on introductions of new financial...

We study whether and how publicizing internal information affects the value of financial markets to the real economy. By publicizing corporate filings, the SEC's EDGAR web platform reduces the cost of acquiring internal information for outsiders and so makes it relatively less attractive to...

We investigate bias in the Federal Reserve's stress test disclosures for the Comprehensive Capital Analysis and Reviews (CCAR) between 2012 and 2017. Using the market response to the report, we develop and implement a model of biased disclosure that incorporates a regulator's trade-off between...