Existing findings on financial disclosure's effect on corporate financial decisions (e.g., investment) can be theoretically rationalized by multiple mechanisms related to information frictions. For instance, an increase in investment associated with an increase in financial transparency is consistent with both a reduction in asymmetric information and a mitigation of moral hazard. We develop a dynamic corporate finance model to separately identify and quantify the effects of asymmetric information and moral hazard. The model features endogenous financial disclosure, signaling, and investor learning. Utilizing confidential panel data of private and public U.S. corporations from the U.S. Census Bureau, we bring unique empirical bearings of the quantitative results of our model.

This paper investigates the role of bank capital regulation in shaping market shares between banks and nonbanks, interest rates, aggregate credit, and financial stability. To this end, we develop and calibrate a structural model where dominant banks, small banks, and nonbanks compete in the downstream market. Dominant banks provide funding to nonbanks via loans in the upstream market, where dominant banks have market power. In equilibrium, negative shocks to nonbanks' balance sheet spillover to banks. We uncover a novel channel through which the stabilizing effect of capital requirements spills over from banks to nonbanks, even though nonbanks are not directly regulated. Facing tighter capital requirements, banks raise more capital and thus have more skin in the game in the loan market. This motivates dominant banks to reduce their nonbank spillover risk by lowering the price of upstream funding to nonbanks, leading nonbanks to lower their loan interest rate in the downstream market. Given lower prices, nonbank borrowers choose less risky projects and thus reduce nonbank loan default risk. Lower nonbank loan prices also shift demand toward nonbanks which increases their market share and borrowing from banks. Quantitatively, we find that the rise in capital requirement for banks explain about 33% of the increase in market share of nonbanks and about 75% of the reduction in nonbank failure.

We empirically assess the effects of banks' information environment on the bank lending channel of monetary policy transmission. Intuitively, higher information asymmetry makes it more costly for banks to draw on wholesale funding to make up monetary-policy-induced drops in insured deposits. Quantitatively, a one-standard-deviation increase in opacity corresponds to a 2.24 percentage-point decrease in loan growth given a 100-basis-point increase in the federal funds rate. Furthermore, we find that the effect of bank opacity on bank lending sensitivity is stronger for public banks. This result suggests that the wholesale funding market creditors monitor public banks more closely, consistent with the fact that public banks disclose more information than private banks.

Utilizing firm credit registry data from Japan, this paper conducts large-sample analyses on the debt structure of private firm. First, we document that bank loans and trade credits are the two dominant sources of debt financing for private firms. Second, there is a persistent and increasing tendency of debt specialization from 2000 to 2020. Furthermore, the usage of long-term debt is on a upward trend over our sample period.

U.S. Census research projects that utilize confidential data on detailed balance sheet and income statement information of private and public corporations in the United States. Census Bureau project ID: wi2981.

This paper investigates the relationship between intra-firm director pay inequality and board partisanship. Using firm-level data with detailed information for board directors, we first document that there is significant heterogeneity in director compensation inequality across U.S. public corporations. Some firms (e.g., Costco) pay all of their directors the exact same amount, while some pay their directors fairly unequally. We uncover that relative to non-partisan boards, partisanship on both sides of the aisle is associated with higher director compensation inequality. In further analysis, we find that partisanship also has an effect on the corporate governance implications of within-firm director compensation inequality.

Using borrower-lender-matched loan-level data, we show that firms with higher markups in the product market enjoy significantly lower loan spread when they borrow in the syndicated loan market. This finding is robust to all standard corporate finance controls (e.g., profitability) that have predictive power on the cost of debt-financing, as well as to a wide range of fixed effects. We further show that this effect is stronger for unsecured loans, credit lines, and among rated corporations. We develop and estimate a dynamic corporate finance model with endogenous firm-level markups and risky debt to explore the causal mechanisms behind our empirical findings.