Publications

Direct and indirect effects of transparency regulation
with Matthias Breuer, forthcoming in the Journal of Accounting & Economics (2026)

Mandatory disclosure would reveal corporate carbon damages
with Michael Greenstone & Christian Leuz, Science (2023)
Explore our interactive website: Climate Disclosure Explorer

Other articles
Mandatory disclosure and corporate carbon damages
with Michael Greenstone & Christian Leuz, Accountability in a Sustainable World Quarterly (2023)

Working Papers

Financial information and firm heterogeneity
solo-authored

Abstract: This paper explores distributional and welfare effects of financial information. Exploiting variation in market-wide financial transparency of various countries and industries, I find that financial transparency (e.g., information on profitable niche markets) helps larger firms grow even larger, seemingly at the expense of smaller firms. I provide evidence on two channels that can contribute to this distributional effect: Firms with multiple subsidiaries appear able to avoid the direct costs of financial transparency by locating their subsidiaries in low-transparency regions. At the same time, firms selling to global markets appear able to use the financial information to spot profitable export destinations. To explore the welfare implications of this distributional effect, I examine larger firms’ productivity, product variety, and prices. While larger firms tend to be more productive than smaller firms, I do not find that they increase their productivity or product variety because of market-wide financial information. They also do not appear to decrease their prices. Collectively, these findings suggest that financial transparency concentrates economic activity among larger firms. This concentration may come with some efficiency gains through the redistribution of market shares to more productive firms. The welfare effects for customers, however, remain ambiguous given limited effects on product variety and prices, and an increased risk of larger firms gaining market power.

Disclosure requirements and legal form choice
with Matteo Merlo & Jochen Pierk

Abstract: We examine how financial disclosure requirements influence firms’ choice of legal form. Limited liability shields entrepreneurs’ personal assets from downside exposure, but it comes with costs: limited-liability firms must publicly disclose financial information, whereas firms under alternative legal forms can avoid disclosure. Exploiting the European Union Micro Directive (Directive 2012/6/EU), which allows member states to relax reporting obligations for micro-entities, we demonstrate that easing disclosure obligations leads to an increase in the share of firms incorporating under limited liability. This effect is strongest in countries that restrict public access to micro firms’ financial statements and in innovation-intensive industries, consistent with proprietary cost concerns driving the response. Our results suggest that targeted regulatory relief can stimulate incorporation under limited liability, particularly in sectors with high proprietary costs.

Disclosures of expected credit losses around the beginning of a crisis: Evidence from European banks during the Covid-19 pandemic
with Jannis Bischof & Vincent Giese

Abstract: The International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) have recently adopted expected credit loss models for the loan loss provisioning of banks. The new regulations are a response to the 2008-09 financial crisis and the widespread view that loan loss provisions were “too little, too late” under the former incurred credit loss model. The expected credit loss model represents a more forward-looking approach and is designed to shift loss recognition to a much earlier stage of the economic cycle. We use a small sample of large European banks that provide sufficiently detailed disclosures of their provisioning choices under the new International Financial Reporting Standard (IFRS) 9 regulation prior to the COVID-19 crisisto examine whether banks had built up sufficient capital buffers at the onset of the crisis. Our evidence indicates that banks’ loan loss provisioning under the new expected credit loss model was lower in the period immediately before the crisis than it would have been under an incurred loss model (largely because of reversals). Therefore, the increase in loan loss recognition during the crisis was even larger, potentially amplifying procyclical effects and leading the European Central Bank to practice regulatory forbearance. The effect results from the exogenous nature of the pandemic, which banks did not consider in their internal loss estimates when determining expected credit losses. Increased reporting discretion in banks’ estimation procedure further augments the effect.

Page updated

Google Sites

Report abuse