Abstract: The U.S. Department of Justice’s self-reporting policy encourages firms to voluntarily disclose misconduct in exchange for reduced penalties. I examine how this policy reshapes supplier contracting with high-risk non-detected firms—firms with red flags of misconduct yet without publicly recorded violations. I argue that the policy induces some firms with hidden misconduct to come forward, thereby lowering suppliers’ perceived risk of hidden misconduct among firms that remain non-detected. Consistent with this mechanism, I find that high-risk non-detected firms are more likely to form new supplier contracts after the policy, particularly with first-time partners. The effect is stronger when suppliers face greater informational frictions or are more vulnerable to negative spillovers from customer misconduct. Overall, the findings suggest that by making non-detection a more credible signal of compliance, self-reporting policy can enhance counterparty trust and expand feasible matches in interfirm relationships.

Abstract: Our study examines the impact of abortion restrictions on the mobility of 13.5 million skilled women across various occupations in the United States. Exploiting the state-level adoption of Targeted Regulation of Abortion Providers (TRAP) laws that restrict women’s access to abortion, we find that skilled women with a tendency to move exhibit a greater propensity to relocate to states without TRAP laws after their previous state adopts these laws. This pattern cannot be explained by the costs of abortion or the likelihood of unwanted pregnancy. Instead, it is more pronounced among women in areas with more liberal political ideologies and weaker religious attachments, suggesting a novel phenomenon of ideology-driven labor mobility. We further utilize the audit industry as a specific setting to shed light on the implications for job performance. We find that the relocation of female auditors leads to a higher turnover rate and a net loss of human capital at local audit offices, thereby impairing the local office’s audit quality.

Abstract: While theory suggests that firms should remain silent on divisive sociopolitical issues due to uncertain investor reactions (Bond and Zeng 2022), we document that nearly 30% of S&P 1500 firms publicly express support for the Black Lives Matter (BLM) movement on Twitter. This disclosure is positively associated with proxies for the management team’s liberal ideology. We provide evidence of ideologically driven investor responses to BLM disclosures: liberal-leaning mutual and hedge fund managers exhibit abnormal purchases of BLM-supporting firms, whereas conservative-leaning managers exhibit abnormal sales. Similarly, liberal-leaning depositors increase their holdings of riskless insured deposits at BLM-supporting banks, while conservative-leaning depositors reduce theirs. These shifts occur despite minimal changes in risk or return, highlighting the role of ideological alignment in investment decisions. Our findings imply that managers derive ideological utility from value-consistent disclosure and are willing to bear the cost of investor polarization.

Abstract: We examine whether competition affects product market discipline in banking. Exploiting a regulatory change that allows credit unions to compete directly with banks for deposits, we test whether heightened competition affects the sensitivity of deposit flows to bank performance. We find that in markets exposed to increased competition, deposit flows are more sensitive to return on assets and to negative signals from consumer complaints. Moreover, banks facing large deposit outflows improve their complaint resolution by providing more monetary relief and increasing deposit rates. Our findings highlight that information and competition are complements in fostering market discipline and have implications for consumer protection.

Abstract: This monograph offers an overview of auditing practices in China from the perspective of New Institutional Economics. We follow Douglass North’s institutional/cognitive approach to understand auditing as an institution, and our discussion proceeds in four steps. First, we explore the economic and regulatory forces that have driven the evolution of the audit market in China. Second, we discuss the implications of audit market consolidation on audit outcomes. Third, we delve into the role of audit partners and elaborate on how auditor experiences influence auditor judgment, thereby shaping the effectiveness of the auditing institution. Finally, we discuss opportunities for integrating the stakeholder model, new structural economics, informal institutions, and cognitive science into future auditing research.