The U.S. hospital industry has seen a dramatic growth of for-profit hospitals. We show that the vulnerability of for-profit hospitals to external financing shocks generates adverse outcomes for patients. Using confidential patient discharge data, we show that negative shocks in external capital markets increase patient mortality of for-profit hospitals, but not of nonprofit hospitals. This effect is robust to refined controls for hospital characteristics, patient demographics, diagnoses and treatment procedures. It is concentrated among patients holding public insurance and facing greater health risks. Our evidence points to nonprofit hospitals' deeper cash reserves serving as a cushion against negative financing shocks.

We examine how firms' access to financing affects the racial pay gap inside firms using granular data on worker earnings and career histories. Exploiting exogenous shocks to firms' debt capacity, we find that better access to financing significantly narrows racial pay gaps inside firms, especially among higher-skilled workers, firms with worse diversity practices, and in tighter labor markets. Following the shocks, minority workers are more likely to be promoted and reassigned to technology-oriented occupations. Our evidence is consistent with financing-induced labor demand improving firms' utilization of minority workers' human capital, generating long-lasting gains for minority workers.

Can local lenders influence mortgage origination and pricing decisions? We examine the role of local bank branches and their managers in the mortgage industry. We find that the idiosyncratic, past experiences of bank branch managers regarding loan approval and pricing significantly shape the corresponding decisions at current branches. Our evidence suggests local branches exercise substantial discretion over mortgage approval, but moderate discretion over pricing. Such discretion increases with credit risk, but decreases with competition. Effects are not driven by manager style or the selection of bank customers. Importantly, managers' past experiences help explain the heterogeneity of monetary passthrough across branches.

We examine the incentives that banks face to report money laundering activity via SAR reports, and the implications of a bank's reporting strategy for criminal activity. We first analyze banks' SAR reporting decisions using a stylized model, which predicts that banks facing depressed revenues from their routine business lines and more profit-seeking pressure adopt more lax reporting policies. These reporting policies help to attract criminals, thus increasing the underlying amount of suspicious activities that banks need to examine and report. Empirically, we test the relation between risk-taking incentives and SAR volume at the county level. We find that counties in which banks face higher competition and lower profitability generate higher volumes of SAR activity. These effects are more pronounced for large banks, banks that are distant from regulators, and banks that face greater risk-taking incentives vis-à-vis earnings pressure. We establish causality using shale gas expansion in unrelated states. Consistent with risk-taking incentives influencing SARs, we find that banks experiencing shale growth increases (decreases) generate fewer (more) SAR reports. Overall, our results provide important insights regarding the role of banks in influencing financial crime, and suggest that a bank's reporting policy has indirect implications for local criminal activity.

This study investigates how U.S. firms respond to geopolitical tensions by reorganizing their global supply chains and how CEO partisanship shapes such responses. Firms reduce import from foreign countries with diverging ideologies from the U.S., more so by firms whose CEOs are politically aligned with the U.S. administration. Following foreign elections that increase ideological distances, aligned CEOs cut imports from election countries by 40% more than misaligned ones. Potential mechanisms include aligned CEOs having heightened concerns for geopolitical risk and national security, and demonstrating support for the administration. These politically driven import decisions significantly reduce firm value and performance.

Using a customized survey and an information-provision experiment, we establish that loan officers' individual subjective expectations about inflation, GDP growth, and policy rates vary substantially within and across bank types and have a sizable causal effect on credit supply decisions. Decisions about loan issuance and pricing exhibit large heterogeneity based on loan officers' subjective expectations even for the same borrower assessed at the same time. Moreover, officers with rosier macroeconomic expectations penalize less borrowers with worsening fundamentals than do officers with more pessimistic expectations. Our findings have implications for theories of financial intermediation and reveal an overlooked human-based friction to the transmission of monetary policy.

Given that employer-sponsored health insurance constitutes a significant component of labor costs, we examine the causal effect of insurance premiums on worker outcomes across the income distribution. To address endogeneity concerns, we instrument premiums using idiosyncratic variation in insurers' recent losses, which is plausibly exogenous to worker outcomes. Analyzing U.S. administrative data, we demonstrate that firms reduce employment following premium increases. Importantly, higher premiums adversely affect lower-income workers but not high-income workers. Following instrumented premium increases, low-income workers face higher risks of job separation, unemployment, large earnings losses, transitions to staffing arrangements, and reduced wage growth even when retained. In contrast, high-income workers experience minimal or opposite effects.

We study the effects of a policy that increased reliance on algorithmic underwriting for low-credit-score, high-leverage mortgage borrowers. Using a bunching-based approach, we document a large policy-induced credit expansion among affected borrowers, with little changes in default risks given observables. The credit expansion is larger among White, Hispanic, and higher-income borrowers. Post-policy, low-credit-score individuals are more likely to move to better-rated school districts. A structural approach helps quantify the welfare implications of the policy. Our results suggest a limited role of human discretion for most borrowers in this market and highlight challenges in increasing financial inclusion for certain disadvantaged populations.

We examine the survival prospects, employment profiles, and patient outcomes at private equity (PE)-acquired hospitals. Target hospitals maintain their survival rates while significantly reducing employment and wage expenditures. The number of core medical workers drops temporarily, but returns to its pre-acquisition level in the long run. However, administrative job and wage cuts persist over the long term, particularly at previously nonprofit hospitals. Using proprietary insurance claims data, we find no significant changes in patient demographics or inpatient prices at PE-acquired hospitals. While patient satisfaction declines, there is no evidence of increased patient mortality or readmission rates at PE-acquired hospitals.

We examine how access to debt markets affects firms' incentives to provide trade credit. Using hand-collected trade credit data between customer-supplier pairs and two exogenous shocks to firms' debt capacity, we show that better access to debt reduces firms' provision of trade credit per dollar of sales. The decline in trade credit is concentrated on ex-ante powerful customers, but absent for weak ones, suggesting that better access to debt improves firms' bargaining position relative to powerful customers. The decline in trade credit leads customers to cut investment, increase leverage, and scale back trade credit provision to firms further downstream.

We study the asset market for pollutive plants. Firms divest pollutive plants in response to environmental pressures. Buyers are firms facing weaker environmental pressures that have supply chain relationships or joint ventures with the sellers. While pollution levels do not decline following divestitures, sellers highlight their sustainable policies in subsequent conference calls, earn higher returns as they sell more pollutive plants, and benefit from higher Environmental, Social, and Governance (ESG) ratings and lower compliance costs. Overall, the asset market allows firms to redraw their boundaries in a manner perceived as environmentally friendly without real consequences for pollution but with substantial gains from trade.

How does firm-specific human capital shape careers in the finance industry? We build a dynamic model where workers accumulate portable and nonportable (firm-specific) human capital and learn about their match quality with employers. Estimating the model using granular data on M&A advisory bankers, we show that a large fraction of bankers' human capital is nonportable, ranging from 12% to 46% across different firm types. Bankers make a dynamic trade-off between portability and returns on human capital, leading to time-varying job preferences over their life cycle. Our results have broad implications for careers in finance and the provision of financial services.

We study the comparative advantage of firms with focused and multidivisional organizational forms at attracting valuable human capital. Using the merger and acquisition (M&A) advisory industry as a laboratory, we show that high-performing individuals are more likely to migrate to boutique (focused) banks, especially those who are still on the upward trajectory of their career. Such migration is amplified by the cross-subsidization inside bulge bracket (multidivisional) firms, proxied by poor performance of their non-M&A departments. The transition of skilled labor improves the performance of the boutique sector, potentially contributing to the rise of boutiques over the past two decades. Moreover, M&A deal outcomes differ when having boutique advisors. Our findings suggest that corporate organizational structure and labor migration can jointly shape industry dynamics.

Does partisanship influence the way investors price financial assets? Using voter registration data of bankers originating large corporate loans, we show that bankers whose party differs from that of the U.S. President charge 7% higher loan spreads than other bankers. This effect holds regardless of borrowers' partisanship, and becomes stronger for politically active bankers and when partisan media exhibit greater disagreement. Bankers do not match disproportionately with co-partisan borrowers but they lead syndicates more frequently with co-partisan bankers. Our results are not driven by bank or borrower fundamentals, but suggest that investor optimism, driven by political alignment, shapes asset prices.

Using big data on U.S. job postings, we show that firms increase skill requirements when hiring workers in states that cut personal income taxes. We trace a significant driver of this effect to companies' reallocation of skilled job postings across states based on tax differentials. The tax-induced upskilling is observed within occupations and is more pronounced for high-skill positions within firms. It is accompanied and amplified by concurrent increases in information technology expenditures at local-level establishments. In characterizing the mechanism at play, we show that job upskilling is triggered by tax changes affecting middle- and upper middle-class workers. It is pronounced for high-growth firms, for firms in tradable industries, and in urban areas, but it is mitigated among profitable firms. A narrative-based analysis helps us establish causal inferences.

We provide evidence that changes in lender optimism can lead to excessive fluctuations in credit spreads across the credit cycle. Using data on the real estate properties of loan officers originating large corporate loans, we find that credit spreads overreact to sophisticated lenders' recent local economic experiences, captured by local housing price growth. These effects are only present when borrowers own real estate assets and during times of greater uncertainty about real estate values, i.e., boom-and-bust cycles in housing prices. Our analysis suggests that recent personal experiences shape sophisticated lenders' beliefs about real estate values, which affect their pricing decisions.

In this study, we examine whether firms respond to internal control weaknesses (ICWs) by requiring accounting-specific skills when hiring rank-and-file employees. Using unique data containing an extensive collection of job postings, we document significant increases in firms' job postings that list accounting skills after the disclosure of an ICW. This effect is more pronounced for firms with better financial resources and when ICWs are more severe or personnel-related. In addition, our results extend to employees that are not specifically designated as accountants, suggesting a broader role for rank-and-file employees in influencing internal control quality. Finally, we find that increases in job postings with accounting skill requirements are associated with improvements in internal controls and a higher likelihood of ICW remediation. Overall, our findings shed new light on how firms respond to ineffective internal controls by increasing their emphasis on accounting skills in their workforce.

We examine how cross-country differences in capital regulations shape the structure of global lending syndicates. Using globally syndicated loans extended by banks from forty-four countries, we find that strictly regulated banks participate more in syndicates originated by lead lenders facing less stringent capital regulations. The resulting lending syndicates extend loans to riskier borrowers, charge higher spreads, forego covenants more frequently, and incur higher default rates. Such syndication activity also facilitates the access to credit by riskier corporations and exposes both participants and lead arrangers to greater systemic risk. Overall, our finding is consistent with the explanation that strictly regulated banks rely on the expertise of loosely regulated banks to procure risky deals outside the border.

Firms in the U.S. economy are closely interconnected in a production network and are subject to shocks that propagate within the network. This study examines the liquidity management of firms centrally connected in the network. I show that, while central firms are more exposed to aggregate swings, they maintain higher cash holdings to protect themselves and connected firms against such exposure. Central firms' cash holding motives are alleviated by firm diversification but are aggravated by industry competition. Such motives are not explained by alternative determinants of cash policies. My findings suggest that systematically important firms proactively dampen the propagation of shocks in the production network.

We investigate the extent to which loan officers generate independent, individual effects on the design and performance of syndicated loans. We construct a large database containing the identities of loan officers involved in structuring syndicated loan deals, allowing us to systematically disentangle borrower, bank, and loan officer fixed effects. We find that loan officers have significant influence on interest spreads, loan covenant design, and loan performance. Inclusion of borrower fixed effects increases our power to rule out the alternative that loan officer fixed effects reflect the matching of officers to borrowers based on time-invariant borrower characteristics. We document heterogeneity in loan officers' influence across loan contract terms, with loan officers exerting stronger influence over covenant package design than over interest spreads, but marginal influence on loan maturity. Lead officers have greater influence than participant officers over covenant package design and loan performance, but less robust differential influence on interest spreads.

Better access to debt markets mitigates the effects of uncertainty on corporate policies. We establish this result using the staggered introduction of anti-recharacterization laws in U.S. states. These laws enhanced firms' ability to borrow by strengthening creditors' rights to repossess collateral pledged in special purpose vehicles. After the passage of the laws, firms that face more uncertainty hoard less cash and increase payouts, leverage, and investment in intangible assets. Our findings suggest that better access to debt markets shields firms from fluctuations in uncertainty and decreases firms' precautionary behavior, contributing to the deployment of cash and other internal resources to investment in intangible capital.

We examine whether bankers face disciplining consequences for structuring poorly performing corporate loans. We construct a novel data set containing the employment histories and loan portfolios of a large sample of corporate bankers and find that corporate credit events (i.e., downgrades, defaults, bankruptcies) increase banker turnover. The effect is pronounced when bankers issue loans with loose terms or experience severe losses. Credit events prompt bankers to adopt stricter future risk management practices, such as offering restrictive covenant packages. Overall, our findings are consistent with banks disciplining employees as a means to manage their own risk exposure.

Unionized workers are entitled to special treatment in bankruptcy court that can be detrimental to other corporate stakeholders, with unsecured creditors standing to lose the most. Using data on union elections, we employ a regression discontinuity design to identify the effect of worker unionization on bondholders in bankruptcy states. Closely won union elections lead to significant bond value losses, especially when firms approach bankruptcy, have underfunded pension plans, and operate in non-RTW law states. Unionization is associated with longer, more convoluted, and costlier bankruptcy court proceedings. Unions depress bondholders' recovery values as they are assigned seats on creditors' committees.

We study pricing and non-pricing features of loan contracts to gauge how the credit market evaluates a firm's customer-base profile and supply-chain relations. Higher customer concentration increases interest rate spreads and the number of restrictive covenants featured in newly initiated as well as renegotiated bank loans. Customer concentration also abbreviates the maturity of those loans as well as the relationship between firms and their banks. These effects are intensified by customers' financial distress, the level of relationship-specific investments, and the use of trade credit in customer-supplier relations. Our evidence shows that a deeper exposure to a small set of large customers bears negative consequences for a firm's relations with its creditors, revealing limits to integration along the supply chain.