Policy Uncertainty, Earnings Management, and the Role of Political Connections 

Political decisions shape the operating environment for the economy as well as the individual firm. Political and regulatory reactions to the Global Financial Crisis, government shutdowns, or major tax reforms number prominently among them. As reactions from political actors are rarely clear-cut ex ante, grave crises give rise to political uncertainty.  Political uncertainty affects economic […]

Political Influence and Regulatory Enforcement

In April of 2010, a coal dust explosion at an underground coal mine in West Virginia killed 29 miners, constituting the worst mining disaster in the U.S. since 1970. An independent, state-led investigation of the accident concluded that regulatory capture was one cause of the tragedy. Political clout that the mine owner, Massey Energy, gained […]

Cruel and Unusual Circumstances: The Fed’s Use and Misuse of Penalty Rates

After a political and legislative showdown at the end of 2020, Congress closed the Fed’s most novel Section 13(3) emergency lending facilities—the ones aimed most directly at Main Street. These facilities—supported by Treasury funds allocated by the Coronavirus Aid, Relief, and Economic Security (CARES) Act—lent only a fraction of their stated maximum lending limits, leaving many criticizing the programs’ overly punitive […]