The “revolving-door” phenomenon whereby analysts are hired by firms that they cover poses a threat to their independence. In this paper, I document this phenomenon and assess the extent to which it is associated with analysts’ issuance of biased research reports during the year prior to their employment with the covered firms. During this final year, I find that the revolving-door analysts alter their forecasts, target prices and recommendations in a direction which suggests that they are attempting to gain favor with their would-be employers. Specifically, relative to other analysts, they become more optimistic about the firms that end up hiring them while, at the same time, they become more pesimistic about other firms’ prospects. The findings raise concerns about their independence and indicate a potential benefit to tightening employment regulations in this industry.

In this paper, I examine the effects of failed M&A deals on firms’ disclosure decisions. As a firm’s detailed proprietary information is shared with the counterparty during an M&A deal, the value of the information declines if the deal fails. As a result, it becomes less costly for the firm to disclose the information publicly. Consistent with this reasoning, I find increases in the disclosure of proprietary information in the year after firms experience failed deals. I strengthen my inference through a quasi-natural experiment based on the Federal Trade Commission’s guidance, which constrains the exchange of proprietary information during M&A deals. I also provide evidence that investor demand contributes to this effect. Finally, consistent with the notion that increased disclosure of proprietary information effectively reduces information asymmetry, I find decreases in information asymmetry between firms and their investors after failed deals. Overall, my study sheds light on how failed deals affect the disclosure decisions and information environment of the firms involved.

I investigate the impact of disclosure regulation on competition. Using a threshold of the anti-fraud disclosure regulation in the U.S. government procurement market, I find that requiring contractors to disclose contract-related misconduct discourages competition in contract bidding. Consistent with heterogeneity in compliance costs, the effect is more pronounced (1) when contract bidders are small firms, (2) when a contract is low value, (3) when a contract is likely to involve more disclosures, and (4) when there are alternative markets for the contracted product. Next, I provide direct evidence of channels as to why the regulation leads to less competition. I find that whistleblower lawsuits and IRS attention to contractors with treated contracts increase because contract-related misconduct is more visible after the regulation is in place. Overall, my evidence suggests that disclosure regulation has significant real effects by imposing costly compliance costs and additional risks on bidders to the extent that they are unwilling to bid, which reduces competition in the government procurement market.

This study examines the impact of the new lease standard, ASC 842, on the portfolio decisions of active corporate bond funds. ASC 842 requires firms to recognize operating leases on the balance sheet and disclose additional information to support this recognition. Using monthly portfolio holdings, I find that shortly after its implementation, active corporate bond funds reduce holdings of bonds issued by firms with significant exposure to operating lease recognition. Further analyses show the effect is more pronounced for non-sophisticated funds, high-yield funds, issuers with more overestimated imputed interest rate (underestimated as-capitalized operating leases) and more complex leasing activities questioned by regulators. These findings suggest that active corporate bond funds fail to fully adjust for off-balance-sheet operating leases and underestimate credit risks of de facto riskier holdings under the legacy lease accounting standard. Operating lease recognition under ASC 842 alleviates the information-processing constraints faced by active corporate bond funds and enhances their ability to incorporate operating leases into their in-house fundamental credit analyses. This study is the first to highlight the impact of accounting reporting changes on the portfolio decisions of active corporate bond funds and provides evidence to FASB during its post-implementation review of the ASC 842.