Francesco Trebbi, University of California-Berkeley
Miao Zhang, University of Southern California
Michael Simkovic, University of Southern California
Abstract: Does the cost of regulatory compliance fall homogeneously on small and large firms? We quantify firms' compliance costs in terms of their labor spending to adhere to government rules. Using comprehensive establishment-level occupational microdata and occupation-specific task information, we recover the proportion of a firm's wage bill attributable to employees engaged in regulatory compliance. On average for 2002-14, regulatory costs account for 1.34% to 3.33% of a firm's wage bill, totaling up in 2014 to $239 billion, and to $289 billion when adding capital equipment costs. Our findings reveal an inverted-U relation between firms' regulatory compliance costs and their scale of employment, indicating that firms with approximately 500 employees face compliance costs that are about 40 percent higher as a share of total wages compared to small or large firms. Finally, we develop an instrumental variable methodology to disentangle the influence of regulatory requirements and enforcement in driving firms' compliance costs.
Abstract: I establish that financial news production can be strongly influenced by factors unrelated to the arrival of, and demand for, information. Fluctuations in real economic
activity, such as advertising, generate cash-flow shocks to the media sector, which reacts by changing news quantity and quality. Such endogenous dynamics in news production then shift the levels of uncertainty and information asymmetry about firms, affecting real and financial outcomes. Implementing a within-firm estimator on a comprehensive data set of media advertising revenue, news, and job postings, I compare news production about the same firm by different news media whose advertising revenues are differentially exposed to industry-level advertisement shocks. Financial news production is procyclical at the aggregate level and serves as a channel for economic shock transmission and amplification.
Discussant: Diego Garcia, University of Colorado-Boulder
Vicente Cunat, London School of Economics and Political Science
Rafael Zambrana, University of Notre Dame
Vicente Bermejo, ESADE Business School
Jose Maria Abad, World Bank
Abstract: We study the effects of late payment in procurement (arrears). We exploit as a natural experiment a large-scale financing plan of the Spanish government in 2012 that unexpectedly repaid accumulated arrears of local governments to their suppliers (amounting to about 3% of Spain’s GDP). Our identification strategy relies on comparing firms included in the first phase of the program and firms accidentally omitted but repaid a year later. Repayment significantly increases corporate investment, reduces firm leverage, and increases cash reserves. Financially constrained firms respond by increasing investment and transmit the effect to the supply chain through trade credit. Less financially constrained firms react by repaying debt. We also show the accumulation of arrears deteriorates procurement relations, which recover upon repayment. Our results highlight the negative effects of procurement arrears and their interaction with financing frictions. We also provide evidence of the effectiveness of an unconventional fiscal policy that has large real effects.
Discussant: Mariassunta Giannetti, Stockholm School of Economics
Abhinav Gupta, University of North Carolina-Chapel Hill
Naman Nishesh, University of North Carolina-Chapel Hill
Elena Simintzi, University of North Carolina-Chapel Hill
Abstract: This paper investigates the impact of individual-level output data on labor redistribution towards large firms by analyzing the disclosure of employee output information through GitHub, the world's largest software management platform. GitHub tracks and publicly displays real-time individual contributions. In 2016, a policy change enabled GitHub users to display their total contributions more accurately on their profiles. Following this update, employees with 1 standard deviation higher GitHub contributions witnessed a 5% increase in job transitions to large firms, predominantly at the expense of smaller companies. While productive individuals left small firms for senior roles in larger companies, the latter retained them through internal promotions. The departure of productive workers led to an overall reduction in employment growth and productivity for small firms with more productive employees before the shock. Our findings highlight labor-related big data's role in amplifying large firms' dominance in recent years.
Discussant: Francesco D'Acunto, Georgetown University
