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Can Germany’s economy stage an unexpected recovery?Steffen MüllerThe Economist, January 30, 2025
Soil is central to the complex interplay among biodiversity, climate, and society. This paper examines the interconnectedness of soil biodiversity, climate change, and societal impacts, emphasizing the urgent need for integrated solutions. Human-induced biodiversity loss and climate change intensify environmental degradation, threatening human well-being. Soils, rich in biodiversity and vital for ecosystem function regulation, are highly vulnerable to these pressures, affecting nutrient cycling, soil fertility, and resilience. Soil also crucially regulates climate, influencing energy, water cycles, and carbon storage. Yet, climate change poses significant challenges to soil health and carbon dynamics, amplifying global warming. Integrated approaches are essential, including sustainable land management, policy interventions, technological innovations, and societal engagement. Practices like agroforestry and organic farming improve soil health and mitigate climate impacts. Effective policies and governance are crucial for promoting sustainable practices and soil conservation. Recent technologies aid in monitoring soil biodiversity and implementing sustainable land management. Societal engagement, through education and collective action, is vital for environmental stewardship. By prioritizing interdisciplinary research and addressing key frontiers, scientists can advance understanding of the soil biodiversity–climate change–society nexus, informing strategies for environmental sustainability and social equity.
Bank lobbying has a bitter taste in most forums, ringing the bell of preferential treatment of big banks from governments and regulators. Using corporate loan facilities and hand-matched information on bank lobbying from 1999 to 2017, we show that lobbying banks increase their borrowers' overall performance. This positive effect is stronger for opaque and credit-constrained borrowers, when the lobbying lender possesses valuable information on the borrower, and for borrowers with strong corporate governance. Our findings are consistent with the theory positing that lobbying can provide access to valuable lender-borrower information, resulting in improved efficiency in large firms' corporate financing.
This paper investigates a firm's stock return asynchronicity through the auditor's perspective to distinguish whether this asynchronicity can proxy for the company's firm-specific information or the quality of its information environment. We find a significant and positive association between asynchronicity and audit fees after controlling for auditor quality and other factors that affect audit fees, suggesting that stock return asynchronicity is more likely to capture a company's firm-specific information than its information environment. We also find that asynchronous firms are more likely to receive adverse opinions on their internal controls over financial reporting, but are associated with lower costs of capital and auditor litigation, providing further evidence in support of the firm-specific information argument. Asynchronicity's positive association with audit fees is driven by firms with higher accounting reporting complexity, suggesting stock return asynchronicity captures a firm's complexity, resulting in more significant efforts by the auditor.
We test whether organizational risk management matters to bondholders of U.S. bank holding companies (BHCs), and find that debt financing costs increase when the BHC has lower-quality risk management. Consistent with bailouts giving rise to moral hazard among bank creditors, we find that bondholders put less emphasis on risk management in large institutions for which bailouts are expected ex-ante. BHCs that maintained strong risk management before the financial crisis had lower debt costs during and after the crisis, compared to other banks. Overall, quality risk management can curtail risk exposures at BHCs and result in lower debt costs.
We investigate whether a firm’s exposure to climate change, as proxied by disclosures during quarterly earnings conference calls, provides forward-looking information to investors regarding the long-term association of stock prices with current earnings and the book values of equity. Following a key regulatory mandate around the formation of the cap-and-trade program to reduce emissions related to climate change, firms’ climate change exposure decreases the association between current earnings and stock prices while increasing the relevance of book values of equity (i.e., historical earnings). However, these relationships flip when the sentiment around climate change exposure is negative, suggesting that the risks related to climate change exposure provide forward-looking information to investors when they evaluate the ability of current earnings to predict firm values. Such a relationship is stronger for new economy firms and is sensitive to conservative accounting. We also observe that the inclusion of climate change disclosure to our models improves the joint ability of earnings and book values to predict stock prices.