We study the interaction of expansionary rate-based monetary policy and quantitative easing, despite their concurrent implementation, by exploiting heterogeneous banks and the introduction of negative monetary-policy rates in a fragmented euro area. Quantitative easing increases credit supply less, translating into weaker employment growth, when banks’ funding costs do not decrease. Using administrative data from Germany, we uncover that among banks selling their securities, central-bank reserves remain disproportionately with high-deposit banks that are constrained due to sticky customer deposits at the zero lower bound. Affected German banks lend relatively less to firms while increasing their interbank exposure in the euro area.

Get access Abstract This study examines how changes in state corporate tax rates affect corporate social responsibility (CSR) performance among U.S. firms. Using staggered state-level tax reforms and a difference-in-differences (DiD) design, we identify an asymmetric causal effect: tax cuts significantly enhance CSR performance by reducing concerns, whereas tax increases only marginally weaken CSR strengths. Drawing primarily on signaling theory, complemented by slack resource and stakeholder perspectives, we argue that tax cuts expand financial slack, enabling firms to use CSR as a positive signal of financial strength, long-term orientation, and responsible use of tax savings. In contrast, firms avoid cutting CSR significantly after tax hikes to prevent negative signaling. In support of the theories, our heterogeneity analyses show that these effects are stronger among financially constrained firms and are concentrated in material CSR issues that are financially relevant to investors. A domain-level analysis further reveals that tax increases reduce environmental strengths, while tax cuts lower concerns related to employee relations, diversity, and environmental practices. These findings highlight how tax policy shapes CSR through its impact on financial flexibility and stakeholder expectation, offering implications for corporate strategy and public policy.

This paper examines how political networks influence insider trading in China. Using biographical data to construct chairman–politician social networks, we find that firms with stronger political networks engage in significantly less insider trading. The effect is stronger for non-state-owned enterprises (non-SOEs) and for long-standing or high-ranking connections. The muted trading persists during periods when insiders possess valuable private information, including prior to M&A announcements and major policy events. The evidence suggests that personal political networks function as informal governance mechanisms that discipline managerial opportunism when formal governance through state ownership is absent.

We show that online listing prices closely approximate transaction prices across Europe. Our validation uses the IWH European Real Estate Index (EREI), a near-real-time database of monthly purchase prices, rents, listing counts, and time on market for 1,154 NUTS-3 regions in 16 countries since April 2024. With publication lags as short as one month, validated listing prices offer a timely, comparable complement to official house price statistics. Purchase price levels correlate between 0.94 and 0.97 with transaction prices in the five most populous markets, while calibration slopes range from 0.95 to 1.00. Aggregate listing prices exceed benchmark transaction prices by 13% to 22%.

This paper provides theory and evidence on micro-level pricing behavior needed to model an aggregate New Keynesian Phillips Curve. We start with individual firms that are heterogeneous in their production technology and in the demand curves they face. We estimate the parameters of supply and demand curves by utilizing prices and quantities of outputs and factor inputs of firms along with exogenous downstream demand instruments from global input-output and trade data. The research addresses model heterogeneity using a clustering method to classify firms according to their production technology and observed price pass-through. The results show that more productive firms exhibit a lower price response to changes in demand. We find that the aggregate price response to demand shocks will be smaller when more productive firms absorb a larger portion of demand shocks, which generally is the case. At the same time, our results imply that idiosyncratic shifts in demand to clusters of firms with more rapidly rising marginal cost curves, or cost shocks to clusters of firms with high pass-through, will result in a higher aggregate price response. Finally, this paper provides a framework to incorporate heterogeneous pricing behavior into an estimate of the slope of the aggregate Phillips Curve.

We study the impact of stricter and more harmonized banking regulation along the income distribution using household survey data for 25 EU countries. Exploiting country-level heterogeneity in the implementation of European Banking Union directives allows us to control for confounders and identify effects. Our results show that these regulatory reforms aimed at increasing financial system resilience affect households heterogeneously and result in a widening of the income distribution. These results are dependent on a country’s ex-ante regulatory stringency, and more pronounced in countries with stronger bank dependence. Furthermore, we find that more stringent regulation reduces income growth for low-income households primarily due to exits from employment, whereas affluent households tend to experience increased growth rates for employee and self-employed income.

This paper examines whether common institutional ownership is associated with CEO connectedness across firms. We document that higher common ownership between two same-industry firms predicts a greater likelihood that a newly appointed CEO has preexisting social ties to the incumbent CEO of the peer firm. To address endogeneity, we use mergers among institutional investors in a stacked difference-in-differences design. In a hiring-firm-peer panel that carries connection status forward from the most recent appointment, exposure to a merger-induced common blockholder approximately doubles the probability that the pair is observed in a connected-CEO state. In a broader firm-pair panel, it increases the probability of CEO connections by 48.7%. We further document that gaining CEO connections through another firm’s CEO appointment is associated with improvements in peer firms’ returns on assets and Tobin’s Q, in both OLS and IV specifications. Peer firms that gain such a connection also experience positive abnormal returns around other firms’ CEO hiring announcements, corresponding to an average increase of $112.5 million in shareholder value. These performance patterns suggest that CEO connections may be valuable from a portfolio-level perspective. Consistent with this interpretation, the association between common ownership and CEO connections is concentrated among product-similar and organizationally complex firms and strengthens after the 2008–2009 financial crisis, when connections appear more valuable. Our findings point to CEO connection as a potential governance channel through which common institutional ownership is linked to firm outcomes, complementing prior work on executive compensation, shareholder voting, and board interlocks.

We study the procurement patterns of non-listed firms and examine how these often-overlooked, yet pivotal players in global supply chains adjust their sourcing when they anticipate accountability for externalities beyond their organizational boundaries. Using granular customs data and a surprise information release about the German Supply Chain Due Diligence Act, product-level regressions reveal that importing firms are 3.5 percentage points less likely to source a product from countries where the relevant production sector exhibits elevated ESG-related risks, suggesting that firms tend to cut ties with higher-risk suppliers. The effects are concentrated among firms with well-diversified supplier networks for a product and higher profitability, suggesting they have the necessary flexibility to respond quickly to anticipated regulatory pressure. Our findings suggest that mandates requiring firms to incorporate broad sustainability considerations into their operational decisions may have limits, particularly for non-listed firms.

Drawing on detailed career and biographical data of Chinese politicians, this study builds a dynamic social network for all political elites in China and examines the selection process of provincial-level politicians. Using regression and tree-based machine learning techniques and leveraging individuals’ global centrality within political networks, we unveil the relative importance of economic performance, political networks, and career trajectory in determining the selection of provincial leaders. Our findings highlight the critical role of network embeddedness.

We revisit the employer size wage effect (ESWE) – arguably the most basic and influential departure from the law of one price for labor. Our main result is that this canonical fact disappears completely across establishments within the same firm, even though they operate in different local labor markets. We uncover and dissect this fact by including a firm fixed effect in otherwise standard cross-sectional regressions of wages on establishment size. We implement this demanding specification in population-wide triple-linked firm-establishment-employee data in Germany. This result is new in the ESWE literature (for which our paper also provides the first systematic meta-analysis). This wage-size decoupling is hard to square with the view that employment is determined along a finitely elastic employerspecific labor supply curve – i.e., employers pay exactly the minimum needed for the quantity of labor, but no more – the foundation of the monopsony view. By contrast, large multi-establishment firms (MEF) appear to hire off their labor supply curves (or those curves are very elastic), pay wage premia above the monopsonistic minimum, and leave excess labor supply. We find some evidence for a reemergence of the ESWE within low-premium MEFs. Overall, at least for the 25% of German employment in large firms for which the ESWE disappears, wage setting and employment determination may be better accounted for by alternative models, namely accommodating above-market-clearing wage premia and rationing of labor supply, such as efficiency wage theories.