I investigate how regulators adjust their enforcement activity in response to firm's corporate social responsibility (CSR) information. Using exogenous variation in CSR ratings coverage and enforcement data from the U.S. Occupational Safety and Health Administration (OSHA), I find that regulators increase enforcement activity on newly CSR covered firms. I explore two non-mutually exclusive mechanisms that can explain my findings: regulatory learning and firms' reputational exposure after the CSR coverage. My results are consistent with firms' CSR-related reputation and visibility being a more plausible channel. Regulators increase enforcement activity on firms with higher visibility as they can experience a larger deterrence effect after the CSR coverage. Evidence from institutional investor holdings corroborates the reputational mechanism. Finally, I document evidence of a spill-over effect on peer firms as they exhibit increased compliance efforts following a violation by a focal firm. Collectively, my findings provide novel insights on the role of CSR information in regulatory activity.

This paper studies the role of decentralized budgeting on the procurement efficiency of local governments. Using a setting in Italy---where public procurement decisions are already highly decentralized---we examine how the Imposta Municipale Unica (IMU) of 2012, a reform that reduced vertical transfers from the central government and devolved revenue generation responsibilities to municipalities, affected the cost and performance of local government contracts. We find that contracts are awarded at significant price discounts to more non-local vendors after the reform. Despite these steeper discounts, local contracts do not face increased performance problems, such as cost overruns or delays during contract execution, resulting in substantially lower total costs. Our results are more pronounced in municipalities with incumbent mayors facing re-election and situated in provinces with higher quality institutions, consistent with revenue decentralization increasing local officials’ accountability towards their constituents, particularly in environments with strong institutional foundations. Overall, our paper shows that revenue decentralization disciplines local government spending.

We study the impact of market participants’ financial information processing costs on firms’ Environmental, Social, and Governance (ESG) engagement. By leveraging the eXtensible Business Reporting Language (XBRL) mandate in the U.S. as an exogenous shock to financial information processing cost, we document a significant increase in firms’ ESG performance after the XBRL adoption. Further analyses reveal that the mandate affected Governance Score the most (consistent with XBRL being beneficial to institutional investors that care more about governance mechanisms) and the magnitude of its effect wanes over time. Our results are robust to multiple falsification tests and alternative identification strategies. We argue that when market participants’ constraints associated with processing financial information are relaxed, they allocate more time to process non-financial (ESG) disclosures, especially in financially opaque firms. Upon facing this increased attention, firms’ managers respond by improving ESG engagements. Consistent with this view, we find that the XBRL mandate's positive effects are concentrated in firms that are either well-monitored, opaque, or have risk-taking managers.

We study the driving forces behind the positive association observed between corporate investment and stock market valuation, and how they interact with managerial equity incentives and informativeness of investment. We build a dynamic model where managers use investment choices to influence investors' opinions about firms' future prospects and increase the market valuation. The incentives to manipulate the valuation processes increase with managerial equity incentives and informativeness of investment. Our empirical findings support the model's predictions that the tendency of using investment to boost market valuation is stronger when managerial stock ownership is high or when earnings quality is low (i.e., there is strong reliance on investment for information).