Thomas Rauter

Department of Accounting, Finance, and Statistics

SSRN Author Page Google Scholar GitHub


Job Market Paper

Disclosure Regulation, Corruption, and Investment:
Evidence from Natural Resource Extraction

I investigate the real effects of mandatory extraction payment disclosures, which require European oil, gas, and mining firms to publicly disclose their payments to foreign host governments in a granular report on their corporate website. Extraction payment disclosures are substantially more detailed compared to previous payment records, allowing activist groups to identify payment discrepancies and exert societal pressure on extractive firms. Using manually-collected host country data on firms' extractive activities abroad and exploiting the staggered, plausibly-exogenous adoption of extraction payment reports across European countries and firms' fiscal-year ends, I document that disclosing companies increase their payments to host governments but decrease and reallocate investments relative to tightly-matched, non-disclosing competitors from around the world. The effects are stronger for large firms and for firms that sell their products directly to end consumers. My results suggest that social responsibility disclosures can have sizeable real effects, especially if public shaming by specialized activist groups disciplines companies not to engage in illicit practices. In contrast, extraction payment disclosures are not associated with improved measures of corruption at the aggregate host country level, which questions unilateral disclosure mandates aimed at addressing foreign policy objectives.

Publication

Procyclicality of U.S. Bank Leverage

In light of the current debate about the link between accounting and financial stability, we investigate the determinants of procyclical book leverage for US commercial and savings banks. We find that total asset growth and GDP growth are both positively related to book leverage growth. Our evidence is not consistent with the notion that fair value accounting contributes to procyclical leverage or that historical cost accounting reduces procyclicality. Overall, the business model of banks is more important for procyclical leverage than accounting or regulatory risk weights.

Internet Appendix|Datasheet and Code

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Working Paper

Fishing with Pearls: The Value of Lending
Relationships with Prestigious Firms

We provide novel evidence of banks establishing lending relationships with prestigious firms to signal their quality and attract future business. Using unique survey data on firm-level prestige, we show that lenders compete more intensely for prestigious borrowers and offer lower upfront fees to initiate lending relationships with prestigious firms. We also find that banks expand their lending after winning prestigious clients. Prestigious firms benefit from these relations as they face lower costs of borrowing even though prestige has no predictive power for credit risk. Our results are robust to matched sample analyses and a regression discontinuity design.

Replication Files (GitHub)

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Work in Progress

Combating Corruption Abroad: The Effect of Internationally Coordinated Regulation on Corrupt Countries


Bank Governance and Financial Stability