Each year, the federal government distributes $900 billion in grants to nonprofit organizations. Grants exceeding a specified threshold are reviewed by an auditor who is chosen by the recipient. Using a unique grant-level dataset covering $23.7 trillion in grants, we exploit a major deregulatory reform that raised the threshold and exempted nearly 10% of grants from auditing. In a difference-in-differences framework, we find that treated auditors -- who had clients below the new threshold before the reform -- nearly ceased to issue negative audits for their remaining clients after the reform. Further tests show that treated auditors struggled to retain clients after the reform and offered more lax supervision to stay competitive. Thus, the deregulation of smaller grants unintentionally weakened the oversight of larger, non-deregulated grants. In a structural model, we identify key cost factors that discourage auditors from issuing negative opinions, especially when the demand for auditors declines. We estimate that the deregulation nearly doubled those costs, prompting auditors to show leniency even when clients potentially mismanage their grants. We evaluate alternative policies, such as subsidizing auditor costs or nationalizing the auditing process, to deregulate markets without compromising the quality of monitoring. Combined, our paper reveals the unintended contagion effect of deregulation, which can impose externalities on non-deregulated firms, service providers, and taxpayers.

American Law and Economics Association Annual Meeting*, European Finance Association Annual Meeting*, Federal Reserve Board of Governors, Haskell and White Conference, National Bureau of Economic Research (Economic Analysis of Regulation)*, New York University (Stern)*, PCAOB Conference on Auditing and Capital Markets, Southern Finance Association Annual Meeting, The Chinese University of Hong Kong (Business)*, The University of Texas at Dallas Fall Finance Conference*, The University of Texas Forensic Finance Conference, UNC-Duke Corporate Finance Conference*, University of Connecticut Finance Conference*

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We use a representative sample of individual credit bureau records to examine the impact of financial distress and debt relief on marital stability. Foreclosures increase marital dissolution, whereas Chapter 13 bankruptcies, which protect debtors from foreclosure, reduce it. These effects are separate from health or local economic shocks. We use post-disaster financial assistance programs and judicial district dismissal rates as instruments to isolate exogenous variation in foreclosure and Chapter 13 bankruptcy dismissals. Our findings emphasize the importance of financial stability and housing security in family structures, suggesting that debt relief policies have broader social implications beyond financial well-being.

A previous version of this paper was circulated under the title “Financial Breakups: Till Debt Do Us Part”

American University (Kogod)*, SFS Cavalcade Conference, Commonwealth Finance Workshop*, Eastern Finance Association Annual Meeting, European Finance Association Annual Meeting*, Rochester Institute of Technology (Saunders), University of Rochester (Simon), Virginia Tech* (Pamplin)

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I study how access to credit matters for young adults. Using a triple difference strategy, I show that a U.S. federal law reduced the supply of credit cards to consumers under 21. However, affected borrowers with credit records prior to the law experienced an increased likelihood of late payments and decreased credit scores, likely due in part to difficulties refinancing pre-existing credit card debt. The law also impacted future cohorts entering adulthood. Eighteen-year-olds became less likely to own credit cards and have credit records. Those with credit records were less likely to have outstanding late payments, suggesting a change in the composition of early credit market entrants. The increased absence of credit records also led to a decrease in access to car loans but not student loans. My results suggest that laws limiting early credit access can have important unintended consequences.

Eastern Finance Association Annual Meeting, Federal Reserve Board of Governors, Financial Management Association (Doctoral Student Consortium), Rice University (Jones), Southern Methodist University (Cox), University of Kentucky (Gatton), University of Rochester (Simon), Virginia Tech~ (Pamplin)

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Using a novel dataset covering 36.5 million employee-year observations across 334 government agencies from 1973-2023, we document persistent and widespread gender pay disparities. Women earn 19.8% less than men in raw comparisons. Moreover, women earn 0.8% less when comparing employees within the same local office, occupation, rank, and tenure, which represents a wealth loss of $250,000 by retirement for a representative female employee. This gap arises from women: sorting into lower paying offices, having lower promotion rates, and having lower pay within-rank. We examine three economic mechanisms. First, the gap is concentrated among higher ranks and more educated employees, consistent with gender gaps in negotiation and subjective evaluation. Second, female leadership mitigates pay gaps for lower-ranked females. Third, labor mobility plays a negligible role.

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