Essays on regulatory burden, firm disclosure & behaviours

This thesis explores how the increasing scale of federal regulation and federal agencies could influence firm disclosure and firm behavior. The thesis consists of three essays on firm-level regulatory burden, government agency exposure, and their impact on firm disclosures and firm product portfolios, using unique data from earnings calls and 10-K filings. The first essay pairs a firm-level regulatory burden index with the risk disclosure measure of S\&P 1500 firms. Higher regulatory burden is associated with lower risk disclosure, especially for smaller, high-growth, and financially constrained firms. The result holds under a battery of robustness tests of subsamples and alternative measures. The results are also consistent in entropy balancing and 2SLS. Evidence shows that regulatory burden is associated with higher bankruptcy risk, which points to a decoupling between risk and risk disclosure. The second essay pairs the same regulatory burden index with the firm product life-cycle measure on a sample of the entire Compustat universe. Regulatory burden is associated with a decrease in innovation-stage, growth-stage, and decline-stage products; and we notice a positive association with maturity-stage products. Regulatory burdens seem to entrench incumbents' mature products while reducing innovation and growth. The third essay takes the U.S. Supreme Court decision as a difference-in-differences shock. Firms with a high federal agency exposure increased climate disclosure by 0.28 standard deviations following the Supreme Court ruling, but no corresponding improvement in environmental performance or firm emissions was observed for these firms. Thus, a widening decoupling that exposes a limit of disclosure-based climate governance. Together, these essays show that firm-level regulatory pressure is a first-order determinant of what firms say, what they sell, and what they actually do.