Despite the importance of internal decision-making for corporate outcomes, we know little about the role of within-firm delegation of decision rights. We use confidential survey data from manufacturing firms to examine whether the extent to which decision rights are delegated from central headquarters to local plant managers is associated with firms’ financial performance. While firms’ overall level of delegation is unassociated with performance, the extent of delegating employee hiring and customer-related sales and marketing decisions is positively associated with financial performance, consistent with delegation being more beneficial when decisions rely on local tacit information that is difficult to transfer to headquarters. In contrast, greater delegation of capital investment and new product introduction decisions is negatively associated with financial performance, consistent with delegation being costly when decisions require centralized coordination and oversight. Cross-sectional tests provide evidence that information transfer frictions, the value of local knowledge, agency conflicts, and the economic importance of the decision delegated moderate the relation between firm performance and delegation of certain types of decisions in expected ways. Collectively, our findings demonstrate that the relation between decision rights delegation and financial performance does not follow a “one size fits all” model, consistent with delegation not being a monolithic governance choice.

We investigate the competitive consequences of government financial assistance by examining non-assisted firms operating in the same product market as assisted firms. Using a novel dataset of U.S. federal, state, and local government assistance to U.S. public firms, we find that increases in government assistance to competitors are associated with a 12.2% decrease in nonassisted firms’ financial performance. The decline in financial performance is driven by decreasing revenues and increasing research and development expenses. Results are more pronounced for financially constrained firms, and concentrated in permanent government assistance in the form of cash grants, cost reimbursements, and tax abatements/credits rather than temporary assistance in the form of loans. We further show that greater competitor assistance is associated with a 5.1% decline in market share, particularly in less competitive markets. Overall, the evidence indicates that government assistance generates negative competitive externalities for non-assisted firms - a potentially unintended and previously unexplored consequence of government intervention that benefits some firms at the competitive expense of others.

We examine the competitive effects of firms’ publicly disclosed negative tax news incidents. Survey evidence indicates that executives seek to avoid negative corporate tax news due to expectations of negative stakeholder perceptions, with executives most concerned about customer stakeholders. Using transaction-level retail consumer purchases data, we find that following a severe negative tax news incident a firm’s sales decrease by 8.3 percent while its competitor firms’ sales increase by 8.2 percent. These findings are consistent with consumers substituting away from affected firm brands and towards competitor firm brands after a negative tax news incident and highlight the revenue implications for both affected and competitor firms. Heterogeneity analyses reveal that these relations are stronger when there is greater firm-brand name similarity and are concentrated in subsamples where the affected firm receives greater consumer attention following the negative incident, consistent with saliency as a necessary condition for a consumer response. Results are also concentrated in product markets classified as discretionary and in product markets where the affected firm is not dominant, consistent with retail consumers being more responsive to substitution when switching frictions are lower. Greater substitution towards competitor firm brands occurs in counties with higher educational attainment, income levels, and Democratic-affiliated residents, consistent with consumer responses driven by heterogeneous preferences within geographic markets. Our findings regarding the competitive effects of rival firms’ negative tax-related news incidents contribute to the ongoing debate as to whether reputation costs impose meaningful discipline on corporate tax behavior.

As of June 2026: Paper is under revision.

As of June 2026: Paper is under revision.

We examine whether governments reduce procurement from corporate contractors involved in publicly disclosed incidents that pose reputational risk. Using a novel dataset that includes more than seven thousand firms contracting with governments in more than 200 countries from 2011 through 2022, we exploit changes in firm-country-pair contracting over time and find that contractor reputational risk incidents are associated with subsequent reductions in government procurement. This negative association is present at both the extensive margin (the likelihood a firm holds any government contract) and the intensive margin (procurement amounts among continuing contractors). We also find that procurement decreases are larger in countries with stronger governance institutions and greater societal trust, with some evidence the negative relation is attenuated where citizens report greater confidence in their government and amplified where citizens are less tolerant of bribery. These findings extend evidence on reputational penalties to the public procurement setting and suggest that governments serve as a disciplining mechanism for contractor conduct.