Roger M. White

Mobile Communication and Local Information Flow: Evidence from Distracted Driving Laws: mobile communication and local information flow

We examine the influence of mobile communication on local information flow and local investor activity using the enforcement of statewide distracted driving restrictions, which are exogenous events that constrain mobile communication while driving. By restricting mobile communication across a potentially sizable set of local individuals, these restrictions could inhibit local information flow and, in turn, the market activity of stocks headquartered in enforcement states. We first document a decline in Google search activity for local stocks when restrictions take effect, suggesting that constraints on mobile communication significantly affect individuals’ information search activity. We further find significant declines in local trading volume when restrictions are enforced. This drop in liquidity is (1) attenuated when laws provide substitutive means of mobile communication and (2) magnified when locals have long car commutes and when their daily commutes overlap with regular exchange hours. Moreover, trading volume suffers the most for local stocks with lower institutional ownership, less analyst coverage, and more intangible information. Additional analyses show lower intraday volume during local commute times when mobile connectivity is constrained. Together, our results suggest that local information and local investors matter in stock markets and that mobile communication is an important mechanism through which these elements operate to affect liquidity and price discovery.

Corruption and Corporate Innovation

Using US Department of Justice data on local corruption convictions, we examine the relation between local political corruption and private sector innovation. We find that political corruption has a substantial negative impact on the quality, quantity, and efficiency of firms’ innovation. This result is robust in the presence of a wide range of covariates, variable definitions, and econometric methods. To help establish causality, we use instrumental variable techniques to address potential endogeneity concerns, such as reverse causality and the endogenous nature of headquarter location decisions. Overall, the results suggest that political corruption acts as a barrier to innovation.

H-1B Visas and Wages in Accounting: Evidence from Deloitte's Payroll

We use payroll data from a Big 4 accounting firm to examine the starting wage differentials for H-1B visa holders. Prior research in other industries has found both positive and negative differentials, but primarily relies on surveyed salary data. We observe that relative to U.S. citizen new hires – matched on office, position, and time of hire – newly hired accountants with H-1B visas receive starting salaries that are lower by approximately 10%. This suggests that, at least in the payroll data we examine, regulatory mandates thought to prevent H-1B visa holders from being paid less than U.S. citizens in similar roles are ineffective. In further tests, we find evidence that the hiring of H-1B visa holders has no or some small positive effect on the wages of peer U.S. citizen new hires (weakly indicative of complementarities or synergies), but no evidence of H-1B hiring driving down the wages for U.S. citizen peer new hires.

Stock Trades of Securities and Exchange Commission Employees

We examine the profitability of stock trades executed by Securities and Exchange Commission (SEC) employees. Subject to the considerable constraints of the data (no portfolio information, occupational details, or individual identifiers and an inability to determine profitability of trades), we find that a hedge portfolio mimicking such trades earns a positive abnormal return of about 8.5 percent per year in US stocks, driven primarily by negative abnormal future returns on sell transactions. The SEC claims that this result stems in part from employees being forced to sell stocks in a firm when they are assigned to secret investigations. We question whether this policy is reasonable.