SSRN

The Moral Obligations of Government Lawyers by Cass R. Sunstein.

What do government lawyers owe when political leaders pressure them to advance partisan objectives?

This paper examines the ethical responsibilities of government lawyers, particularly in situations where their independence is challenged and they are pressured, marginalized, ignored, dismissed, or punished for resisting political demands.

The paper starts from the premise that government lawyers occupy a uniquely important position in modern states. Unlike private attorneys, they serve within institutions whose legitimacy depends on lawful governance and public trust.

Sunstein argues that three moral commitments should guide government lawyers:

1. The Morality of Law Enforcement
2. The Morality of Legality
3. The Rule of Law

A central theme of the paper is the importance of professional independence. The author highlights the risks that arise when government lawyers are expected to simply carry out the wishes of elected officials without regard to legal constraints or institutional principles.

Read: http://spkl.io/61827pAZn

The Productivity J-Curve: How Intangibles Complement General Purpose Technologies by Erik Brynjolfsson, Daniel Rock, and Chad Syverson.

Why do transformative technologies often arrive long before productivity statistics show meaningful gains?

This influential paper argues that the answer lies in intangible investments that accompany the adoption of general purpose technologies (GPTs) such as AI, software, and other foundational innovations.

The authors contend that technologies like AI do not generate productivity gains simply through installation or deployment. Instead, firms must make substantial complementary investments. These investments are frequently intangible and often poorly measured in national accounts, even when they create significant economic value.

The paper develops a model showing how this measurement problem creates a "Productivity J-Curve." In the early stages of a GPT's adoption, firms incur substantial costs from complementary investments while many of the benefits have yet to materialize. As a result, measured productivity growth can appear weak or even disappointing.

Later, when firms begin harvesting the benefits from those earlier investments, productivity growth accelerates. At that stage, conventional measures may actually overstate current productivity improvements because they fail to fully account for the intangible investments that occurred earlier.

Read: http://spkl.io/61887p2no

Mafia Connections: Infiltration in Corporate Ownership by Adriano Amati, Monica Billio, Marco Di Cataldo, and Giovanni Mastrobuoni.

How can organized-crime infiltration of firms be detected before it becomes visible through legal action?

This paper applies modern machine-learning techniques to a challenging problem: identifying signs of mafia infiltration within corporate ownership networks. Rather than relying solely on financial statements or known criminal investigations, the authors analyze firms' positions within evolving ownership networks.

Using a detailed Italian corporate ownership dataset centered on 5,700 firms that were eventually confiscated by judicial authorities, the authors train a Temporal Graph Network (TGN) to learn patterns in ownership relationships over time. Importantly, the model is not directly trained to predict confiscations. Instead, it generates time-varying representations of firms based on their network connections.

From these representations, the authors create an Infiltration Proximity Index (IPI), a measure of how closely a firm's network position resembles that of firms already known to have been infiltrated and confiscated.

The paper validates the index in several ways.

First, the IPI predicts future confiscations up to four years in advance, outperforming a full set of traditional firm-level financial variables across all prediction horizons and classification methods examined.

Second, the network geometry itself appears meaningful. Firms that are confiscated later tend to be located closer, within the learned network representation, to firms whose criminal involvement is already known at the time of measurement.

Third, the index responds systematically to changes in ownership structures, suggesting that it captures meaningful shifts in corporate-network relationships rather than static characteristics.

The authors then use the index to identify when firms transition into a high-risk infiltration regime. Around these transition points, firms exhibit several notable changes:
-Rapid expansion in scale.
-Rising liabilities.
-Increasing receivables.
-Reallocation of costs.
-Persistent illiquidity.
-Only temporary improvements in profitability.

According to the authors, these patterns are more consistent with firms being used as conduits for financial flows than with firms operating primarily as profit-maximizing businesses.

Read: http://spkl.io/61847p2jO

External Equity Financing Shocks, Financial Flows, and Asset Prices by Frederico Belo, Xiaoji Lin, and Fan Yang.

How do changes in firms' ability to raise external equity affect asset prices and the broader economy?

This paper starts from a simple observation: the cost of issuing equity is not constant over time. Firms can raise external equity more easily in some macroeconomic environments than in others, implying that equity financing conditions themselves represent an important source of financial shocks.

Using data on U.S. publicly traded firms, the authors construct a measure of aggregate shocks to the cost of equity issuance and interpret this measure as a financial shock. They find that this shock captures systematic risk and helps explain differences in returns across a range of stock portfolios.

According to the authors, growth firms, high-investment firms and large firms are generally better able to replace equity financing with debt financing when external equity becomes more costly. Because they have greater financing flexibility, these firms are less exposed to equity-financing shocks and are therefore less risky in equilibrium.

Read: http://spkl.io/61827p2qO

Demography is Destiny? University Finances and the Enrollment Cliff by Jess Cornaggia, Kimberly Cornaggia, Peter Iliev, and Yuchen Li.

How do organizations respond when a major demographic shock becomes predictable years before it arrives?

This paper examines the financial consequences of the well-known "enrollment cliff" facing U.S. higher education. The sharp decline in U.S. births after 2007 effectively determined the size of the college-age population of the late 2020s more than a decade in advance, creating a unique opportunity to study whether markets and institutions react before the demographic impact is realized.

The authors focus on universities that issue bonds and therefore have market prices that can reflect future enrollment risk.

The evidence suggests that financial markets began pricing this demographic shift early. In regions where birth rates declined the most, university bond spreads widened during the 2009-2011 financial crisis, particularly for bonds maturing after the smaller college-age cohort was expected to arrive. By 2020 and beyond, the pattern reverses. Bonds issued by the most exposed universities trade at 9 to 15 basis points lower spreads than comparable institutions. According to the authors, this reflects investors updating their assessments as universities adjust to the coming enrollment decline.

These findings suggest that many institutions successfully adapted their operations to the expected demographic headwind.

The adjustments were not uniform across all regions. Adaptation appears strongest where birth declines represented a structural demographic shift. In contrast, where declining births mainly reflected the unwinding of a housing boom, institutions experienced larger enrollment losses and were more likely to consolidate.

Read: http://spkl.io/61827p2xp

Conceptual Search: A Generative View of Entrepreneurial Imagination by Felipe A. Csaszar.

Where do entrepreneurial ideas come from?

This paper starts from a simple but profound observation: entrepreneurs cannot pursue opportunities they never imagine. Rather than treating opportunity discovery as a passive process, the paper develops a framework for understanding entrepreneurial imagination as an active process of generating, evaluating, and revising venture ideas.

The author introduces the concept of conceptual search, in which venture ideas are represented as text and systematically transformed through a series of interpretable operations. In this framework, entrepreneurial imagination becomes a search process over possible concepts, where ideas are generated, assessed, modified, and compared.

The results suggest that both approaches play important roles. Local refinement can substantially improve an idea's quality, while global recombination helps uncover possibilities that might not emerge through incremental improvement alone.

The framework suggests that AI tools may expand the range of ideas individuals and firms are able to imagine, thereby broadening entrepreneurial opportunity discovery. At the same time, widespread use of similar AI systems could produce more correlated patterns of imagination across firms, potentially causing organizations to converge on similar opportunities.

Read: http://spkl.io/61847p22M

Artificial Intelligence, Algorithmic Recommendations and Competition by Emilio Calvano, Giacomo Calzolari, Vincenzo Denicolò, and Sergio Pastorello.

How do AI-powered recommendation systems affect competition?

Recommendation algorithms are often praised for helping consumers find products that better match their preferences. This paper argues that while recommendations can improve matching and reduce search costs, they may also have important consequences for market competition and pricing.

The authors develop a model in which AI recommendation systems learn from sparse and noisy consumer feedback and guide consumers toward products that are predicted to fit their preferences. This creates what the paper calls personalized prominence: rather than starting their search from the entire market, consumers begin with products highlighted by the recommendation system.

The benefits are clear. Recommendations help consumers identify relevant products more quickly and improve the quality of matches between buyers and sellers.

However, the paper finds that these gains can come with a cost: higher equilibrium prices.

Read: http://spkl.io/61807pFaE

Size Anomalies in U.S. Bank Stock Returns: A Fiscal Explanation by Priyank Gandhi and Hanno N. Lustig.

Why have the largest U.S. banks historically earned lower risk-adjusted stock returns than smaller banks, despite being more highly leveraged?

This paper investigates a puzzling pattern in bank stock returns. Conventional finance theory would suggest that more highly leveraged institutions should offer higher expected returns as compensation for greater risk. Yet the authors find that the largest commercial bank stocks consistently generate lower risk-adjusted returns than small and medium-sized bank stocks.

To understand this anomaly, the paper identifies a bank-specific size factor that is distinct from standard asset-pricing factors, including the traditional small-minus-big (SMB) factor. This factor captures variation in bank returns that conventional risk models fail to explain.

The authors show that this size factor is linked to size-dependent exposure to bank-specific tail risk. In other words, investors appear to value large and small banks differently when considering extreme adverse economic scenarios.

Read: http://spkl.io/61867pFq0

This UCLA Journal of Int’l Law & Foreign Affairs article argues that while debates have focused heavily on jobs, privacy/likeness, IP & sustainability, how will shape the future of is comparatively underexplored.

Read: http://spkl.io/61807pmri
Subscribe: http://spkl.io/61857pmrW

Texas A&M University School of Law

We're hiring: Content Editor, at SSRN

Are you passionate about advancing medical research and keeping scholarly communication trustworthy?

SSRN, Elsevier's preprint server, works with over 1,200 Elsevier journals to give authors the option to preprint their research. Our medical preprints operation is growing, and we're looking for a Content Editor to help shape it.

In this role you will:
-Manage medical submission queues with other Content Editors, keeping turnaround times on track
-Help prevent the posting of preprints that could cause harm, and check that ethics, funding and COI information is in place
-Support journal partners such as Preprints with The Lancet on their editorial policies and projects
-Work with our Policy, Research Integrity, Production and Product teams, including reporting on funder preprints such as those from the Gates Foundation
-Deliver reporting and analysis on growth in medical preprints

Interested? Apply here: http://spkl.io/61807pffI

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