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• Technical Note | HBS Case Collection | June 2019

  Sustaining Corporate Culture in a Growing Organization

  Tatiana Sandino and Dennis Campbell

  Citation:

  Sandino, Tatiana, and Dennis Campbell. "Sustaining Corporate Culture in a Growing Organization." Harvard Business School Technical Note 119-109, June 2019.  View Details

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• Article | Journal of Accounting Research | June 2019

  Consequences of Debt Forgiveness: Strategic Default Contagion and Lender Learning

  Gerardo Pérez Cavazos

  I use a unique data set of loans to small business owners to examine whether lenders face adverse consequences when they grant debt forgiveness to borrowers. I provide evidence consistent with borrowers communicating their debt forgiveness to other borrowers, who then more often strategically default on their own obligations. This strategic default contagion is economically large. When the lender doubles debt forgiveness, the default rate increases by 10.9% on average. Using an exogenous shock to the lender's forgiveness policy, my findings suggest that as the lender learns about the extent of borrower communication, the lender tightens its debt forgiveness policy to mitigate default contagion.

  Keywords: Debt Forgiveness; strategic default contagion; contracting; Borrowing and Debt; Communication; Learning;

  Citation:

  Pérez Cavazos, Gerardo. "Consequences of Debt Forgiveness: Strategic Default Contagion and Lender Learning." Journal of Accounting Research 57, no. 3 (June 2019): 797–841.  View Details

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• Article | Journal of Accounting Research | June 2019

  Fraud Allegations and Government Contracting

  Jonas Heese and Gerardo Pérez Cavazos

  This paper examines whether fraud allegations affect firms’ contracting with the government. Using a dataset of whistleblower allegations brought under the False Claims Act against firms accused of defrauding the government, we find that federal agencies do not reduce the total dollar volume of contracts with accused firms; however, they substitute approximately 14% of the harder-to-monitor cost-plus contracts for fixed-price contracts. This effect is concentrated in the procurement of services and explained by contract and service substitution. Lastly, we find that after the conclusion of the investigation, the government reduces the contract dollar volume by approximately 15% for cases that resulted in a settlement. Our findings indicate that contract-design changes are used to mitigate uncertainty in suppliers’ reputation.

  Keywords: whistleblower; Fraud Allegations; False Claims Act; Government Contracting; Risk Allocation; Government and Politics; Contracts; Crime and Corruption; Risk and Uncertainty; Business and Government Relations;

  Citation:

  Heese, Jonas, and Gerardo Pérez Cavazos. "Fraud Allegations and Government Contracting." Journal of Accounting Research 57, no. 3 (June 2019): 675–719.  View Details

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