Essays in Disclosure

This dissertation contains three self-contained papers on disclosure, contracting, and economic behavior. The first two papers study rebate contracting in the U.S. pharmaceutical supply chain. The third paper examines how countries’ fiscal capacity affects firms’ risk perceptions and investment. The chapters are independent; the first two are directly connected, while the third addresses a separate macro-finance question. The first chapter provides an empirical evaluation of state laws requiring pharmacy benefit managers (PBMs) to disclose rebates to health plans. Using administrative Medicare Part D data covering all prescription-drug plans from 2016–2025 and exploiting the staggered adoption of transparency laws between 2019 and 2022, the analysis tests whether increased visibility over rebate flows reduces consumer costs. Across premiums, deductibles, negotiated prices, and out-of-pocket payments, I find no statistically or economically significant effects. Plan formularies, benchmark acquisition costs, and coinsurance structures also remain unchanged. The only systematic response is a cross-state spillover among multi-state plans, which raise prices in states not subject to the law. The evidence indicates that these transparency mandates did not meaningfully alter PBM–plan contracting or reduce drug spending. The second chapter provides a theoretical explanation for the empirical results. I develop a vertical contracting model with a manufacturer, a PBM, and a health plan, in which rebates are subject to costly state verification. The model shows that disclosure affects outcomes only when the reported information is sufficiently detailed and can be audited at low cost. When disclosure is coarse or auditing is expensive—conditions matching the structure of the state laws—the PBM optimally shifts compensation into unverifiable channels. This weakens rebate pass-through, induces higher list prices, and reduces coverage generosity. The model also shows that partial transparency can increase list-price inflation by tightening the relationship between rebates and formulary placement without constraining PBM rents. These mechanisms align with the empirical finding that the reforms had minimal effect on consumer prices. The third chapter studies how fiscal capacity shapes firms’ sensitivity to disaster risk. Using a global panel of firms and constructing a firm-level measure of exposure to fiscal constraints based on the sales-weighted fiscal space of countries, the chapter examines the onset of the COVID-19 pandemic as an exogenous shock. Firms more exposed to fiscally constrained countries experience significantly larger increases in fiscal-constraint-related risk in earningscall transcripts, with no comparable increase for other categories of risk. In the pre-pandemic period, the same firms exhibit higher perceived risk, higher internal discount rates used for investment, and lower investment in both capital and R&D. The results document a direct link between countries’ fiscal limitations and firm-level disaster vulnerability, providing microevidence on how fiscal constraints can depress investment and, ultimately, growth. Overall, the dissertation provides empirical evidence and theoretical results on three distinct questions: whether rebate transparency lowers drug costs (it does not), why transparency fails when verification is costly, and how sovereign fiscal constraints affect firms’ perceived risk and investment behavior.