Seunghyun Cho

Investments in Industry 4.0 technologies are largely expensed under current reporting standards, leaving a firm's technological capability unobservable on the balance sheet, and voluntary disclosures about that capability are discounted as cheap talk. We examine whether third-party certification resolves this gap, using the World Economic Forum's Lighthouse designation, which certifies operational capabilities that financial statements cannot convey. Using a propensity-scorematched sample and an event-study design, we find that designation reduces trade accounts receivable, expands market share, and shifts customer composition toward ESG-oriented and developed-country buyers. These benefits concentrate among firms with lower accrual quality, smaller size, and thinner analyst coverage, though not uniformly across outcomes. Because financial reporting conveys operational capability at no level of quality, this pattern reflects not substitution between information sources but the greater weight counterparties place on a capability signal when other sources leave reliability unresolved.

We study how firms' inventory holdings are affected by natural disasters. Building on the premise that managers often make decisions in line with the availability heuristic, we investigate whether managers increase inventory holdings in response to heightened disaster risk perceptions and the need to hedge against inventory shortages. Through a battery of tests, we show that the occurrence of disasters in neighboring counties triggers inventory stockpiling, an effect that is unlikely to be driven by the real disaster disruptions. Our results also indicate that inventory stockpiling is likely inconsistent with a rational expectations equilibrium. Collectively, our results highlight another undesirable consequence of natural disasters and warn about supply chain implications due to increased climate ambiguity. Data Availability: All the data used in this study are publicly available. JEL Classifications: G31; G41; M21; M11; M41; Q54.