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Public enforcement of securities market rules: Resource-based evidence from the Securities and Exchange Commission

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  • Lohse, Tim
  • Pascalau, Razvan
  • Thomann, Christian

Abstract

We empirically investigate whether increases in the U.S. Securities and Exchange Commission's (SEC) budget have an effect on firms’ compliance behavior with securities market rules. Our study uses a dataset on the SEC's resources and its enforcement actions over a period beginning shortly after the Second World War and ending in 2010. We find that increases in the SEC's resources both improve compliance and lead to an increased activity level of the SEC. The higher level of compliance is reflected by a decrease in the numbers of enforcement cases. The increased activity level is reflected by a surge in the number of investigations conducted by the SEC.

Suggested Citation

  • Lohse, Tim & Pascalau, Razvan & Thomann, Christian, 2014. "Public enforcement of securities market rules: Resource-based evidence from the Securities and Exchange Commission," Journal of Economic Behavior & Organization, Elsevier, vol. 106(C), pages 197-212.
    • Handle: RePEc:eee:jeborg:v:106:y:2014:i:c:p:197-212
    DOI: 10.1016/j.jebo.2014.06.010
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    Cited by:

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    3. Thomann Christian, 2014. "Recent developments in Corporate Taxation in Sweden," Nordic Tax Journal, Sciendo, vol. 2014(2), pages 195-214, November.
    4. Licht, Amir N. & Poliquin, Christopher & Siegel, Jordan I. & Li, Xi, 2018. "What makes the bonding stick? A natural experiment testing the legal bonding hypothesis," Journal of Financial Economics, Elsevier, vol. 129(2), pages 329-356.

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    More about this item

    Keywords

    Public enforcement; Securities laws; Compliance; Securities and Exchange Commission; Budget;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law

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