Scandinavian Working Papers in Economics
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CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology KTH/CESIS Working Paper Series in Economics and Institutions of Innovation

No 364:
Public Enforcement of Securities Market Rules: Resource-based evidence from the Securities Exchange Commission

Tim Lohse (), Razvan Pascalau () and Christian Thomann ()

Abstract: We empirically investigate whether increases in the U.S. Securities and Exchange Commissionís (SEC) budget have an effect on firmsí compliance behavior with securities market rules. Our study uses a dataset on the SECís 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 SECís 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 inves-tigations conducted by the SEC.

Keywords: Public enforcement; securities laws; compliance; Securities and Exchange Com-mission; budget; (follow links to similar papers)

JEL-Codes: D21; G14; G18; K22; (follow links to similar papers)

38 pages, May 20, 2014

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