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Is the SEC captured? Evidence from political connectedness and SEC enforcement actions

Is the SEC captured? Evidence from political connectedness and SEC enforcement actions This study examines the impact of political connectedness (PC) on enforcement actions by the Securities and Exchange Commission (SEC). Our analysis confirms that SEC is not captured and shows that firms or executives with stronger PC are more likely to be criminally charged or face bar or suspension than firms or executives with weaker PC. In addition, we document that imposed fines are relatively higher for prosecuted firms and executives with stronger PC. These findings are robust to inclusions of controls for Republican Congress, Republican President, and recent regulatory reforms and are not driven by endogeneity concerns and sample selection bias. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Accounting & Finance Wiley

Is the SEC captured? Evidence from political connectedness and SEC enforcement actions

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References (44)

Publisher
Wiley
Copyright
Accounting and Finance © 2022 AFAANZ
ISSN
0810-5391
eISSN
1467-629X
DOI
10.1111/acfi.12880
Publisher site
See Article on Publisher Site

Abstract

This study examines the impact of political connectedness (PC) on enforcement actions by the Securities and Exchange Commission (SEC). Our analysis confirms that SEC is not captured and shows that firms or executives with stronger PC are more likely to be criminally charged or face bar or suspension than firms or executives with weaker PC. In addition, we document that imposed fines are relatively higher for prosecuted firms and executives with stronger PC. These findings are robust to inclusions of controls for Republican Congress, Republican President, and recent regulatory reforms and are not driven by endogeneity concerns and sample selection bias.

Journal

Accounting & FinanceWiley

Published: Jun 1, 2022

Keywords: Political connectedness; Corporate misconduct; Securities and Exchange Commission; Prosecution; Enforcement; Litigation

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