Political Connections and SEC Enforcement
Maria M. Correia
London Business School
April 14, 2014
Journal of Accounting & Economics (JAE), Forthcoming
Rock Center for Corporate Governance at Stanford University Working Paper No. 61
In this study, I examine whether firms and executives with long-term political connections through contributions and lobbying incur lower costs from the enforcement actions by the Securities and Exchange Commission (SEC). I find that politically connected firms on average are less likely to be involved in SEC enforcement actions and face lower penalties if they are prosecuted by the SEC. Contributions to politicians in a strong position to put pressure on the SEC are more effective than others at reducing the probability of enforcement and penalties imposed by an enforcement action. Moreover, the amounts paid to lobbyists with prior employment links to the SEC, and the amounts spent on lobbying the SEC directly, are more effective than other lobbying expenditures at reducing enforcement costs faced by firms.
Number of Pages in PDF File: 49
Keywords: Political connections, Securities and Exchange Commission, Enforcement, Accounting
JEL Classification: M41, G18, G28, G38Accepted Paper Series
Date posted: August 21, 2009 ; Last revised: April 29, 2014
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