Abstract

http://ssrn.com/abstract=1745105
 
 

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Capital-Market Effects of Securities Regulation: Prior Conditions, Implementation, and Enforcement


Hans Bonde Christensen


University of Chicago - Booth School of Business

Luzi Hail


University of Pennsylvania - The Wharton School

Christian Leuz


University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI); Center for Financial Studies (CFS); University of Pennsylvania - Wharton Financial Institutions Center; CESifo Research Network

March 31, 2016

ECGI - Finance Working Paper No. 407/2014
Chicago Booth Research Paper No. 12-04

Abstract:     
We examine the capital-market effects of changes in securities regulation in the European Union (EU) aimed at reducing market abuse and increasing transparency. To estimate causal effects for the population of EU firms, we exploit that for plausibly exogenous reasons, like national legislative procedures, EU countries adopted these directives at different times. We find significant increases in market liquidity, but the effects are stronger in countries with stricter implementation and traditionally more stringent securities regulation. The findings suggest that countries with initially weaker regulation do not catch up with stronger countries, and that countries diverge more upon harmonizing regulation.

Number of Pages in PDF File: 79

Keywords: Capital market regulation, Enforcement, Disclosure, Law and finance, European Union, Liquidity

JEL Classification: F30, G15, G18, G30, K22, M41


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Date posted: January 23, 2011 ; Last revised: April 6, 2016

Suggested Citation

Christensen, Hans Bonde and Hail, Luzi and Leuz, Christian, Capital-Market Effects of Securities Regulation: Prior Conditions, Implementation, and Enforcement (March 31, 2016). Chicago Booth Research Paper No. 12-04. Available at SSRN: http://ssrn.com/abstract=1745105 or http://dx.doi.org/10.2139/ssrn.1745105

Contact Information

Hans Bonde Christensen
University of Chicago - Booth School of Business ( email )
5807 South Woodlawn Avenue
Chicago, IL 60637
United States

Chicago Booth School of Business Logo

Luzi Hail
University of Pennsylvania - The Wharton School ( email )
3641 Locust Walk
Philadelphia, PA 19104-6365
United States
215-898-8205 (Phone)
215-573-2054 (Fax)

Christian Leuz (Contact Author)
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-834-1996 (Phone)
HOME PAGE: http://faculty.chicagobooth.edu/christian.leuz/

Chicago Booth School of Business Logo

National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
HOME PAGE: http://www.nber.org
European Corporate Governance Institute (ECGI)
Brussels
Belgium
HOME PAGE: http://www.ecgi.org
Center for Financial Studies (CFS) ( email )
Grüneburgplatz 1
Frankfurt am Main, 60323
Germany
University of Pennsylvania - Wharton Financial Institutions Center
3641 Locust Walk
Philadelphia, PA 19104-6218
United States

CESifo Research Network
Poschinger Str. 5
Munich, DE-81679
Germany

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