Exchanges and Their Investors: A New Look at Reporting Issues, Fraud, and Other Problems by Exchange

Abstract:     
Statistics reporting litigated cases of fraud on an exchange-by-exchange basis are not readily available to investors. This paper introduces data from three countries with multiple exchanges with different listing standards – Canada, the United Kingdom and the United States – to show litigated cases of fraud significantly vary by country, and the different exchanges within the country. Comparisons are also made to Brazil, China and Germany to assess out-of-sample inferences. The data examined suggest there are significant differences in the nature of observed fraud across exchanges within the United States; by contrast, outside the United States there appears to be a comparative lack of enforcement. The data also suggest policy implications for the ways in which fraud ought to be reported to improve investor knowledge, market transparency and market quality.

Number of Pages in PDF File: 39

Keywords: Corporate fraud; Exchange listing standards, Securities commissions, NYSE, NASDAQ, TSX, TSXV, LSE, AIM, Pinksheets

JEL Classification: G32, J33

working papers series