Abstract

http://ssrn.com/abstract=2024069
 
 

References (29)



 
 

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Political Contributions and the Severity of Government Enforcement


Sarah Fulmer


Florida State University - Department of Finance

April M. Knill


Florida State University

Xiaoyun Yu


Indiana University - Kelley School of Business - Department of Finance; China Academy of Financial Research (CAFR)

March 1, 2012

AFA 2013 San Diego Meetings Paper

Abstract:     
Using data on political contributions and government enforcement actions from 1999 through 2010, we document a negative relationship between political contributions and the severity of government enforcement outcomes. Specifically, a $10,000 increase in contributions is associated with a reduction in the number of years accused executives are penalized with an officer ban (0.47 fewer years), probation (0.19 fewer years) and prison (0.32 fewer years), as well as the probability of receiving the harshest penalty from each agency (10%). Executives who personally contribute see similar effects. Results are robust to controlling for alternate reasons for disparate penalties (net benefit to shareholders and earned leniency), alternate discipline mechanisms (class action lawsuits, termination by the board, and firm delisting), and the level of discretion the agencies have in imposing penalties. We find some evidence to support a delay mechanism in criminal sanctions.

Number of Pages in PDF File: 46

Keywords: political contributions, SEC enforcement, DOJ enforcement, fraud

JEL Classification: G3, K4


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Date posted: March 18, 2012 ; Last revised: June 3, 2016

Suggested Citation

Fulmer, Sarah and Knill, April M. and Yu, Xiaoyun, Political Contributions and the Severity of Government Enforcement (March 1, 2012). AFA 2013 San Diego Meetings Paper. Available at SSRN: http://ssrn.com/abstract=2024069 or http://dx.doi.org/10.2139/ssrn.2024069

Contact Information

Sarah Fulmer
Florida State University - Department of Finance ( email )
Tallahassee, FL 32306-1042
United States
April M. Knill (Contact Author)
Florida State University ( email )
Tallahassee, FL 32306-1042
United States
(850) 644-2047 (Phone)
Xiaoyun Yu
Indiana University - Kelley School of Business - Department of Finance ( email )
1309 E. 10th St.
Bloomington, IN 47405
United States
812-855-3521 (Phone)
812-855-5875 (Fax)

China Academy of Financial Research (CAFR)
1954 Huashan Road
Shanghai P.R.China, 200030
China

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