Abstract

http://ssrn.com/abstract=2125560
 
 

References (34)



 
 

Citations (3)



 


 



The Revolving Door and the SEC's Enforcement Outcomes: Initial Evidence from Civil Litigation


Ed DeHaan


Stanford University - Graduate School of Business

Simi Kedia


Rutgers Business School

Kevin Koh


Nanyang Technological University (NTU) - Nanyang Business School

Shivaram Rajgopal


Emory University - Goizueta Business School

February 23, 2015

Rock Center for Corporate Governance at Stanford University Working Paper No. 187
Stanford University Graduate School of Business Research Paper No. 14-14

Abstract:     
We investigate the consequences of the “revolving door” for trial lawyers at the SEC’s enforcement division. If future job opportunities motivate SEC lawyers to develop and/or showcase their enforcement expertise, then the revolving door phenomenon will promote more aggressive regulatory activity (the “human capital” hypothesis). In contrast, SEC lawyers can relax enforcement efforts in order to develop networking skills and/or curry favor with prospective employers at private law firms (the “rent seeking” hypothesis”). We collect data on the career paths of 336 SEC lawyers that span 284 SEC civil cases against accounting misrepresentation over the period 1990-2007. Our overall evidence is consistent with the “human capital” hypothesis. However, we find some evidence of “rent seeking” when SEC lawyers are based in Washington DC and when defense firms employ more former SEC lawyers. The revolving door likely impacts numerous aspects of SEC regulation setting and enforcement. This study examines accounting-related civil cases and is not able to study administrative or non-accounting enforcement cases. Further, the study does not address the choice of which cases to pursue, the incentives of employees other than trial lawyers, or how the revolving door affects rule making. Subject to these caveats, the results provide an important first look into the effects of revolving door incentives on the SEC’s enforcement process.

Number of Pages in PDF File: 64

Keywords: SEC, enforcement, revolving door, financial reporting, lawyers, human capital

JEL Classification: G38, M4


Open PDF in Browser Download This Paper

Date posted: August 7, 2012 ; Last revised: March 26, 2015

Suggested Citation

deHaan, Ed and Kedia, Simi and Koh, Kevin and Rajgopal, Shivaram, The Revolving Door and the SEC's Enforcement Outcomes: Initial Evidence from Civil Litigation (February 23, 2015). Rock Center for Corporate Governance at Stanford University Working Paper No. 187; Stanford University Graduate School of Business Research Paper No. 14-14. Available at SSRN: http://ssrn.com/abstract=2125560 or http://dx.doi.org/10.2139/ssrn.2125560

Contact Information

Ed DeHaan
Stanford University - Graduate School of Business ( email )
518 Memorial Way
Stanford, CA 94305-5015
United States

Simi Kedia
Rutgers Business School ( email )
117 Levin
94 Rockafellar Road
Piscataway, NJ
United States
8484454195 (Phone)
Kevin Koh
Nanyang Technological University (NTU) - Nanyang Business School ( email )
S3-B2C-96, Nanyang Avenue
Nanyang Business School , NTU
Singapore, 639798
Singapore
(+65) 6790 4096 (Phone)
Shivaram Rajgopal (Contact Author)
Emory University - Goizueta Business School ( email )
1300 Clifton Road
Atlanta, GA 30322-2722
United States
Feedback to SSRN


Paper statistics
Abstract Views: 4,293
Downloads: 581
Download Rank: 27,611
References:  34
Citations:  3

© 2015 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo1 in 0.516 seconds