Abstract

http://ssrn.com/abstract=2125560
 
 

References (34)



 
 

Citations (3)



 


 



Does the Revolving Door Affect the SEC’s Enforcement Outcomes?


Ed DeHaan


Stanford 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

March 4, 2014

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 lawyers at the SEC’s enforcement division. If future job opportunities make SEC lawyers exert more enforcement effort to develop and showcase their 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 enforcement actions against accounting misrepresentation over the period 1990-2007. We find evidence consistent with the human capital hypothesis. Specifically, enforcement outcomes are more aggressive for lawyers that leave the SEC to join law firms that specialize in defending clients before the SEC. We find no notable difference in enforcement outcomes for lawyers hired by the SEC from private law firms (“inbound revolvers”). Due to data limitations, we are unable to comprehensively analyze every aspect of the revolving door phenomenon, including whether revolving door incentives influence SEC lawyers’ choice of which cases to pursue. Nevertheless, our results provide an important first empirical look into the effects of revolving door incentives on the SEC’s enforcement process.

Number of Pages in PDF File: 61

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

JEL Classification: G38, M4

working papers series


Download This Paper

Date posted: August 7, 2012 ; Last revised: June 12, 2014

Suggested Citation

deHaan, Ed and Kedia, Simi and Koh, Kevin and Rajgopal, Shivaram, Does the Revolving Door Affect the SEC’s Enforcement Outcomes? (March 4, 2014). 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 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: 2,899
Downloads: 429
Download Rank: 37,201
References:  34
Citations:  3

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo8 in 0.375 seconds