36 Pages Posted: 16 Sep 2010 Last revised: 18 Dec 2015
Date Written: October 2, 2015
We study the impact of the enforcement of financial regulation by the UK’s regulatory authorities on the market price of penalized firms. Existing studies rely on analyses of multiple events that may distort the measurement of reputational losses. In the UK, the entire enforcement process involves only one public announcement and is accompanied by complete information on legal penalties. We find that reputational losses are nearly nine times the size of fines, and are associated with misconduct harming customers or investors, but not third parties.
Keywords: Regulation, Reputation, Enforcement, Corporate Law, Financial Regulation
JEL Classification: G28, G38, K22, K42, L51
Suggested Citation: Suggested Citation
Armour, John and Mayer, Colin and Polo, Andrea, Regulatory Sanctions and Reputational Damage in Financial Markets (October 2, 2015). Oxford Legal Studies Research Paper No. 62/2010; ECGI - Finance Working Paper No. 300/2010. Available at SSRN: https://ssrn.com/abstract=1678028 or http://dx.doi.org/10.2139/ssrn.1678028