A Lobbying Approach to Evaluating the Whistleblower Provisions of the Dodd-Frank Reform Act of 2010
58 Pages Posted: 7 Sep 2011 Last revised: 12 Apr 2016
Date Written: June 23, 2015
We evaluate the net costs and benefits of the whistleblower (WB) provisions adopted under the Dodd-Frank Reform Act of 2010 by examining investor responses to events related to the proposed regulations. We focus our main analysis on a sample of firms that lobbied against implementation of the WB provisions by submitting a comment letter to the SEC. Short-window excess stock returns around events related to implementation of the WB rules are significantly more positive for lobbying firms than for similar non-lobbying firms; this effect is also more pronounced for lobbying firms with weaker existing WB programs. We also find that the new WB regulation is value-increasing for the average U.S. firm. These results collectively suggest that investors expect the new WB provisions to provide net benefits by improving shareholder protection.
Keywords: Whistleblowing, Dodd-Frank, Lobbying, Code of Ethics, Regulation
JEL Classification: M41, M48
Suggested Citation: Suggested Citation