Exchanges and Their Investors: A New Look at Reporting Issues, Fraud, and Other Problems by Exchange

39 Pages Posted: 15 Jan 2012

See all articles by Douglas J. Cumming

Douglas J. Cumming

Florida Atlantic University

Sofia Johan

Florida Atlantic University - Finance; Tilburg Law and Economics Center (TILEC)

Date Written: December 5, 2011

Abstract

Statistics reporting litigated cases of fraud on an exchange-by-exchange basis are not readily available to investors. This paper introduces data from three countries with multiple exchanges with different listing standards – Canada, the United Kingdom and the United States – to show litigated cases of fraud significantly vary by country, and the different exchanges within the country. Comparisons are also made to Brazil, China and Germany to assess out-of-sample inferences. The data examined suggest there are significant differences in the nature of observed fraud across exchanges within the United States; by contrast, outside the United States there appears to be a comparative lack of enforcement. The data also suggest policy implications for the ways in which fraud ought to be reported to improve investor knowledge, market transparency and market quality.

Keywords: Corporate fraud; Exchange listing standards, Securities commissions, NYSE, NASDAQ, TSX, TSXV, LSE, AIM, Pinksheets

JEL Classification: G32, J33

Suggested Citation

Cumming, Douglas J. and Johan, Sofia A., Exchanges and Their Investors: A New Look at Reporting Issues, Fraud, and Other Problems by Exchange (December 5, 2011). Available at SSRN: https://ssrn.com/abstract=1985319 or http://dx.doi.org/10.2139/ssrn.1985319

Douglas J. Cumming

Florida Atlantic University ( email )

777 Glades Rd
Boca Raton, FL 33431
United States

HOME PAGE: http://booksite.elsevier.com/9780124095373/

Sofia A. Johan (Contact Author)

Florida Atlantic University - Finance ( email )

777 Glades Rd
Boca Raton, FL 33431
United States

Tilburg Law and Economics Center (TILEC) ( email )

Warandelaan 2
Tilburg, 5000 LE
Netherlands

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