Abstract

https://ssrn.com/abstract=2024069
 
 

References (29)



 


 



Negation of Sanctions: The Personal Effect of Political Contributions


Sarah Fulmer


Florida State University - Department of Finance

April M. Knill


Florida State University; Florida State University - College of Law

Xiaoyun Yu


Indiana University - Kelley School of Business - Department of Finance; China Academy of Financial Research (CAFR)

January 15, 2017

AFA 2013 San Diego Meetings Paper

Abstract:     
We show that political contributions negatively affect the severity of governmental enforcement outcomes for executives accused of committing fraud. Contributing executives receive smaller monetary fines, are banned fewer years as an officer or director of a public company, serve less time in prison or on probation, and enjoy a lower probability of receiving the harshest penalty from both the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ). An instrumental variable approach provides consistent evidence of causality. We examine potential channels, and find that political contributions lengthen the case time-to-resolution with the SEC and increase the chance of settling with government agencies instead of going to court, allowing fraudulent executives to receive less harsh sanctions. Our paper sheds light on the personal benefits that executives can extract from political connections.

Number of Pages in PDF File: 58

Keywords: political contributions, SEC enforcement, DOJ enforcement, fraud

JEL Classification: G3, K4


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Date posted: March 18, 2012 ; Last revised: January 16, 2017

Suggested Citation

Fulmer, Sarah and Knill, April M. and Yu, Xiaoyun, Negation of Sanctions: The Personal Effect of Political Contributions (January 15, 2017). AFA 2013 San Diego Meetings Paper. Available at SSRN: https://ssrn.com/abstract=2024069 or http://dx.doi.org/10.2139/ssrn.2024069

Contact Information

Sarah Fulmer
Florida State University - Department of Finance ( email )
Tallahassee, FL 32306-1042
United States
April M. Knill (Contact Author)
Florida State University ( email )
Tallahassee, FL 32306-1042
United States
(850) 644-2047 (Phone)
Florida State University - College of Law ( email )
425 W. Jefferson Street
Tallahassee, FL 32306
United States
Xiaoyun Yu
Indiana University - Kelley School of Business - Department of Finance ( email )
1309 E. 10th St.
Bloomington, IN 47405
United States
812-855-3521 (Phone)
812-855-5875 (Fax)

China Academy of Financial Research (CAFR)
1954 Huashan Road
Shanghai P.R.China, 200030
China

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