Running the D.C. Circuit Gauntlet on Cost Benefit Analysis after Citizens United: Empirical Evidence from SOX and the JOBS Act

52 Pages Posted: 22 Apr 2014 Last revised: 20 Oct 2014

See all articles by Ciara Torres-Spelliscy

Ciara Torres-Spelliscy

Stetson University College of Law

Kathy Fogel

Suffolk University - Department of Finance

Rwan El-Khatib

Zayed University - College of Business

Date Written: April 21, 2014

Abstract

To require disclosure or not to require disclosure; that is the question faced by regulators, including the Securities and Exchange Commission (SEC), in light of the Supreme Court’s 2010 Citizens United decision, which allows anew free flow of corporate money into the political system.

Pending before the SEC since 2011 is a petition by 10 law professors asking for transparency of corporate political spending. We write this article in anticipation of the SEC’s eventual promulgation of rules requiring disclosure of corporate political spending. Many of the core questions about the market’s reaction to increased regulation of listed companies that we can study now are likely to be implicated in the debate about regulation within the narrower subset of corporate political spending.

Corporations who do not want to disclose their political spending are likely to challenge any rule that the SEC issues on the subject. Such a legal challenge is destined to be heard by the D.C. Circuit Court, which examines federal regulations with an increasingly jaundiced eye. One of the ground on which the D.C. Circuit can dispose of a new regulation is by finding that the SEC did not do a sufficiently rigorous cost-benefit analysis.

This article addresses the potential hostility that the D.C. Circuit may harbor against a new SEC rule requiring greater corporate transparency in election activities and provides some data that might assist the SEC in navigating this gauntlet.

In summary, our data showed that the market reacted positively to the new regulations in SOX and reacted negatively to the deregulations embodied in the JOBS Act. In short, and as discussed more fully below, the data demonstrate that the market values transparency and distrusts opaqueness. We hope that the D.C. Circuit will find these data useful in illuminating the larger debate over what securities regulations are allowable.

Keywords: cost benefit analysis, CBA, SEC, Citizens United, SOX, JOBS Act, securities regulations, disclosure, D.C. Circuit, corporate, public firms, public corporations, rulemaking, APA

JEL Classification: G14, G18

Suggested Citation

Torres-Spelliscy, Ciara and Fogel, Kathy and El-Khatib, Rwan, Running the D.C. Circuit Gauntlet on Cost Benefit Analysis after Citizens United: Empirical Evidence from SOX and the JOBS Act (April 21, 2014). Duke Journal of Constitutional Law & Public Policy, 2014, Stetson University College of Law Research Paper No. 2014-6, Available at SSRN: https://ssrn.com/abstract=2427427

Ciara Torres-Spelliscy (Contact Author)

Stetson University College of Law ( email )

1401 61st Street South
Gulfport, FL 33707
United States

Kathy Fogel

Suffolk University - Department of Finance ( email )

8 Ashburton Place-Beacon Hill
Boston, MA 02108-2770
United States

Rwan El-Khatib

Zayed University - College of Business ( email )

Zayed University
P.O. Box 144534
Abu Dhabi
United Arab Emirates

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