The Political Influence of Voters’ Interests on SEC Enforcement

57 Pages Posted: 24 Dec 2014 Last revised: 14 May 2018

Date Written: May 7, 2018

Abstract

I examine whether political influence as a response to voters’ interest in employment levels is reflected in the enforcement actions of the Securities and Exchange Commission (SEC). I find that large employers are less likely to experience SEC enforcement actions. Next, I examine whether variations in politicians’ sensitivity to employment levels result in variations in enforcement against large employers. I find that large employers are less likely to face enforcement actions during presidential elections if they are based in politically important states. Large employers also face fewer enforcement actions if they are based in high-unemployment states during elections of senators who serve on SEC oversight committees. Large employers based in high-unemployment districts enjoy lower enforcement if their congressmen serve on SEC oversight committees. The findings suggest that voters’ interests are reflected in SEC enforcement.

Keywords: SEC enforcement actions; firm employment; political influence; voters’ interests

JEL Classification: D72, G18, M41, M43

Suggested Citation

Heese, Jonas, The Political Influence of Voters’ Interests on SEC Enforcement (May 7, 2018). Contemporary Accounting Research, Forthcoming; Harvard Business School Accounting & Management Unit Working Paper No. 15-054 . Available at SSRN: https://ssrn.com/abstract=2542242 or http://dx.doi.org/10.2139/ssrn.2542242

Jonas Heese (Contact Author)

Harvard Business School ( email )

Soldiers Field Road
Morgan Hall 397
Boston, MA 02163
United States

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