SEC Scrutiny Shopping

58 Pages Posted: 8 Jul 2015 Last revised: 5 Nov 2019

See all articles by Paul Calluzzo

Paul Calluzzo

Queen's University - Smith School of Business

Wei Wang

Queen's University - Smith School of Business

Serena Wu

Queen's University

Date Written: December 2019

Abstract

We examine whether firms exploit enforcement heterogeneity in response to risks and costs arising from investigations by regional Securities and Exchange Commission (SEC) enforcement offices. We find that firms facing high SEC scrutiny risk are more likely to relocate outside the jurisdiction of their SEC regional office. The likelihood of relocation becomes at least two times higher after exogenous local enforcement shocks. High scrutiny-risk firms tend to migrate to regions with weaker SEC enforcement history and regions with more peers engaging in misbehavior. Scrutiny shopping is more salient for firms with lower costs of relocation.

Keywords: regulatory enforcement, SEC regulation, forum shopping, corporate relocation

JEL Classification: G34, G38, M41, M48

Suggested Citation

Calluzzo, Paul and Wang, Wei and Wu, Serena, SEC Scrutiny Shopping (December 2019). Available at SSRN: https://ssrn.com/abstract=2627760 or http://dx.doi.org/10.2139/ssrn.2627760

Paul Calluzzo

Queen's University - Smith School of Business ( email )

Smith School of Business - Queen's University
143 Union Street
Kingston, Ontario K7L 3N6
Canada

Wei Wang (Contact Author)

Queen's University - Smith School of Business ( email )

Queen's University-Smith School of Business
143 Union Street
Kingston, Ontario K7L 3N6
Canada

Serena Wu

Queen's University ( email )

Kingston, Ontario K7L 3N6
Canada

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