SEC Scrutiny Shopping

87 Pages Posted: 8 Jul 2015 Last revised: 20 Dec 2020

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 1, 2019

Abstract

We examine whether firms exploit enforcement heterogeneity in response to heightened risk of investigation 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 the SEC regional office. The likelihood of out-of-SEC relocation becomes at least two times higher after exogenous shocks to local SEC enforcement. 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 1, 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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