Corporate Lobbying and Fraud Detection: Revisited
49 Pages Posted: 20 Aug 2015 Last revised: 19 Apr 2016
Date Written: April 19, 2016
This paper re-examines the size of penalties following securities class actions and the impact of lobbying on the time it takes to detect managerial misconduct. Managers of lobbying firms are able to get away with misconduct for longer and are marginally less likely to have to settle a class action up to 2004. From 2005, lobbying no longer impacts the time it takes to detect misconduct or the outcome of the case. Our findings suggest that the tacit power of lobbying firms has decreased over time and the most likely explanation for this is the enactment of SOX.
Keywords: Securities class actions; Lobbying; Sarbanes-Oxley Act; Tacit Power
JEL Classification: G18, G38, K22
Suggested Citation: Suggested Citation