Measuring the Temperature and Diversity of the U.S. Regulatory Ecosystem

10 Pages Posted: 3 Jan 2017 Last revised: 11 Jan 2017

Michael James Bommarito II

LexPredict, LLC; Bommarito Consulting, LLC; Chicago-Kent College of Law - Illinois Institute of Technology; Michigan State College of Law

Daniel Martin Katz

Illinois Tech - Chicago Kent College of Law

Date Written: January 11, 2017

Abstract

Over the last 23 years, the U.S. Securities and Exchange Commission has required over 34,000 companies to file over 165,000 annual reports. These reports, the so-called “Form 10-Ks,” contain a characterization of a company’s financial performance and its risks, including the regulatory environment in which a company operates. In this paper, we analyze over 4.5 million references to U.S. Federal Acts and Agencies contained within these reports to build a mean-field measurement of temperature and diversity in this regulatory ecosystem. While individuals across the political, economic, and academic world frequently refer to trends in this regulatory ecosystem, there has been far less attention paid to supporting such claims with large-scale, longitudinal data. In this paper, we document an increase in the regulatory energy per filing, i.e., a warming “temperature.” We also find that the diversity of the regulatory ecosystem has been increasing over the past two decades, as measured by the dimensionality of the regulatory space and distance between the “regulatory bitstrings” of companies. This measurement framework and its ongoing application contribute an important step towards improving academic and policy discussions around legal complexity and the regulation of large-scale human techno-social systems.

Keywords: complex systems, legal complexity, techno-social systems, diversity, regulation, legal science, empirical legal studies, natural language processing

JEL Classification: D72, D73, G14, H11, K10, K20, K22, L51, O51

Suggested Citation

Bommarito, Michael James and Katz, Daniel Martin, Measuring the Temperature and Diversity of the U.S. Regulatory Ecosystem (January 11, 2017). Available at SSRN: https://ssrn.com/abstract=2891494 or http://dx.doi.org/10.2139/ssrn.2891494

Michael James Bommarito II

LexPredict, LLC ( email )

MI
United States

HOME PAGE: http://lexpredict.com

Bommarito Consulting, LLC ( email )

MI 48098
United States

HOME PAGE: http://bommaritollc.com

Chicago-Kent College of Law - Illinois Institute of Technology ( email )

565 W. Adams St.
Chicago, IL 60661-3691
United States

Michigan State College of Law ( email )

318 Law College Building
East Lansing, MI 48824-1300
United States

Daniel Martin Katz (Contact Author)

Illinois Tech - Chicago Kent College of Law ( email )

565 W. Adams St.
Chicago, IL 60661-3691
United States

HOME PAGE: http://www.danielmartinkatz.com/

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