Regulators' Disclosure Decisions: Evidence from Bank Enforcement Actions

54 Pages Posted: 4 Feb 2019 Last revised: 11 May 2019

See all articles by Anya Kleymenova

Anya Kleymenova

The University of Chicago Booth School of Business

Rimmy E. Tomy

University of Chicago

Date Written: May 1, 2019


Regulatory disclosure requirements induce market discipline and facilitate efficient allocation of resources by increasing firm transparency. At the same time, disclosure increases the visibility of regulatory actions, which influences the behavior of regulators. In this paper, we study the impact of a change in the disclosure regime by using the setting of the 1989 Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), which required bank regulators to disclose enforcement actions publicly. Using a novel sampling technique to identify enforcement actions in the non-disclosure regime, we find that regulators' incentives change after the introduction of the Act. In the disclosure regime, regulators are more likely to issue enforcement actions, as well as to rely on the publicly observable signals to issue enforcement orders, suggesting a response to the increased public scrutiny of their actions. We also find that following an enforcement action, its disclosure leads to a decline in uninsured deposits and improves banks' capital ratios and asset quality. Furthermore, enforcement actions are a stronger predictor of bank failure in the disclosure period.

Keywords: Disclosure, Enforcement actions, Regulatory incentives, Banking

JEL Classification: G21, G28

Suggested Citation

Kleymenova, Anya V. and Tomy, Rimmy, Regulators' Disclosure Decisions: Evidence from Bank Enforcement Actions (May 1, 2019). Chicago Booth Research Paper No. 19-05; Fama-Miller Working Paper. Available at SSRN: or

Anya V. Kleymenova (Contact Author)

The University of Chicago Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-834-4348 (Phone)

Rimmy Tomy

University of Chicago ( email )

Booth School of Business
5807 S Woodlawn Ave
Chicago, IL 60637
United States

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