Regulatory Intensity and Firm-Specific Exposure

95 Pages Posted: 19 Sep 2019 Last revised: 28 Aug 2020

See all articles by Joseph Kalmenovitz

Joseph Kalmenovitz

Drexel University - LeBow College of Business

Date Written: September 10, 2019


Using a hand-collected administrative dataset, I develop a regulatory intensity index that tracks the total costs of compliance with federal paperwork regulations. I estimate firm-specific regulatory exposure based on the correlation between stock returns and unanticipated index changes. Regulatory exposure is associated with material declines in investment and employment, indicative of response to adverse shocks. The effect is driven by firms with ex-ante financial constraints and irreversible investment opportunities. The results shed new light on the heterogeneous economic impact of regulation and on its propagation mechanisms.

Keywords: Deregulation, Regulated Industries, Corporate Regulation, Investment

JEL Classification: E22, G18, G28, G31, K23

Suggested Citation

Kalmenovitz, Joseph, Regulatory Intensity and Firm-Specific Exposure (September 10, 2019). NYU Stern School of Business, Available at SSRN: or

Joseph Kalmenovitz (Contact Author)

Drexel University - LeBow College of Business ( email )

Philadelphia, PA 19104
United States

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