Friends in High Places: Political Ties and SEC Oversight of Foreign Firms

69 Pages Posted: 13 Sep 2022 Last revised: 2 Apr 2023

See all articles by Jill E. Fisch

Jill E. Fisch

University of Pennsylvania Carey Law School; European Corporate Governance Institute (ECGI)

Xian Gu

Durham University Business School

Date Written: August 28, 2022


In this paper, we examine the effect of country-level political relationships on SEC oversight of US-listed foreign firms, ranging from routine review of issuer filings to enforcement actions. We find that the political relationship between a foreign firm’s home country and the US is an important determinant of the frequency and intensity of SEC comment letters as well as whether the firm is likely to face enforcement. When the firm’s home country has stronger political ties with the US, the frequency of comment letters issued by the SEC is lower, the tone of comment letters is less negative and litigious and the firm is less likely to be the subject of an SEC enforcement action. We further examine the extent to which SEC routine monitoring through comment letters complements its enforcement activity, and we find that, although the relationship is generally complementary, when the political ties with the US are stronger, the complementary effect is mitigated.

Keywords: political relationship; SEC; comment letters; enforcement actions

JEL Classification: G18, G38, K22, P16

Suggested Citation

Fisch, Jill E. and Gu, Xian, Friends in High Places: Political Ties and SEC Oversight of Foreign Firms (August 28, 2022). U of Penn, Inst for Law & Econ Research Paper No. 22-27, Proceedings of the EUROFIDAI-ESSEC Paris December Finance Meeting 2022, European Corporate Governance Institute – Finance Working Paper No. 853/2022, Available at SSRN: or

Jill E. Fisch

University of Pennsylvania Carey Law School ( email )

3501 Sansom Street
Philadelphia, PA 19104
United States
215-746-3454 (Phone)
215-573-2025 (Fax)

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels

Xian Gu (Contact Author)

Durham University Business School ( email )

Mill Hill Lane
Durham, DH1 3LB
United Kingdom

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