SEC scrutiny shopping

Paul Calluzzo, Wei Wang and Serena Wu

Journal of Corporate Finance, 2021, vol. 67, issue C

Abstract: We examine whether firms exploit enforcement heterogeneity in response to a heightened risk of investigation by regional Securities and Exchange Commission (SEC) enforcement offices. We find that firms facing high SEC scrutiny risks are more likely to relocate outside the jurisdiction of the SEC regional office. The likelihood of out-of-SEC relocation becomes at least two times higher after exogenous shocks to local SEC enforcement. High scrutiny-risk firms tend to migrate to regions with weaker SEC enforcement history and regions with more peers engaging in misbehavior. Scrutiny shopping is more salient for firms with lower costs of relocation.

Keywords: Regulatory enforcement; SEC; Forum shopping; Corporate relocation (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:67:y:2021:i:c:s0929119920303229

DOI: 10.1016/j.jcorpfin.2020.101878

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