Escape from New York: the market impact of SEC Rule 12h-6

Nuno Fernandes, Ugur Lel and Darius P. Miller

No 945, International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.)

Abstract: We examine the stock market impact of SEC Rule 12h-6 which eased the ability of foreign firms to deregister with the SEC and as a result terminate their U.S. disclosure obligations under the 1934 Securities Exchange Act. We document that the market reacted negatively to the ability of firms from weak disclosure and governance countries to more easily opt out of the stringent U.S. reporting and legal environment. Our findings suggest that shareholders of non-U.S firms place significant value on U.S. securities regulations, especially when the home country investor protections are weak.

Keywords: International; finance (search for similar items in EconPapers)
Date: 2008
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