Political connections and SEC enforcement

Maria M. Correia

Journal of Accounting and Economics, 2014, vol. 57, issue 2, 241-262

Abstract: In this study, I examine whether firms and executives with long-term political connections through contributions and lobbying incur lower costs from the enforcement actions by the Securities and Exchange Commission (SEC). I find that politically connected firms on average are less likely to be involved in SEC enforcement actions and face lower penalties if they are prosecuted by the SEC. Contributions to politicians in a strong position to put pressure on the SEC are more effective than others at reducing the probability of enforcement and penalties imposed by an enforcement action. Moreover, the amounts paid to lobbyists with prior employment links to the SEC, and the amounts spent on lobbying the SEC directly, are more effective than other lobbying expenditures at reducing enforcement costs faced by firms.

Keywords: Political connections; Securities and Exchange Commission; Prosecution; Enforcement; Legal penalties (search for similar items in EconPapers)
JEL-codes: G38 M41 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (164)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:57:y:2014:i:2:p:241-262

DOI: 10.1016/j.jacceco.2014.04.004

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