Capital-Market Effects of Securities Regulation: Prior Conditions, Implementation, and Enforcement

Hans B. Christensen, Luzi Hail and Christian Leuz

The Review of Financial Studies, 2016, vol. 29, issue 11, 2885-2924

Abstract: We examine the capital-market effects of changes in securities regulation in the European Union aimed at reducing market abuse and increasing transparency. To estimate causal effects for the population of E.U. firms, we exploit that for plausibly exogenous reasons, such as national legislative procedures, E.U. countries adopted these directives at different times. We find significant increases in market liquidity, but the effects are stronger in countries with stricter implementation and traditionally more stringent securities regulation. The findings suggest that countries with initially weaker regulation do not catch up with stronger countries, and that countries diverge more upon harmonizing regulation.Received August 3, 2015; accepted April 25, 2016, by Editor Andrew Karolyi.

JEL-codes: F30 G15 G18 G30 K22 M40 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (130)

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Working Paper: Capital-Market Effects of Securities Regulation: Prior Conditions, Implementation, and Enforcement (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:oup:rfinst:v:29:y:2016:i:11:p:2885-2924.

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