How stock markets react to regulatory sanctions? Evidence from France

Thierry Kirat and Amir Rezaee

Applied Economics, 2019, vol. 51, issue 60, 6558-6566

Abstract: Our study of how the stock market reacts to sanction announcements by the French financial regulator from 2004 to 2017 finds that the market reacts negatively when a sanction is announced in the press. Cross-sectional regression models show that the penalties are too low to influence market reactions. Our results suggest that after the financial crisis of 2008, a plethora of news on financial wrongdoings has desensitized markets to announcements of sanctions against large companies.

Date: 2019
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DOI: 10.1080/00036846.2019.1644443

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