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

Hans B. Christensen, Luzi Hail and Christian Leuz

No 16737, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We examine the capital-market effects of changes in securities regulation in the European Union (EU) aimed at reducing market abuse and increasing transparency. To estimate causal effects for the population of EU firms, we exploit that for plausibly exogenous reasons, like national legislative procedures, EU 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.

JEL-codes: F36 G12 G14 G15 G38 K22 M41 M48 (search for similar items in EconPapers)
Date: 2011-01
Note: AP CF LE POL
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Published as Hans B. Christensen & Luzi Hail & Christian Leuz, 2016. "Capital-Market Effects of Securities Regulation: Prior Conditions, Implementation, and Enforcement," Review of Financial Studies, vol 29(11), pages 2885-2924.

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Journal Article: Capital-Market Effects of Securities Regulation: Prior Conditions, Implementation, and Enforcement (2016)
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