Incentivizing Financial Regulators

• 成果类型: Article
• 署名作者: Kalmenovitz, Joseph
• 署名单位: Drexel University
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhaa138
• 发表日期: 2021
• 页码: 4745
• 关键词: rank-order tournaments; REVOLVING-DOOR; firm; ENFORCEMENT; MARKET; pay; CONSEQUENCES; performance; sector; RISK

摘要

I study how promotion incentives within the public sector affect financial regulation. I assemble individual data for all SEC enforcement attorneys between 2002 and 2017, including enforcement cases, salaries, and ranks. Consistent with tournament model, attorneys with stronger promotion incentives are involved in more enforcement, especially against severe misconduct, and in tougher settlement terms. For identification, I rely on cross-sectional tests within offices and ranks and on exogenous variation in salaries resulting from a conversion to a new pay system. The findings highlight a novel link between incentives and regulation and show that the regulator's organizational design affects securities markets.