What Happens in Nevada? Self-Selecting into Lax Law

• 成果类型: Article
• 署名作者: Barzuza, Michal; Smith, David C.
• 署名单位: University of Virginia; University of Virginia
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhu058
• 发表日期: 2014
• 页码: 3593
• 关键词: CORPORATE GOVERNANCE; MARKET; state; COMPENSATION; RESTATEMENTS; COMPETITION; FEDERALISM; DIRECTORS; boards

摘要

We find that Nevada, the second most popular state for out-of-state incorporations and a state with lax corporate law, attracts firms that are 30-40% more likely to report financial results that later require restatement than firms incorporated in other states, including Delaware. Our results suggest that firms favoring protections for insiders select Nevada as a corporate home, and these firms are prone to financial reporting failures. We provide some evidence that Nevada law also has a causal impact by increasing a Nevada firm's propensity to misreport financials after the firm has incorporated in Nevada.