Enforcement Waves and Spillovers

• 成果类型: Article
• 署名作者: Choi, Hae Mi; Karpoff, Jonathan M.; Lou, Xiaoxia; Martin, Gerald S.
• 署名单位: Loyola University Chicago; University of Washington; University of Washington Seattle; University of Delaware; American University
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2023.4711
• 发表日期: 2024
• 关键词: SEC; misrepresentation; FRAUD; ENFORCEMENT; market efficiency

摘要

We document that regulatory enforcement actions for financial misrepresentation cluster in industry-specific waves and that wave-related enforcement has information spillovers on industry peer firms. Waves and spillovers have significant effects on share prices. Early-wave target firms have the largest short-run losses in share values and the largest information spillovers on industry peer firms. Late-wave targets' short-run losses are smaller, but not because they involve less costly instances of misconduct. Rather, late wave targets are subject to more information spillovers from earlier in the wave. These results indicate that prices incorporate changes in the likelihood that a firm will face wave related enforcement action for financial misconduct. Short-window share-price losses understate the total share-price impact, particularly for firms whose financial misrepresentation is revealed late in an enforcement wave.