Proactive financial reporting enforcement and shareholder wealth

• 成果类型: Article
• 署名作者: Christensen, Hans B.; Liu, Lisa Yao; Maffett, Mark
• 署名单位: University of Chicago
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2019.101267
• 发表日期: 2020
• 关键词: sarbanes-oxley act; economic consequences; Disclosure regulation; capital-market; Information environment; Accounting information; corporate governance; MANDATORY DISCLOSURE; earnings; QUALITY

摘要

Within the UK's proactive financial-reporting enforcement regime, we examine the effect of increased regulatory scrutiny on equity values. We find that a fourfold increase in the likelihood of regulator-initiated reviews of financial reports reduces equity values by 1.3% on average. Reductions in equity values are largest for firms with strong private oversight that likely ensures that they are closer to their equity-value-maximizing level of transparency. Additional evidence suggests that competition increases and that managers' investment horizons decrease in industries selected for increased regulatory scrutiny, consistent with direct compliance costs not fully explaining the reduction in equity values. (C) 2019 Elsevier B.V. All rights reserved.