The revolving door and the SEC's enforcement outcomes: Initial evidence from civil litigation

• 成果类型: Article
• 署名作者: deHaan, Ed; Kedia, Simi; Koh, Kevin; Rajgopal, Shivaram
• 署名单位: Stanford University; Nanyang Technological University; Rutgers University System; Rutgers University New Brunswick; Columbia University
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2015.07.010
• 发表日期: 2015

摘要

We investigate the consequences of the revolving door for trial lawyers at the SEC's enforcement division. If future job opportunities motivate SEC lawyers to develop and/or showcase their enforcement expertise, then the revolving door phenomenon will promote more aggressive regulatory activity (the human capital hypothesis). In contrast, SEC lawyers can relax enforcement efforts in order to develop networking skills and/or curry favor with prospective employers at private law firms (the rent seeking hypothesis). We collect data on the career paths of 336 SEC lawyers that span 284 SEC civil cases against accounting misrepresentation over the period 1990-2007. Our overall evidence is consistent with the human capital hypothesis. However, we find some evidence of rent seeking when SEC lawyers are based in Washington DC and when defense firms employ more former SEC lawyers. The revolving door likely impacts numerous aspects of SEC regulation setting and enforcement. This study examines accounting-related civil cases and is not able to study administrative or non-accounting enforcement cases. Further, the study does not address the choice of which cases to pursue, the incentives of employees other than trial lawyers, or how the revolving door affects rule making. Subject to these caveats, our study provides an important first look into the effects of revolving door incentives on the SEC's enforcement process and lays the groundwork for future research. (C) 2015 Published by Elsevier B.V.