Regulator-Cited Cooperation Credit and Firm Value: Evidence from Enforcement Actions

• 成果类型: Article
• 署名作者: Files, Rebecca; Martin, Gerald S.; Rasmussen, Stephanie J.
• 署名单位: University of Texas System; University of Texas Dallas; American University; University of Texas System; University of Texas Arlington
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-52307
• 发表日期: 2019
• 页码: 275-302
• 关键词: sec enforcement; corporate; IMPACT

摘要

Regulators claim to reward firm cooperation in the enforcement process. However, critics question which actions constitute firm cooperation and contend that cooperation leads to harsh'' and unfair'' outcomes. Examining 1,162 enforcement actions for financial misrepresentation initiated by the Securities and Exchange Commission and Department of Justice, we find that regulator-cited cooperation credit is best explained by remedial actions and self-reported law violations. Cooperation credit is negatively associated with firm monetary penalties assessed by regulators. Our estimates suggest that firms with cooperation credit realize an average penalty reduction of $23.8 million (49 percent). We also estimate that average reputation-related losses are $756 million (70 percent) lower for firms with cooperation credit. We find no association between cooperation credit and related private action outcomes. Our results provide important insight into what constitutes meaningful cooperation with regulators, and suggest that the benefits can be substantial for firms deemed to be cooperative.