Regulatory Transparency and Regulatory Capture
Prof. Rui GUO
Assistant Professor, School of Management, Xiamen University
Date: 29 November 2024 (Friday)
Time: 10:30 – 12:00
Venue: E22-2002
Host: Prof. Rubin HAO, Assistant Professor in Accounting
Abstract
This study investigates whether regulatory transparency can curb regulatory capture by motivating regulators to increase their work effort. Specifically, we find that publicly releasing comment letters increases the reviewers’ effort (i.e., work input) for politically connected firms, and that the SEC issues more comment letters (i.e., work output). These findings suggest that output transparency in the filing review process reduces regulatory capture within the Division of Corporate Finance (DCF). However, we also observe that the SEC initiates fewer investigations and enforcement actions against political connected firms under the more transparent regime. These findings indicate that the transparency shift in the DCF may create negative externalities for the Division of Enforcement (DOE) and heighten its risk of being captured. Overall, this study contributes to our understanding of how regulatory transparency influences regulatory capture within the SEC.
Speaker
Prof. Rui GUO is now an assistant professor at School of Management, Xiamen University. He got his PhD degree from the Chinese University of Hong Kong. His research interest includes corporate disclosure, capital markets and auditing. He got his paper published in Journal of Accounting Research.
All are welcome!
