Date of Award
9-2012
Document type
dissertation
Access Type
Open Access Dissertation
Degree Name
Doctor of Philosophy (PhD)
Degree Program
Management
First Advisor
Pieter T. Elgers
Second Advisor
Mark Bradshaw
Third Advisor
Ben Branch
Subject Categories
Management Information Systems
Abstract
This study provides a test of the market valuation impact of Securities and Exchange Commission (SEC) enforcement actions for foreign firms. I examine the SEC enforcement policy towards foreign firms under its jurisdiction. In contrast to Siegel (2005) who examines earlier years, I find that the SEC's current (post-2002) enforcement intensity is considerable and has increased dramatically by comparison. I construct a novel test using the burgeoning series SEC enforcement events as changes to the legal environment that circumvents the issues associated with firm-level exchange-listing events (e.g. self-selection and simultaneous changes to firm traits). The tests focus on stock returns of foreign firms not targeted by the SEC during event windows surrounding SEC announcements of enforcements against foreign firms. This isolates the effect of a changing enforcement environment. I find that when the SEC takes action against a foreign firm, non-target foreign firms experience positive stock returns. Returns are amplified for firms from weaker home legal environments, suggesting that the returns are due to a perceived increase in SEC scrutiny. Finally, consistent with the market adjusting to the new enforcement regime, the magnitude of non-target firm returns declines with each sequential SEC enforcement action. The overall results provide evidence that SEC oversight plays a significant role in increasing the value of foreign firms, which supports the legal bonding hypothesis discussed in prior literature.
DOI
https://doi.org/10.7275/3527586
Recommended Citation
Silvers, Roger Nelson, "The Valuation Impact of Sec Enforcement Actions on Non-Target Foreign Firms" (2012). Open Access Dissertations. 624.
https://doi.org/10.7275/3527586
https://scholarworks.umass.edu/open_access_dissertations/624