Public and Private Enforcement of Securities Laws: Resource-Based Evidence

By H. Jackson, Mark J. Roe. 2009

446 citations recorded by the source corpus.

Ascertaining which enforcement mechanisms work to protect investors has been both a focus of recent work in academic finance and an issue for policy-making at international development agencies. According to recent academic work, private enforcement of investor protection via both disclosure and private liability rules goes hand in hand with financial market development, but public enforcement fails to correlate with financial development and, hence, is unlikely to facilitate it. Our results confirm the disclosure result but reverse the results on both liability standards and public enforcement. We use securities regulators' resources to proxy for regulatory intensity of the securities regulator. When we do, financial depth regularly, significantly, and robustly correlates with stronger public enforcement. In horse races between these resource-based measures of public enforcement intensity and the most common measures of private enforcement, public enforcement is overall as important as disclosure in explaining financial market outcomes around the world and more important than private liability rules. Hence, policymakers who reject public enforcement as useful for financial market development are ignoring the best currently available evidence.

Subfields: Accounting, Finance

View Paper: https://www.semanticscholar.org/paper/47289cdf2d8475638dbda62b556be283ca7d9101

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Citations in the corpus

The Economics of Disclosure and Financial Reporting Regulation: Evidence and Suggestions for Future Research (2015, background): “…studies often emphasize the importance of enforcement (e.g., Frost and Pownall, 1994; Bhattacharya and Daouk, 2002; Hope, 2003; La Porta et al., 2006; Coffee, 2007; Jackson and Roe, 2009; Cumming et al., 2011) and, more recently, the implementation of regulation (e.g., Christensen et al., 2016).”
Capital-Market Effects of Securities Regulation: Prior Conditions, Implementation, and Enforcement (2016, background): “In line with Jackson and Roe (2009), we assume that a higher rate of staff growth indicates stronger implementation and enforcement.”
Supervisory Effectiveness and Bank Risk (2011, methodology): “Our research was inspired by the works of Jackson (2007), Jackson and Roe (2009), and Coffee (2007).”
Does Enforcement of Intellectual Property Rights Matter in China? Evidence from Financing and Investment Choices in the High-Tech Industry (2014, unknown): “(2006) and Jackson and Roe (2008) have documented the role of private and public enforcement of securities laws.”
Global Accounting Convergence and the Potential Adoption of IFRS by the U.S. (Part I): Conceptual Underpinnings and Economic Analysis (2010, background): “…of public enforcement efforts in the United States is unparalleled in the orld, not just in terms of rules and regulation La Porta et al. 2006 , regulators’ staffing levels nd budgets Jackson and Roe 2009 , but even more so in terms of actual enforcement actions and anctions imposed Coffee 2007 .”
Board Independence, Ownership Structure and the Valuation of IPOs in Continental Europe (2014, unknown): “IPO valuation is influenced by numerous countryspecific institutional characteristics, including listing standards (Johan, 2010) and the quality and enforcement of securities laws (Jackson & Roe, 2009; La Porta, Lopez-deSilanes, & Shleifer, 2006).”
Measuring Country Differences in Enforcement of Accounting Standards: An Audit and Enforcement Proxy (2013, unknown): “Studies have also distinguished between public enforcement (through state-funded security market regulators for example) and private enforcement (through private litigation) (La Porta et al., 2006; Jackson and Roe, 2009), where enforcement means activities aimed at ensuring compliance with a rule or”