Date of Degree

6-2021

Document Type

Dissertation

Degree Name

Ph.D.

Program

Business

Advisor

Monica Neamtiu

Committee Members

Kalin S. Kolev

Edward X. Li

Erik Johannesson

Lin Peng

Subject Categories

Accounting

Keywords

Securities and Exchange Commission, Enforcement, Oversight, Political connections, Lobbying

Abstract

Due to the private nature of its internal investigations, research on the SEC oversight enforcement is limited. By distinguishing between enforcement staff’ decision to open an investigation (investigation decision) and commissioners’ authorization of an enforcement action (enforcement decision), this study is the first to examine how these two decisions interplay to overcome the political capture while fulfilling the SEC’s mission to protect investors. First, I do not find evidence that investigation decision is influenced by firms’ political connections, whereas enforcement decision is affected by firms’ lobbying efforts. Collectively, my results imply that there exists a misalignment between commissioners’ political incentives and the staff’ career incentives in the SEC oversight enforcement. My results also suggest that a firm’s opportunistic lobbying during an investigation (reactive lobbying) is effective in reducing the probability of an SEC enforcement action, while habitual lobbying activities in anticipation of possible adverse events (proactive lobbying) do not shield a firm from regulatory scrutiny.

Included in

Accounting Commons

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