Published in:Baruch College Zicklin School of Business Research Paper ; No. 2018-000
Extent:
1 Online-Ressource (67 p)
Language:
English
DOI:
10.2139/ssrn.3159112
Identifier:
Origination:
Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments April 8, 2018 erstellt
Description:
This paper examines the interplay between the SEC and misconduct firms under the modified leniency program of 2010. In contrast to prior research that finds the SEC penalizes cooperative violators prior to 2010, we show that the Commission now rewards cooperation after 2010. The post-2010 change is primarily due to the SEC exercising more leniency towards good faith cooperation (e.g., timely disclosure, replacing executives), as opposed to perfunctory actions (e.g., internal investigation). Unlike prior studies, our results are not conditional on firms receiving enforcement actions. We also show that misconduct firms have become reluctant to cooperate under the new regime, indicating violators' suspicion about the SEC's intent. Our findings highlight the importance of regulators establishing a clear ex ante incentive structure to limit ex post prosecutorial discretion when operationalizing an effective leniency program. Our results also caution against using SEC sanctions as a proxy for severity of misreporting after 2010