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Is the SEC captured? Evidence from political connectedness and SEC enforcement actions

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  • Abdul‐Rahman Khokhar
  • Hesam Shahriari

Abstract

This study examines the impact of political connectedness (PC) on enforcement actions by the Securities and Exchange Commission (SEC). Our analysis confirms that SEC is not captured and shows that firms or executives with stronger PC are more likely to be criminally charged or face bar or suspension than firms or executives with weaker PC. In addition, we document that imposed fines are relatively higher for prosecuted firms and executives with stronger PC. These findings are robust to inclusions of controls for Republican Congress, Republican President, and recent regulatory reforms and are not driven by endogeneity concerns and sample selection bias.

Suggested Citation

  • Abdul‐Rahman Khokhar & Hesam Shahriari, 2022. "Is the SEC captured? Evidence from political connectedness and SEC enforcement actions," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(2), pages 2725-2756, June.
    • Handle: RePEc:bla:acctfi:v:62:y:2022:i:2:p:2725-2756
    DOI: 10.1111/acfi.12880
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