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Escape from New York: the market impact of SEC Rule 12h-6

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  • Nuno Fernandes
  • Ugur Lel
  • Darius P. Miller
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Abstract

We examine the stock market impact of SEC Rule 12h-6 which eased the ability of foreign firms to deregister with the SEC and as a result terminate their U.S. disclosure obligations under the 1934 Securities Exchange Act. We document that the market reacted negatively to the ability of firms from weak disclosure and governance countries to more easily opt out of the stringent U.S. reporting and legal environment. Our findings suggest that shareholders of non-U.S firms place significant value on U.S. securities regulations, especially when the home country investor protections are weak.

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Bibliographic Info

Paper provided by Board of Governors of the Federal Reserve System (U.S.) in its series International Finance Discussion Papers with number 945.

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Date of creation: 2008
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Handle: RePEc:fip:fedgif:945

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Keywords: International finance;

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References

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Cited by:
  1. Doidge, Craig & Karolyi, G. Andrew & Stulz, Rene M., 2009. "Why Do Foreign Firms Leave U.S. Equity Markets?," Working Paper Series 2009-3, Ohio State University, Charles A. Dice Center for Research in Financial Economics.
  2. Doidge, Craig & Karolyi, G. Andrew & Stulz, Rene, 2008. "Why Do Foreign Firms Leave U.S. Equity Markets? An Analysis of Deregistrations under SEC Exchange Act Rule 12h-6," Working Paper Series 2008-14, Ohio State University, Charles A. Dice Center for Research in Financial Economics.

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