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

  • Nuno Fernandes
  • Ugur Lel
  • Darius P. Miller
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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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File URL: http://www.federalreserve.gov/pubs/ifdp/2008/945/default.htm
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File URL: http://www.federalreserve.gov/pubs/ifdp/2008/945/ifdp945.pdf
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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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