SEC Investigations and Securities Class Actions: An Empirical Comparison
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چکیده
We compare investigations by the SEC with securities fraud class action filings involving public companies. Using actions with both an SEC investigation and a class action as our baseline, we compare SEC‐only investigations with class action‐only lawsuits. We find evidence that the stock market reacts more negatively to the class actions relative to SEC investigations. We also find that institutional ownership and stock turnover decline more for class actions compared with SEC investigations. Lastly, the incidence and magnitude of settlements, as well as the incidence of top officer resignation, are greater for class actions relative to SEC investigations. This evidence is consistent with private class actions pursuing more egregious securities law violations than SEC investigations and imposing greater sanctions against companies. At least for the metrics employed here, our findings are consistent with the private enforcement providing at least as much deterrent value, if not more, than public enforcement. * Murray and Kathleen Bring Professor of Law, New York University and Frances and George Skestos Professor of Law, University of Michigan, respectively. The authors thank Un Kyung Park as well as participants at a Fawley Lunch at the University of Michigan Law School for helpful comments on earlier drafts. We are particularly grateful to Cornerstone Research for assisting us with data on SEC investigations and enforcement actions used here. 1 Choi and Pritchard: Published by University of Michigan Law School Scholarship Repository, 2012 Electronic copy available at: http://ssrn.com/abstract=2109739 1
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تاریخ انتشار 2013