Journal of Financial and Quantitative Analysis Vol. 52 No. 4 2017

Regulatory Sanctions and Reputational Damage in Financial Markets

John Armour^1,2; Colin Mayer^1,2; Andrea Polo^1,2

¹ Hebrew University of Jerusalem · ² University of Oxford

Abstract

We study the impact of the enforcement of financial regulation by the United Kingdom’s regulatory authorities on the market price of penalized firms. Existing studies rely on analyses of multiple events that may distort the measurement of reputational losses. In the United Kingdom, the entire enforcement process involves only one public announcement and is accompanied by complete information on legal penalties. We find that reputational losses are nearly nine times the size of fines and are associated with misconduct harming customers or investors but not third parties.

DOI

10.1017/s0022109017000461

Volume

52

Issue

4

Pages

1429-1448

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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