Review of Financial Studies Vol. 36 No. 8 2023
Regulatory Intensity and Firm-Specific Exposure
Abstract
Building on administrative data and machine-learning models, I develop a firm-specific measure of regulatory intensity: cost of compliance with all federal paperwork regulations. Regulatory intensity increases the cost of goods sold and overhead spending (SGA). It also incentivizes companies to reduce capital investment, hire fewer employees, and lobby more. The effects are particularly strong among financially constrained firms and those with irreversible investment opportunities, suggesting that regulation affects companies through budgetary pressures and heightened uncertainty. The findings highlight the real effects of regulation and the underlying mechanisms.
- DOI
- 10.1093/rfs/hhad001
- Volume
- 36
- Issue
- 8
- Pages
- 3311-3347
- Language
- en
- Sources
- bibtex:phds-export.bib crossref openalex