Multiple Regulators and Accounting Restatements: Evidence from Canada

2019 ◽  
Vol 18 (2) ◽  
pp. 3-29 ◽  
Author(s):  
Brian M. Burnett ◽  
Daphne Hart ◽  
Bjorn N. Jorgensen ◽  
Gregory W. Martin
Keyword(s):  
Common Law ◽  
Civil Law ◽  
Securities And Exchange Commission ◽  
Securities Regulation ◽  
Legal Origin ◽  
Accounting Restatements ◽  
Listed Firms ◽  
Ex Post ◽  
The U.S

ABSTRACT Canada delegates securities regulation to the provincial securities regulators where each Canadian firm is headquartered. Legal origin theories predict weaker enforcement due to less emphasis on accounting in civil law jurisdictions, like Quebec. Consistent with these theories, we find fewer restatements for non-U.S. cross-listed firms headquartered in Quebec relative to the rest of Canada (ROC), which has a common law legal origin. When subject to two securities regulators—a Canadian provincial securities regulator and the Securities and Exchange Commission—Quebec firms cross-listed in the U.S. restate at a rate similar to the ROC. Finally, we document that Canadian firms restate less frequently after adopting IFRS, consistent with more principles-based standards being more difficult to enforce ex post than more rules-based standards.

scholarly journals Dividend Smoothing and Investor Protection

2019 ◽  
Vol 22 (2) ◽  
pp. 55-70
Author(s):  
Ante Džidić ◽  
Silvije Orsag
Keyword(s):  
United States ◽  
Common Law ◽  
Investor Protection ◽  
Civil Law ◽  
Legal Origin ◽  
Agency Model ◽  
Dividend Smoothing ◽  
Widespread Phenomenon ◽  
The Common ◽  
The Difference

Abstract This paper examines the agency model of dividends where the importance of dividends depends on the level of investor protection. The importance of dividends is presented by the dividend smoothing concept, while the level of investor protection is determined by the legal origin. Within this, the sensitivity of dividends to earnings changes was analyzed to examine the universality of the dividend smoothing phenomenon. Subsequently, the difference in proportions of dividend smoothing firms within the common law and civil law countries was tested to determine which of these two systems attributes more importance to dividends. Finally, the application of Lintner’s model was examined in transition countries as well as in United States. Research results show that dividend smoothing is a globally widespread phenomenon, but the likelihood to reduce or cut dividends is greater in civil law countries. Also, the largest percentage of dividend smoothing firms was recorded in common law countries.

The Diminishing Benefits of U.S. Cross-Listing: Economic Consequences of SEC Rule 12h-6

2017 ◽  
Vol 52 (3) ◽  
pp. 1143-1181 ◽  
Author(s):  
Chinmoy Ghosh ◽  
Fan He
Keyword(s):  
Investor Protection ◽  
Regulatory System ◽  
Securities And Exchange Commission ◽  
Economic Consequences ◽  
Difference In Difference ◽  
Listed Firms ◽  
Average Rule ◽  
Cross Listing ◽  
Voting Premium ◽  
The U.S

On Mar. 21, 2007, the U.S. Securities and Exchange Commission (SEC) passed Exchange Act Rule 12h-6 to make it easier for cross-listed firms to deregister from the U.S. market and escape its regulatory costs. Using difference-in-difference (DD) tests, we find that, on average, Rule 12h-6’s passage induced an increase in voting premium, a decline in equity raising, and a decline in cross-listing premium. These effects are observed for exchange-listed firms and for firms from countries with weak investor protection. We conclude that although cross-listed firms are still valued at a significant premium over non-cross-listed firms, the rule decreased the value of commitment to the U.S. regulatory system.

scholarly journals Does Legal Origin Matter for Arms Control Treaty Ratification?

2021 ◽  
pp. 157-173
Author(s):  
Jeroen Klomp ◽  
Robert Beeres
Keyword(s):  
Common Law ◽  
Arms Control ◽  
Civil Law ◽  
International Treaties ◽  
Legal Origin ◽  
Arms Races ◽  
Law System ◽  
Treaty Ratification ◽  
Governmental Organizations ◽  
The Common

AbstractThis chapter examines whether the legal origin of a country influences the likelihood of ratification of multilateral international treaties concerning arms control. We theorize that ratification of an arms control treaty signals a country’s intention to avoid arms races and wars. We know only little about the variation in the ratification of such agreements. One possible element that may explain this variation is the legal origin or tradition of a country. Since treaties are legally binding agreements between two or more states and/or international governmental organizations, they cannot be adapted to local needs and circumstances. Treaties are therefore generally an uneasy fit with the gradual, organic evolution of law that is essential in the common-law system. By contrast, the civil-law tradition neatly distinguishes between legally binding obligations and non-binding guidelines or directives. Consequently, civil-law countries are expected to be more likely to ratify treaties than common-law countries. The empirical results clearly confirm this expectation. In particular, civil-law countries have ratified about nine percent more treaties than common-law countries.

Some Observations on the Use of Structural and Remedial Measures in American and German Law After Sarbanes-Oxley

2003 ◽  
Vol 4 (2) ◽  
pp. 127-135 ◽  
Author(s):  
David C. Donald
Keyword(s):  
Financial Reporting ◽  
Stock Prices ◽  
Investment Decisions ◽  
Securities And Exchange Commission ◽  
Financial Information ◽  
Securities Regulation ◽  
Accurate Information ◽  
Fraud Risk ◽  
Sarbanes Oxley ◽  
The U.S

Rational investment decisions require accurate information regarding the operations and performance of issuers. As the U.S. Securities and Exchange Commission (“SEC”) has recently noted: “Accurate and reliable financial reporting lies at the heart of our disclosure-based system for securities regulation, and is critical to the integrity of the U.S. securities markets. Investors need accurate and reliable financial information to make informed investment decisions. Investor confidence in the reliability of corporate financial information is fundamental to the liquidity and vibrancy of our markets.” Issuers have strong motives to signal to investors that the business information they disclose is correct and complete – so as to build solid reputations and avoid discounts that investors might apply to their stock prices as compensation for undisclosed risk or misrepresented results. A similar argument applies to “gatekeeping” reputational intermediaries, such as auditing firms and investment banks that lend their reputations to their clients in various ways. However, dishonest issuers and gatekeepers can take advantage of a generally honest market (that does not contain a substantial fraud risk discount), and the return on fraud for a given member of a firm might exceed such individual's pro rata share of the firm's overall reputational capital, making crime literally pay; therefore, regulation must be introduced to supplement market controls and mandate full and accurate disclosure.

The Evolution of a Nation

2011 ◽  
Author(s):  
Daniel Berkowitz ◽  
Karen B. Clay
Keyword(s):  
Political Competition ◽  
Common Law ◽  
Civil Law ◽  
Legal Institutions ◽  
Colonial History ◽  
Legal Systems ◽  
Water Transportation ◽  
Long Run ◽  
Access To Water ◽  
Late Twentieth

Although political and legal institutions are essential to any nation's economic development, the forces that have shaped these institutions are poorly understood. Drawing on rich evidence about the development of the American states from the mid-nineteenth to the late twentieth century, this book documents the mechanisms through which geographical and historical conditions—such as climate, access to water transportation, and early legal systems—impacted political and judicial institutions and economic growth. The book shows how a state's geography and climate influenced whether elites based their wealth in agriculture or trade. States with more occupationally diverse elites in 1860 had greater levels of political competition in their legislature from 1866 to 2000. The book also examines the effects of early legal systems. Because of their colonial history, thirteen states had an operational civil-law legal system prior to statehood. All of these states except Louisiana would later adopt common law. By the late eighteenth century, the two legal systems differed in their balances of power. In civil-law systems, judiciaries were subordinate to legislatures, whereas in common-law systems, the two were more equal. Former civil-law states and common-law states exhibit persistent differences in the structure of their courts, the retention of judges, and judicial budgets. Moreover, changes in court structures, retention procedures, and budgets occur under very different conditions in civil-law and common-law states. This book illustrates how initial geographical and historical conditions can determine the evolution of political and legal institutions and long-run growth.

Is Style of Reasoning a Fundamental Difference Between the Common Law and the Civil Law?

2017 ◽  
Vol 17 (2) ◽  
pp. 238-290
Author(s):  
Colm Peter McGrath ◽  
◽  
Helmut Koziol ◽  
Keyword(s):  
Common Law ◽  
Civil Law ◽  
Fundamental Difference ◽  
The Common
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