How stock markets react to regulatory sanctions? Evidence from France

Kirat, Thierry; Rezaee, Amir

Kirat, Thierry; Rezaee, Amir (2019), How stock markets react to regulatory sanctions? Evidence from France, Applied Economics, 51, 60, p. 6558-6566. 10.1080/00036846.2019.1644443

Type

Article accepté pour publication ou publié

Date

2019

Journal name

Applied Economics

Volume

Number

Publisher

Taylor & Francis

Pages

6558-6566

Institut de Recherche Interdisciplinaire en Sciences Sociales [IRISSO]
Rezaee, Amir
Institut Supérieur de Gestion [ISG]

Abstract (EN)

Our study of how stock market reacts to sanction announcements by the French financial regulator from 2004 to 2014 finds that market reacts negatively when a sanction is announced to the firm or in the press, but that market fails to react at the opening of proceedings for possible sanctions. Cross sectional regression models show that the penalties are too low to influence market reactions. Our results suggest that after the Financial Crisis of 2008, a plethora of news of financial wrongdoings have desensitized markets to announcements of sanctions against large companies

Subjects / Keywords

Sanctions; wrongdoings; financial regulator; reputation; abnormal returns

JEL

K22 - Business and Securities Law
K23 - Regulated Industries and Administrative Law
G14 - Information and Market Efficiency; Event Studies; Insider Trading
K42 - Illegal Behavior and the Enforcement of Law