Measuring firm exposure to government agencies

IF 7.8 1区管理学 Q1 BUSINESS, FINANCE

Journal of Accounting & Economics Pub Date : 2025-02-01 Epub Date: 2024-05-09 DOI:10.1016/j.jacceco.2024.101703

Daphne M. Armstrong, Stephen Glaeser, Jeffrey L. Hoopes

{"title":"Measuring firm exposure to government agencies","authors":"Daphne M. Armstrong, Stephen Glaeser, Jeffrey L. Hoopes","doi":"10.1016/j.jacceco.2024.101703","DOIUrl":null,"url":null,"abstract":"<div><div><span>We use textual analysis of mandatory accounting filings to develop firm-level, time-varying measures of exposure to individual government agencies including the Securities Exchange Commission (SEC) and Internal Revenue Service (IRS). The measures vary predictably across industries and with agency-specific events such as the Sarbanes Oxley Act at the SEC and budget cuts at the IRS. The measures positively relate to undisclosed agency investigations and financial statement downloads. Firms' total exposure across government agencies negatively relates to their profitability, consistent with exposure to government agencies imposing net costs. Consistent with a causal interpretation of these results, the positive stock market reaction to the surprise election of Donald Trump, who promised to reduce the power of government agencies, positively varies with firms' exposure to government agencies. As initial applications of our measures, we demonstrate that expanded SEC oversight increases firms' stock liquidity and reduced IRS oversight decreases firms’ effective </span>tax rates.</div></div>","PeriodicalId":48438,"journal":{"name":"Journal of Accounting & Economics","volume":"79 1","pages":"Article 101703"},"PeriodicalIF":7.8000,"publicationDate":"2025-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of Accounting & Economics","FirstCategoryId":"91","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0165410124000338","RegionNum":1,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"2024/5/9 0:00:00","PubModel":"Epub","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}

引用次数: 0

Abstract

We use textual analysis of mandatory accounting filings to develop firm-level, time-varying measures of exposure to individual government agencies including the Securities Exchange Commission (SEC) and Internal Revenue Service (IRS). The measures vary predictably across industries and with agency-specific events such as the Sarbanes Oxley Act at the SEC and budget cuts at the IRS. The measures positively relate to undisclosed agency investigations and financial statement downloads. Firms' total exposure across government agencies negatively relates to their profitability, consistent with exposure to government agencies imposing net costs. Consistent with a causal interpretation of these results, the positive stock market reaction to the surprise election of Donald Trump, who promised to reduce the power of government agencies, positively varies with firms' exposure to government agencies. As initial applications of our measures, we demonstrate that expanded SEC oversight increases firms' stock liquidity and reduced IRS oversight decreases firms’ effective tax rates.

查看原文本刊更多论文

衡量公司与政府机构的关系

我们使用强制性会计文件的文本分析来开发公司层面的、随时间变化的暴露于各个政府机构的措施，包括证券交易委员会（SEC）和美国国税局（IRS）。可以预见，不同行业的措施会有所不同，也会随着SEC的《萨班斯-奥克斯利法案》（Sarbanes - Oxley Act）和IRS的预算削减等特定机构的事件而有所不同。这些措施与未公开的机构调查和财务报表下载呈正相关。企业在政府机构的总敞口与其盈利能力呈负相关，与施加净成本的政府机构敞口一致。与对这些结果的因果解释一致，股市对唐纳德·特朗普（Donald Trump）意外当选的积极反应与公司对政府机构的敞口呈正相关。特朗普承诺减少政府机构的权力。作为我们措施的初步应用，我们证明了扩大的SEC监管增加了公司的股票流动性，减少的IRS监管降低了公司的有效税率。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

求助全文

约1分钟内获得全文求助全文

来源期刊

Journal of Accounting & Economics Multiple-

CiteScore

8.70

自引率

6.80%

发文量

期刊介绍： The Journal of Accounting and Economics encourages the application of economic theory to the explanation of accounting phenomena. It provides a forum for the publication of the highest quality manuscripts which employ economic analyses of accounting problems. A wide range of methodologies and topics are encouraged and covered: * The role of accounting within the firm; * The information content and role of accounting numbers in capital markets; * The role of accounting in financial contracts and in monitoring agency relationships; * The determination of accounting standards; * Government regulation of corporate disclosure and/or the Accounting profession; * The theory of the accounting firm.