Measuring the Cost of Regulation: A Text-Based Approach / Charles W. Calomiris, Harry Mamaysky, Ruoke Yang.

Format:

Book

Author/Creator:

Calomiris, Charles W.

Contributor:

National Bureau of Economic Research.

Mamaysky, Harry.

Yang, Ruoke.

Series:

Working Paper Series (National Bureau of Economic Research) no. w26856.

NBER working paper series no. w26856

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Measuring the Cost of Regulation

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2020.

Summary:

We derive a measure of firm-level regulatory exposure from the text of corporate earnings calls. We use this measure to study the effect of regulation on companies' growth, leverage, profitability, and equity returns. Higher regulatory exposure results in slower sales and asset growth, lower leverage, reduced profitability, but higher post-call equity returns. These effects are mitigated for larger firms. Our findings suggest that both compliance risk and physical operational cost are consequences of increased regulation, but the magnitude of the effects of compliance risk are larger. The topical context of regulation is important for future firm-level outcomes.

Notes:

Print version record

March 2020.