FRB: Escape From New York: The Market Impact of SEC Rule 12h-6

International Finance Discussion Papers

Escape From New York: The Market Impact of SEC Rule 12h-6
Nuno Fernandes, Ugur Lel, and Darius P. Miller
2008-945 (September 2008)

Abstract: We examine the stock market impact of SEC Rule 12h-6 which eased the ability of foreign firms to deregister with the SEC and as a result terminate their U.S. disclosure obligations under the 1934 Securities Exchange Act. We document that the market reacted negatively to the ability of firms from weak disclosure and governance countries to more easily opt out of the stringent U.S. reporting and legal environment. Our findings suggest that shareholders of non-U.S firms place significant value on U.S. securities regulations, especially when the home country investor protections are weak.

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Keywords
International finance, deregulation, international cross-listing

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