Speaker:
Pablo Slutzky
Robert H Smith
School of Business - University of Maryland
Discussant:
Pedro Matos
Darden School of Business - University of Virginia
Abstract
Paper Authors: Pablo Slutzky
This paper studies how rms deal with business regulations that limit their operations. I rst exploit a natural experiment to show that the ownership structure of a rm a ects its degree of compliance with regulations, with publicly listed rms complying more than privately held ones. Then I show that this di erential compliance imposes a burden on listed rms that helps explain the patterns of M&A activity in emerging markets. When the level of market regulations increases, private rms acquire listed ones, and when the level decreases the results are reversed. I nd that this e ect is stronger for listed rms that are subject to stricter auditing and enforcement standards, suggesting that scrutiny plays an important role. Taken together, these results uncover an additional cost faced by listed companies, identify a new driver of M&A transactions in emerging markets, and show evidence that high levels of regulation lead to opaque corporate structures.
