| Abstract: |
The dissertation is a compilation of three empirical papers on the effects of corporate financial misconducts on financial markets. The scope of misconducts covers insider trading, price manipulations, communication of false information (including accounting frauds), and any breach to securities laws. The first two papers exploit a unique and exhaustive dataset of the sanction decisions made by the French Financial Market Authority (Autorité des Marchés Financiers) since its creation in 2003, using an event study methodology. The first paper investigates how French markets react to the unanticipated news of a sanctioned financial misconduct committed by listed firms. The results stress that condemned listed firms endure significant but limited negative abnormal returns in the aftermath of the regulator’s decision. In particular, after accounting for the regulatory fines, large firms would gain from being sanctioned in terms of reputation. The second paper changes perspective by analyzing the spillovers for listed firms of being named as the victims of sanctioned financial misconducts. The conclusion is that the victims endure a double-punishment: first, when the breach is committed (such as price manipulation or insider trading), and then again when their past executioner is condemned. The last paper enlarges the perspective by meta-analyzing the literature on intentional financial crimes and subsequent market reactions, estimated with an event study methodology. The goal is to put into perspective the results of the first article as well as to fill in a gap in the existing literature. The meta-analysis demonstrates that this empirical literature is affected by a negative publication selection bias. Still, after controlling for this bias, financial crimes imply statistically significant negative abnormal returns. |
