SEC Monitoring of Foreign Firms’ Disclosures

We find that foreign firms listed on US exchanges are subject to less intensive monitoring than comparable US firms. While this is potentially inconsistent with SEC’s mission to protect US investors, we posit and show that SEC reduces monitoring when it can rely on public and private enforcement in the foreign firm’s home country. In addition, we find that SEC provides increased monitoring for those foreign firms where SEC monitoring is most valuable to US investors. Our study highlights the heterogeneity in SEC monitoring of foreign firms and provides evidence consistent with implicit cooperation between SEC and international securities regulators.