Last modified: 2014-12-23
Abstract
Cataldo, Fuller and Miller (2014) examined a published sample of Securities and Exchange Commission (SEC) and Public Company Accounting Oversight Board Engagement Quality Reviewer violations (Messier, Kozloski and Kochetova-Kozloski 2010) and the entire population of 2012 SEC trading suspensions. They found that Nevada firms disproportionately consume scarce Federal regulatory resources. Their results support what has been characterized as the Nevada Effect.
Additional evidence in support of the Nevada Effect is presented in the current research. In this extension, regulatory enforcement actions by the SEC, Department of Justice, Federal Bureau of Investigation and Internal Revenues Service during 2011 and 2013 are examined. Additionally, measures associated with related stock promoters and promotional schemes are identified. Our methodology used a forensic approach and examined publicly available information not previously executed or explored in the literature. Publicly traded Nevada corporations dominated our analysis of this information at a variety of detectible levels. We discuss our findings, in the context of information asymmetry, hidden and private information.
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